This article first appeared in The Edge Financial Daily on March 5, 2019
KUALA LUMPUR: Primary Industries Minister Teresa Kok and China’s ambassador to Malaysia Bai Tian yesterday witnessed the signing of four purchase intent documents for the export of 1.62 million tonnes of palm oil from Malaysia to China with a combined estimated worth of US$891 million (RM3.64 billion).
The deals will be a boost to Malaysia’s palm oil industry, which has come under attacks and sabotage in the European Union (EU), Kok told reporters, and will help in reducing the country’s stockpile.
“I must say I really appreciate China. When we are facing so much attacks and sabotage from the EU, China has, in the beginning of the year, already showed us a kind gesture by signing the agreements to buy these 1.6 million tonnes of palm oil from Malaysia. This is going to be a great relief for the palm oil industry,” she said after officiating the Malaysia-China Palm Oil Business Forum.
The deals, signed between three Chinese companies and four Malaysian companies during the opening of the forum yesterday, came after a news report stated last month that Malaysia was nearing an agreement with China to revive the scrapped RM81 billion East Coast Rail Link (ECRL) project, with Foreign Minister Datuk Saifuddin Abdullah quoted as saying in a Feb 19 interview that China was willing to reduce the price tag for the project.
He also said ongoing talks on the fate of the project were “in the last mile”. Subsequently, Prime Minister Tun Dr Mahathir Mohamad said last Monday that Malaysia would continue with the ECRL if the price was right.
The first of the deals signed yesterday was between China’s Yantai Tianmao Edible Ltd Co and Sime Darby Plantation Bhd for the purchase of 100,000 tonnes of refined, bleached and deodorised (RBD) palm stearin.
The second document signed was between Yihai Kerry (Shanghai) International Trade Co Ltd and PGEO Marketing Sdn Bhd for the purchase of 1.3 million tonnes of RBD palm olein.
The third document, signed between China’s Yizheng Fangshun Industry Ltd Co and Cacao Paramount Sdn Bhd (a subsidiary of Teck Guan Group), involves the purchase of 120,000 tonnes of RBD palm stearin. Yizheng Fangshun also inked another document with SOP Edible Oils Sdn Bhd to buy 100,000 tonnes of RBD palm olein.
In her opening remarks earlier, Kok said China was Malaysia’s second biggest importer of palm oil and palm-based products in 2018, with Malaysia exporting 3.07 million tonnes of palm oil and palm products valued at RM8.38 billion to China, up 7.3% from 2.86 million tonnes (worth up to RM9.39 billion) in 2017.
Kok also urged China’s businessmen to venture into projects in the promoted areas within the palm oil sub-sectors in Malaysia. “There are opportunities to explore investments in the palm oil industry in value-added downstream activities namely oleo chemicals, pharmaceuticals, processed food, specialty products and even consumer products. In this context, I would like to urge all of you here today (yesterday) to explore new areas of cooperation and enhance current business linkages in the palm oil industry,” she said.
Meanwhile, Bai called for greater cooperation between Malaysian and Chinese companies, especially in the area of research and development in the palm oil industry, like developing high-value processing and biofuel products, for the benefit of both countries.
“I have repeatedly said that China imposes no ceiling on the import of Malaysian palm oil and palm oil products. So the prospects of the Chinese market for Malaysian palm oil and palm oil-related products are very bright,” he said.