This article first appeared in The Edge Malaysia Weekly on September 8, 2025 - September 14, 2025

THE Malaysian Palm Oil Board (MPOB)turned 25 in May and now finds itself having to balance multiple mandates under the MPOB Act 1998 — while contending with a tight budget amid rising operating costs.

MPOB traces its roots to 1977, with the establishment of the Palm Oil Registration and Licensing Authority (PORLA). The Palm Oil Research Institute of Malaysia (PORIM) was set up in 1979 and merged with Porla in 2000 to form MPOB — tasked with both regulating the industry and driving research and development (R&D) across the palm oil value chain.

Apart from licensing fees, revenue from the commercialisation of its research and grants from the government, MPOB relies primarily on a mandatory cess collected from palm oil producers — set at RM16 per tonne of crude palm oil (CPO) and crude palm kernel oil (CPKO) since March 1, 2021, a RM2 increase from the previous rate of RM14 per tonne.

Of this amount, RM12 is allocated to R&D activities, RM3 to the Palm Oil Promotional Fund, and RM1 to conservation initiatives supporting the sustainability of the oil palm industry.

At RM12 per tonne, MPOB collected RM258 million in 2024. Based on CPO and CPKO production from 2022 to 2023, MPOB’s income ranged from RM247 million to RM248 million.

Now, there is industry talk that the cess may be raised again. When asked, MPOB director-general (DG) Datuk Dr Ahmad Parveez Ghulam Kadir — who has held the position since Aug 10, 2019 — declines to comment directly, saying only that the focus should remain on the agency’s contributions over the years. He notes, however, that operating costs have continued to rise, driven by growing demands on MPOB, including new layers of certification and compliance under the MSPO standard and the EU Deforestation Regulation (EUDR).

“The overall figure [cess collected] has remained relatively unchanged over the past 20 years. However, MPOB’s operating costs as a government agency have risen in line with salary adjustments under the government scheme. These increments alone will add about RM35 million annually to our expenditure,” Ahmad Parveez tells The Edge in an interview.

Then, he says, there is the increase in the minimum wage, which applies to MPOB’s general workers, including security guards. “Unlike other government agencies, whose salaries are paid by the government, MPOB has to depend on the cess. Because we are involved in R&D, we need to strengthen our capabilities.”

In terms of what MPOB has been doing to keep costs down, Ahmad Parveez says he has reduced MPOB’s head count from 2,600 when he took over as DG to around 2,150 now. MPOB’s offices around the world have also been shuttered except for the one in Shanghai, China, which also undertakes R&D work and is currently funded by the government.

While it maintains 49 Tunas offices nationwide under the Smallholder Extension and Certification Division to support smallholders, MPOB has closed its shops around the country.

“We gradually reduced [staff]; we did not retrench. Every time we fill up a permanent post, the contract post that we have, we will not refill. We only fill the critical ones and some of these we also outsource,” he explains, adding that everyone at MPOB, including himself, travels economy class for local and Asean destinations.

On the revenue side, MPOB also stopped selling its seedlings below market price and started charging for its data on palm oil exports.

While it can budget its spending, its revenue is tied to national CPO and CPKO production volumes, which are beyond its control.

“In 2016, because of El Niño, the production dropped from 20 million [tonnes] to 16-plus million. Then, the cess for R&D was RM9 per tonne. So, if, for example, production dropped almost three million tonnes, our income dropped by almost RM27 million. It affects us, like during the Covid-19 pandemic in 2020, when foreign workers returned home and the oil palm plantation sector faced labour shortages, leading to a drop in CPO production from 19.86 million tonnes in 2019 to 18.12 million tonnes in 2021,” says Ahmad Parveez.

Meanwhile, some industry players believe this is a good time to raise the cess because of high CPO prices, with third-month futures rising just above RM4,500 per tonne in mid-August. However, others say there should be a mechanism to vary the cess according to CPO price movements.

