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Improve the competitiveness of Malaysia's palm oil industry

  • Malaysian palm oil operators must adopt new technologies to boost their productivity and efficiency while lowering their cost so that overall competitiveness could be lifted. Photo courtesy; AFP

Sin Chew Daily

The once booming oil palm industry is facing severe challenges today, as prices drop drastically in addition to an oversupply of domestic inventory.

Oil palm operators must work together with the government in order to boost their competitiveness and expand the marketplace.

Malaysia is one of the largest palm oil producing and exporting countries, and the industry has brought us lucrative foreign exchange earnings. As such, a depressing palm oil industry is poised to have a heavy impact on the country's economy. Palm oil products were the top revenue-generating commodity between January and April this year at RM24.2 billion.

One of the reasons for falling prices is trade pressure from the EU. The EU has ruled to restrict the use of biofuels from 2019, with a progressive ban from 2023 until 2030. Because of this, palm oil prices have plummeted from RM2,800 to RM2,100 per ton within one year.

Malaysia needs to join hands with Indonesia, another major palm oil exporter, to tackle any anti-palm oil campaign in the international market, while local palm oil operators must work hand in hand with the government in the Malaysian Sustainable Palm Oil (MSPO) Certification Scheme to ensure their products meet the international standards.

Currently only about 20% of Malaysian palm oil operators have attained the MSPO certification. This ratio needs to be significantly increased, and this can only be achieved with government encouragement as well as awareness among the operators themselves.

Besides the EU, the government and operators must also look for new markets and explore new opportunities in order to resolve the problem of oversupply. One way of doing this is making good use of biofuels from palm oil.

Where this is concerned, Indonesia is one step ahead of us. It is imperative that the ministry of primary industries actively promote the relevant programs.

As for palm oil exports, Indonesia has always been a powerful competitor because their palm oil is more competitively priced than ours.

The government intends to expand the Indian and Chinese markets, but again we are facing stiff competition from Indonesia. Malaysia will continue to be disadvantaged in the absence of competitive pricing.

Like in any other sector, the best way of responding to stiff global competition is to improve our own competitiveness. Malaysian palm oil operators must turn the pressure into a motivation force, and the current dilemma into a unique opportunity for growth, in a bid to implement industrial reforms and boost our competitiveness.

At this moment the agricultural industry is still heavily dependent on the availability of migrant workers. However, the operators must innovate and reform by way of adopting new technologies to boost their productivity and efficiency and lower their production cost so that overall competitiveness could be lifted.

 

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