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Last Updated: 26 May 2022

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MEDIA STATEMENT
INDONESIA’S PALM OIL BAN: REAP A BOUNTIFUL HARVEST
WHILE OPPORTUNITY PRESENTS ITSELF

1. Both upstream oil palm growers and downstream oil producers in Malaysia should join hands to reap the benefit of the void following neighbouring Indonesia’s decision to halt its palm oil exports. As the world's largest producer of palm oil, Indonesia imposed this ban to lower commodity prices and further address its domestic supply shortages.

2. While Malaysia sympathises with Indonesian palm oil players who will be impacted by significant shift in the demand-supply mechanics in the country, this is nonetheless the best time for Malaysian palm oil players to enhance their innovation capability while exploring the best possible strategies to meet a spike in demand by palm oil importing countries.

3. India is currently the biggest consumer of Indonesian palm oil – importing around 13.0 million to 13.5 million metric tonnes of edible oils – of which palm oil makes up around 8.0 million to 8.5 million metric tonnes (63%). Almost 45% of the quantity is expected to come from Indonesia while the remainder is sourced from Malaysia which is currently the world’s second biggest palm oil producer.

4. This has led to further tightening a market already on the edge due to Russia’s invasion of Ukraine and global warming. The prices of palm, soybean, European rapeseed and even its Canadian GMO counterpart, canola oil, have since reached historic highs following Indonesia’s action. Even as common sense would dictate that Malaysia will be an instant beneficiary by virtue of being the second-largest exporter of palm oil after Indonesia, scepticism persists on whether Malaysia is able to cope with various production challenges and constraints.

5. Daunting as it is to meet rising global demand amid labour shortage, the Ministry of Plantation Industries and Commodities (MPIC) remains optimistic that Malaysia has what it takes to fill the gap in global palm oil supply based on its market trend analytics and projection.

6. As palm oil prices will stay elevated supported by low inventory levels at both origins and destinations amid heightened price volatility, it is our hope that both the Malaysian upstream and downstream players seize the opportunity from Indonesia’s absence to maximise their revenue stream, hence earnings. After all, such opportunity only presents itself for a short-term given Indonesia will certainly re-look into its ban policy once both its domestic supply and pricing structure have stabilised. After all, it goes without saying that Indonesia relies on export taxes to fund its biodiesel programme. As market analysts expect the export ban to be lifted by the end of 2Q 2022 (around July), there is likelihood that Indonesia will flood the global market with its inventory accumulated during the ban.

7. Given that the industry enters into its seasonal peak output period during this time of the year – coupled with the prospect of South Korea which is one of the fastest growing palm oil markets releasing its stockpile – this could trigger a sharp price correction. The prospect of both Russia and Ukraine releasing their rapeseed/sunflower oil stockpiles, if any, once their conflict has subsided or settled must also be looked into. Based on these possible risks, it is only logical that both Malaysian palm oil planters and downstream industry players go all out
to take advantage of the current situation rather than to let such opportunity slip away.

8. In so doing, MPIC wants to assure industry players that it is doing its utmost best to meet demand for migrant workforce especially from upstream players. Recall that in September last year, the authorities approved the recruitment of 32,000 migrant workers for palm oil plantations which culminated in the entry of the foreign workforce into the plantation sector in mid-February this year. Malaysia is now anticipating a new batch of foreign workers to arrive in May and June, hence overcoming further manpower crunch to harvest palm fruits which otherwise can cap production. Rest assured that the process to hire foreign workers has already begun under a special quota.

9. On the longer term, the MPIC projects palm oil production and export to rise by 30% by end-2022, which comes against the backdrop of Malaysia having reopened its international borders and as the country began transitioning to the endemic phase since April 1. No doubt that although production was low due to shortage of foreign workers at the height of the COVID-19 pandemic in 2020, things are gradually returning to normal. With the workers coming back, production levels will rise and Malaysia is on track to meet global demand.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
Minister of Plantation Industries and Commodities
10 May 2022

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Last Updated: 26 May 2022

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MEDIA STATEMENT
OPPORTUNE TIME FOR PALM OIL TO REGAIN ITS MARKET SHARE IN EU
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1. THE Ministry of Plantation Industries and Commodities (MPIC) will take advantage of the political tension in Europe and the shortage of global edible oil to promote Malaysian palm oil, paving the way for the commodity to regain its market share, especially in the European Union (EU). Russia’s invasion of Ukraine on Feb 24 this year has significantly affected the global vegetable oil supplies as the uncertainty over Black Sea exports have resulted in higher vegetable/edible oil prices.

