Thursday 06 Feb 2025
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KUALA LUMPUR (4 Feb): Malaysia needs to shift to high-value products like oleochemicals and biodiesel rather than just relying on crude palm oil (CPO) exports without a solid value-added strategy, according to Paya Besar Member of Parliament Datuk Mohd Shahar Abdullah.

He said Indonesia, which has implemented a mandatory B35-B40 biodiesel policy since 2020 to stabilise domestic demand, has seen palm oil prices that are more stable compared to Malaysia, which depends 80% on crude exports.

Malaysia’s CPO price remains susceptible to sharp fluctuations and is easily influenced by global market speculation, he said during the debate on the motion of thanks for the royal address in the Dewan Rakyat on Tuesday.

According to Mohd Shahar, Malaysia is caught in the “volume versus value” dilemma.

“Although exports to the European Union (EU) contributed only 14% of Malaysia’s total palm oil exports in 2023, the EU premium rate, on a pro-rata basis, is actually higher compared to that in the Indian and Chinese markets.

“Besides looking at India and China as volume markets, we need to view the EU as a volume market that offers high value. Moreover, the EU remains the main importer of palm kernel oil for the past five years,” he said.

Mohd Shahar, who is also the chairman of the Parliament’s Special Select Committee on Finance and Economy, also praised the government’s recent efforts to correct the perception and stigma of Malaysian palm oil in the EU and the US due to the EU Deforestation-Free Regulation (EUDR) and import ban on palm oil as biofuel.

“Promotion and communication efforts must be intensified all the way to the level of policy implementers, not just at the policymaker level,” he added.

Mohd Shahar said the new management strategy for the country’s palm oil industry has yet to reach its full potential, despite Malaysia having world-class sustainability standards like the Malaysian Sustainable Palm Oil (MSPO) certification.

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