R&D has been — and will continue to be — MPOB’s core strength, says Ahmad Parveez, and the results speak for themselves. “So far, we have introduced more than 700 technologies and services, and we have 223 technologies commercialised by the industry.”

These technologies, generating more than RM5.9 billion in market value, include high-yield planting materials, farm mechanisation, eco-friendly pest and disease control solutions, and downstream innovations such as red palm oil, biodiesel, tocotrienols, a palm-based coconut milk substitute and biodegradable lubricants.

The adoption rate of 30% is commendable, considering the challenges in commercialising R&D findings.

Ahmad Parveez estimates the national average patent rate at no more than 10%, citing his peers from Stanford University who observed that only 5% to 10% of developed technologies are patented — and, of those, just half successfully reach the market.

“Of course, people always think, you have 700, you must commercialise 700 — it’s not easy. You cannot force people to accept. But I think we will try, if possible,” he says.

One reason for the high commercialisation rate is MPOB’s Programme Advisory Committee, comprising local and international academicians and industry players who provide independent oversight and strategic guidance for the agency’s research.

“Our research must be scientifically sound, approved by industry experts and scientists, both local and overseas, and it must be what the industry needs,” says Ahmad Parveez, who holds a bachelor of science in genetics and master of science in molecular genetics from Universiti Kebangsaan Malaysia, as well as a PhD in plant genetic engineering from Universiti Pertanian Malaysia.

Two of MPOB’s most significant achievements — that are recognised globally — are the sequencing of the oil palm genome in 2013, and the discovery of the SHELL gene, which regulates shell thickness in oil palm fruit.

Ahmad Parveez explains that this discovery revolutionised breeding and productivity by enabling higher yields on less land — benefiting both tropical forest conservation and smallholder incomes. Published in Nature, the finding significantly elevated MPOB’s standing in the global scientific community.

In 2024, an improved genome assembly was released, demonstrating MPOB’s commitment to continuous scientific advancement and in line with its positioning as a world-class research institution.

It is worth noting that the MPOB scientist who led the research in oil palm genome sequencing, Dr Ravigadevi Sambanthamurthi, was elected into the Royal Society in July this year in recognition of her work on oil palm biochemistry and genomics. On that note, many other MPOB scientists are respected in their fields of research, including Tan Sri Dr Augustine Ong (former DG of Porim before the merger); Dr Rajinder Singh, director of the Advanced Biotechnology and Breeding Centre (ABBC); Dr Leslie Low, head of the bioinformatics unit at ABBC; Dr Meilina Ong Abdullah, director of the biology and sustainability research division; and Dr Vijaya Subramaniam, head of sustainability, climate change and biodiversity.

All this research requires significant funding, Ahmad Parveez says MPOB has invested about RM240 million in the genome project alone over the past 15 years.

Asked about monetising the research findings, he says direct monetisation of the genome sequencing has been challenging, but its transformative impact on the oil palm scientific landscape has been profound.

“The genome data generated by MPOB has become foundational to nearly all molecular biology research related to oil palm. It is widely referenced and used by both the oil palm industry and the international scientific community.”

MPOB’s subsequent breakthroughs, including the identification of three important agronomic genes — SHELL, VIRESCENS (fruit colour) and KARMA (abnormal fruit in clones) — have been commercialised. These discoveries were licensed to Orion Biosains Sdn Bhd, resulting in royalty payments to MPOB.

Orion Biosains, a subsidiary of US-based Orion Genomics, is a private laboratory, equipped for large-scale palm DNA processing. “This has created high-skilled jobs and career opportunities in advanced scientific research,” says Ahmad Parveez.

MPOB’s breeding programmes have also created revenue streams for MPOB through the leasing of Sirim-compliant mother palms and the sale of pollen from elite paternal palms to selected plantation companies.

“This reflects the industry’s confidence in the quality of MPOB-developed planting materials, marking the tangible value of long-term investments,” says Ahmad Parveez.

MPOB has managed to monetise several of its scientific innovations through commercialisation, licensing, royalties and partnerships across milling, mechanisation, biomass utilisation and renewable energy.