2. This could further tighten the global oilseed and vegoil supplies, thus prolonging the upcycle in vegoil prices. The Eastern European tension has led to shortages of sunflower oil and rapeseed oil with both countries account for 80% of global exports. MPIC believes that the Black Sea tension will benefit Malaysian palm oil exports as many European countries with high dependency on sunflower oil, have now shifted their demand to palm oil.

3. In fact, Ukraine and Russia are entering the critical month for sunflower planting which should start in April, hence the prolonged war could hamper the coming planting season. Ukraine’s and Russia’s sunflower oil exports account for 10% of global vegoil exports. Market analysts are presently anticipating an increase in palm oil demand from EU region in the near-term given lower quantity of soybean exports from Brazil, Paraguay, Russia and Ukraine as well as reduced sunflower from Russia, Kazakhstan and Ukraine.

4. Coupled with the latest move by neighbouring Indonesia who is the world’s largest palm oil exporter to widen the scope of its export ban on raw materials for cooking oil to include crude and refined palm oil, global vegetable oil prices are likely to remain high in 1H 2022. This is why I believe now is a time opportunity for palm oil to regain its confidence from European buyers given the publicity the commodity received in the past.

5. In this respect, I have instructed relevant agencies under MPIC, such as the Malaysian Palm Oil Council (MPOC) and the Malaysian Palm Oil Board (MPOB) to undertake aggressive efforts and campaigns not just for our commodity to fill global market gaps in the interim. These agencies, in collaboration with MPIC, will have to ensure that Malaysian palm oil remain a top choice in global markets in the long run, particularly those where the consumers have been exposed to vicious propaganda in the past.

6. Under my leadership, MPIC will not want to waste a good crisis. It is time we step up efforts to counter adverse propaganda to undermine palm oil’s credibility and for us to showcase the numerous health benefits the golden oil has to offer. These are all in line with MPOC’s Malaysian Palm Oil Full of Goodness campaign.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
06 MAY 2022

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Last Updated: 24 May 2022

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FUTURE-PROOFING PALM OIL FROM ADVERSE WESTERN PROPAGANDA

THE notoriety of developed economies against palm oil – the most produced, consumed and traded edible oil – all in favour of protecting the soybean trade (the second most-produced edible oil) is well-known. The European Union (EU) Parliament has voted for palm oil-based biofuels to be banned entirely by 2021. In contrast, other crop-based biofuels will be capped at 7%
and enjoy a gradual reduction to 3.8% by 2030.

Such a ban is linked to the EU’s belief that oil palm cultivation is responsible for deforestation. Another trade ban that has often affected Malaysian palm oil export is the US Customs and Border Protection (CBP), curtailing palm oil import into the world’s largest economy based on forced labour allegations. In the EU case, palm oil exports into the continent face numerous hurdles even with Asian palm oil exporters voluntarily abiding by the sustainable certification ruling under the Roundtable on Sustainable Palm Oil (RSPO) scheme.

In fact, putting in place mandatory sustainability requirements is not an issue for exporters, given that sustainable volumes will receive a market price premium. However, the EU’s failure or hesitance to recognise the national sustainability standards in Malaysia (the MSPO or Malaysian Sustainable Palm Oil standard) and Indonesia (the ISPO or Indonesian Sustainable Palm Oil standard) is a severe worry for both top two global palm oil producers. This is ironic, considering Europe only represents 6.4% of the global palm oil market. Yet, the cartel-like RSPO endeavours to apply pressure from consumers in affluent Western markets on Asian palm oil producers.

