This article first appeared in Forum, The Edge Malaysia Weekly on May 26, 2025 - June 1, 2025

Over the past five years, Malaysian palm oil exports to its top three markets have faced numerous challenges including health-related concerns, regulatory hurdles and intensified price competition from soft oils.

In 2024, European Union member states (EU27) imported five million tonnes of palm oil, of which 2.7 million were used in the energy sector. However, with the EU Deforestation Regulation (EUDR) scheduled to take effect in December this year and the EU set to phase out palm oil for energy use by 2030 under the Renewable Energy Directive, Malaysian palm oil exports to the region are projected to decline, potentially falling below one million tonnes.

In response to these shifting dynamics, the Malaysian Palm Oil Council (MPOC) launched a five-year road map in 2023 to diversify Malaysian palm oil exports beyond traditional markets by targeting growth markets in Sub-Saharan Africa (SSA), the Middle East and North Africa (Mena) and Asean. The strategy focuses on increasing consumer and public awareness while strengthening engagement with manufacturers and palm oil importers to build trust and long-term partnerships. MPOC sees significant potential for growth in palm oil consumption and demand across these three regions.

To complement this strategic shift, MPOC has realigned its promotional efforts by concentrating its resources on hosting targeted events, business-matching sessions and trade exhibitions across priority regions. Since 2023, MPOC’s flagship event, the Malaysian Palm Oil Forum (MPOF), has been held in Kenya and Egypt, underscoring the council’s commitment to expanding its footprint in SSA and Mena. In 2024, the Malaysian Palm Oil Forum and Trade Networking Visit was organised in Kuala Lumpur, bringing together buyers from SSA, Mena and Asean. The forum drew participation from over 100 buyers representing 30 countries and generated potential sales valued at RM1.24 billion, with most trade enquiries originating from the African continent.

In 2025, MPOC will continue advancing its market diversification strategy with the upcoming MPOF in Manila. The Philippines is a key market, having emerged in 2024 as the largest importer of Malaysian palm oil within Asean, accounting for 51% of the region’s total exports. In addition, business-matching events are scheduled for the second half of the year in Kuala Lumpur, South Africa and Saudi Arabia. These events will focus on strengthening engagement with buyers and importers from these regions. The Kuala Lumpur trade networking session, set for July this year, is expected to draw more than 70 buyers, further reinforcing the country’s efforts to cultivate new partnerships and deepen market presence in these high-potential regions.

MPOC’s diversification efforts have started to deliver tangible results, with a notable shift in export trends from traditional to growth markets. As shown in the table, combined Malaysian palm oil exports to India, China and the EU27 declined by 23% over the past four years — from 7.4 million tonnes in 2020 to 5.7 million tonnes in 2024. This decline reflects ongoing challenges such as regulatory constraints, shifting consumer preferences and rising competition from soft oils.

In contrast, exports to SSA, Mena and selected Asean countries grew by 24% during the same period, rising from six million tonnes in 2020 to 7.5 million in 2024. For the first time, combined exports to these growth markets have surpassed those to the traditional markets of India, China and the EU.

This momentum has continued into 2025. In the first quarter alone, exports to SSA, Mena and Asean (excluding Indonesia and Singapore) totalled 1.7 million tonnes — more than double the volume exported to India, China and EU27, which stood at 696,000 tonnes. This represents a 145% increase in favour of the growth markets, reaffirming the strategic value of MPOC’s market diversification road map.

Beyond trade facilitation and opportunity identification, MPOC also continuously monitors market dynamics, regulatory developments and policy shifts to assess their implications on Malaysian palm oil exports. One such example is the current uncertainty surrounding the proposed 24% import tariff on Malaysian palm oil by the US. To better understand its implications, MPOC conducted an analysis of Malaysia’s palm oil export profile to the US and the likely impact of the proposed measure.

In 2024, Malaysia exported about 191,000 tonnes of palm oil to the US, representing 11% of the US palm oil market and just 1.1% of Malaysia’s total palm oil exports. Notably, 65% of these exports were certified and channelled into high-value niche segments, while 19% comprised palm stearin — an essential raw material in the food processing and personal care industries. Given the limited availability of suitable alternatives in these sectors, demand for Malaysian palm oil is expected to remain relatively inelastic. As such, despite a potential increase in domestic US prices, the overall impact of the proposed tariff is anticipated to be minimal.

As global trade dynamics continue to evolve, MPOC remains committed to safeguarding the interests of the Malaysian palm oil industry through proactive market engagement, policy analysis and strategic outreach. By staying ahead of emerging challenges and capitalising on new opportunities, MPOC is positioning Malaysian palm oil for sustainable growth and greater resilience in an increasingly competitive global marketplace.

Belvinder Sron is  CEO of the Malaysian Palm Oil Council

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