Progress on the adoption of downstream applications by industry players has been “decent”, although widespread adoption, especially among smallholders and small and medium enterprises, remains limited because of costs.

Notable downstream breakthroughs include production technologies for red palm oil, margarine and coconut milk analogue (Santan Sawit). MPOB also formulated feed pellets for beef cattle using palm kernel cake, empty fruit bunch and CPO. Further downstream, MPOB has monetised numerous innovations through licensing agreements, intellectual property rights and the transfer of technical know-how to industry players.

Ahmad Parveez also points out that MPOB’s regulatory oversight and data governance have been the backbone of the industry’s credibility. “Through its licensing framework, traceability systems and market intelligence, MPOB has upheld the integrity of Malaysia’s oil palm industry while facilitating access to international markets and supporting national policies on food security, environment and trade.”

Since MPOB’s revenue is tied to the country’s production of CPO and CPKO, it has a vested interest in increasing fresh fruit bunch and oil extraction rate yields. This can be achieved by using improved seedlings, adopting sound agronomic practices and, most importantly, replanting to replace ageing, less productive palms.

Ahmad Parveez acknowledges that smallholders have often been seen as an obstacle to Malaysia’s replanting efforts but he notes that this narrative is changing. He highlights the 13th Malaysia Plan, which allocates RM1.4 billion over five years specifically for smallholder replanting, reflecting the government’s decisive commitment to the issue.

The current replanting rate among smallholders is well below the ideal 4%. Independent smallholders, who account for 14.6% of the total oil palm planted area in Malaysia, often lack the resources to undertake replanting. According to MPOB’s 2024 data, the replanting rate stood at just 0.7% for independent smallholders and 2.3% for estates, resulting in an industry-wide average of 2%.

The low replanting rate among smallholders underscores the need for greater outreach, education and financial support — but MPOB faces the challenge of doing so with fewer ground staff due to cost-cutting measures.

“Sometimes, we close a few offices and put the staff together in one location to bring down the cost,” Ahmad Parveez explains.

Testing seeds and seedlings for non-tenera contamination is another way to ensure that only the high-yielding tenera hybrid — whose fruits produce more oil because of their thin shell and thick mesocarp — is planted in estates. A study previously found a 12.8% contamination rate in the Malaysian palm oil supply chain.

Although MPOB has developed a diagnostic tool dubbed SureSawit Kits to determine the variety of the palm at the seed or seedling stage, it has not been adopted by industry players because of the cost.

“We cannot just neglect the technology, whereas Indonesia is very keen. At the same time, I cannot force people to use it,” says Ahmad Parveez.

As such, MPOB has taken on the task and cost of testing all nurseries and seed producers nationwide. Those found to have high levels of cross-contamination are notified, and follow-up testing is conducted at intervals in the hope of improved results.

In line with its vision to become a Nobel Laureate-producing R&D institution, MPOB aims to attract and retain the country’s top scientific talent.

Ahmad Parveez highlights that some contract staff have remained with MPOB for more than 15 years, with contracts renewed annually and accompanied by salary increments and promotions where merited. Staff are also recognised through excellence awards, which include cash incentives for long service, innovative ideas, published research in high-impact journals and commercialisation of projects. Innovators whose technologies are commercialised may also receive royalties from their inventions.

From 1998 to 2016, MPOB ran its Graduate Student Assistance Scheme, funding postgraduate studies and absorbing top talent into the organisation.

While it sees Malaysia remaining at the forefront of the global vegetable oil market, MPOB faces ongoing challenges — from labour shortages and smallholders’ limited replanting capacity to geopolitical tensions and trade barriers such as the EUDR.

“The next 25 years will test MPOB’s strategic foresight and leadership,” Ahmad Parveez says. “Success will depend on the organisation’s ability to balance technological innovation, stakeholder support and global engagement — ensuring Malaysia not only maintains its leadership in oil palm, but also sets new standards for sustainability and competitiveness.” 

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