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Palm oil is one of the most important commodities of Malaysia. The industry acts as an economic backbone for Malaysia. In the era of globalisation, the Malaysian palm oil industry, like any other industries in the world, also faces many challenges. Representing a major global producer of palm oil, we need to spearhead our initiatives to transform and meet the increasing challenges of the industry as they unfold.

The palm oil industry contributes significantly to the economic development of Malaysia; providing a range of benefits for both producers and consumers in the global markets. Some of the key benefits of the industry are revenue and employment generation, development of infrastructure and expansion of food and product supply. Statistics have shown that in 2012 alone, Malaysia produced almost 19 million tonnes of palm oil or more than a third of the entire world’s production. Interestingly, over 700 million oil palm trees are planted all over Malaysia; covering only 15.5% of Malaysia’s total land area.

More than 500,000 people make a living out of the industry, which has provided billions of dollars in revenue to the nation’s economy. A lot of this income comes in the form of exports of the industry’s products to the global market. Some of the major consumers and importers of Malaysian palm oil are China, USA, Pakistan, Japan, India and Egypt. To maintain the high standards required for palm oil export, Malaysia has many stringent laws and regulations which also ensure that the industry remains socially and environmentally responsible.

According to Tan Sri Datuk Dr Yusof Basiron, Chief Executive Officer, to remain competitive, the Malaysian palm oil industry continues to focus on product development, innovation and technology to enable it to produce improved and better products every year.

“For the record, the industry has gone through the process of improving and re-engineering itself. We have developed a number of new ways of producing palm oil. Continued research and development (R & D) is always the best method to bring about a revolution in the industry. As such, the palm oil industry has recorded significant achievements thus far. We are now producing products of a wider variety and better quality for our customers.”

To boost trade opportunities, MPOC has established 10 regional offices around the world. “We have set up a number of regional offices to promote and monitor the palm oil market while also looking out for various prospects and opportunities within these countries. Whenever we identify an opportunity for trade, we alert our exporters to venture into those countries,” he said, adding that the competition in the near future is going to be intense, with more and more countries entering the palm oil market.

“They are looking to produce with the same intensity and quality that we are producing. Not only that, our industry faces a threat from not only the palm oil producers but also other edible oil producers. For example, Indonesia is one of our closest competitors in the palm oil industry. The country has a very favourable climate to grow oil palm trees.

“An advantage that Indonesia has over us is that there is more land and cheap labour available to them and these will help them produce more palm oil every year. Nevertheless, I am optimistic that with the right attitude and strategic plans and programmes in place, we will continue to be the market leader in the palm oil industry, ” Tan Sri Datuk Dr Yusof elaborated. Another advantage of oil palm cultivation in Malaysia is the positive effect it has on biodiversity.

“I am optimistic that with the right attitude and strategic plans and programmes in place, we will continue to be the market leader in the palm oil industry, ” – Tan Sri Datuk Dr Yusof Basiron, CEO

Being a perennial and high-yielding oil crop, oil palm requires the least hectarage of agricultural land to produce the same tonnage of vegetable oils as produced by other competing oilseeds such as soya, rapeseed and sunflower. This enables oil palm to save virgin forest land from conversion to agriculture, therefore helps in the conservation of natural biodiversity including wildlife habitats.

The Future of Palm Oil as a Source of Renewable Energy

Perhaps one the most important uses of palm oil in the coming years is in the renewable energy sector. The depleting fossil fuel reserves coupled with enhanced awareness on climate change has led to concerted and escalating R&D efforts on renewable energy sources. Increasing demand for renewable fuels has driven up production worldwide. Palm oil has already been successfully used as biodiesel, a viable and environment-friendly diesel substitute, in motor vehicles. With the global price of fossil fuels consistently going up and its obvious advantages; palm biodiesel could be the preferred fuel to rely on to run billions of vehicles in future. With reduced smoke emission and carbon, sulphur and nitrogen contaminants, palm biodiesel could very well indeed turn out to be the fuel of choice for the future.

This article is reproduced from Malaysia Progress 2013-2014

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