To re-cap, Indonesia was the first to initiate its national certification scheme (the ISPO) in 2011, with Malaysia following suit four years later (with the MSPO). Since then, both countries have been campaigning globally to win recognition of their standards and the right to define sustainable palm oil on their own terms. Uneven turf Unfair attacks and new allegations continue to discredit and pursue the industry's downfall amid existing legislation and certification standards to ensure labour rights are protected or the very fact that oil palm cultivation occupies only 0.31% of the global 5 billion hectares of agricultural land.

As highlighted by Gambian Centre for Sustainable Palm Oil Studies (CSPO) member Muhammed Magassy, it should come as no surprise if significant palm oil producers (like Malaysia and Indonesia) regard the EU’s anti-palm oil stance as “crop apartheid” given such behaviour re-animated the exploitative, colonial origins of the industry. While the EU biofuel ban is in place, it simultaneously evokes subtle protectionism by exempting European oilseed products such as rapeseed and sunflower, which require more land, water, and fertiliser than palm oil, from any economic penalty.

“We in Africa know this too well; the EU’s Common Agricultural Policy (CAP) provides domestic farmers €42 billion (RM196.2 bil) in annual subsidies, hence strengthening their ability to export at artificially low prices to the developing world,” argued Muhammed Magassy in “Green Trade War on Palm Oil” published by London-based The Parliament e-magazine. “This gives European producers an unfair advantage in markets such as Africa, bankrupting local farmers.”

Imagine such biasness is allowed to prevail even as palm oil also boasts numerous health benefits, which has led to the Malaysian Palm Oil Council (MPOC) unveiling the Malaysian Palm Oil Full of Goodness campaign to showcase the Malaysian Palm Oil industry’s sustainable initiatives and management. Dismantling barriers Denial of entry is already fuelling deep concerns among global industry players concerned that such a ruling may influence other major export destinations to follow suit. Of late, there has been a resurgence of anti-palm oil campaigns – even at the school level by associating the emergence of oil palm plantations with the disappearance of orang utans.

As mentioned earlier, such stigma surfaces even though there have been existing legislations to protect and prohibit the expansion of oil palm cultivation under existing conservation programmes. It just seems that no matter how many preventive measures are put in place, they are never enough. As much as Malaysia and neighbouring Indonesia, which are the world’s two largest palm oil producers, harbour no intention to make enemies, it is obviously high time for the palm oil industry to take a more proactive and aggressive stance to dispel baseless claims by powerful competitors who are out there to champion other types of edible vegetable oils.

It is time for all concerned certification bodies to come forward to defend palm oil, dispelling all the allegations. Slim chance or otherwise, Malaysia/Indonesia must proactively pursue their legal recourse filed with the World Trade Organization (WTO) against the EU’s restrictions on palm oil biodiesel. Truth must be told As highlighted by FGV Holdings Bhd’s group CEO Mohd Nazrul Izam Mansor at the Future-Proofed Palm Oil Summit (FPPO 2021) in November last year, the global agribusiness and food producer places a strong commitment to environmental, social
and governance (ESG) considerations in all its undertakings.

This is clearly embedded in the group’s sustainability policy where FGV has adopted the no deforestation, no planting on peat and no exploitation commitment. In its quest to conserve biodiversity and wildlife, the group has embarked on a new three-year initiative to protect and enhance high conservation value and high carbon stock areas within the vicinity of its plantations by planting fast growing indigenous or native tree species and wild fruit trees. “Wildlife protection and human-wildlife conflict management remain a high priority for FGV. One of our conservation projects involves the rescue, rehabilitation and release of injured or displaced Malayan Sun Bears,” he said in a special address at FPPO 2021.

“While this project is ongoing, we have expanded our Protection of Rare, Endangered and Threatened Species Programme to include pygmy elephants, gibbons and pangolins.” On the social component, FGV has been focusing on efforts in the past several years towards ensuring compliance to human rights and labour standards. These efforts have been intensified since early 2019 especially with our affiliation to the Fair Labour Association (FLA) which is a long-term programme to improve structures and systems for the enhancement of FGV’s labour practices.

Even then, it is worth noticing that FGV was slapped with a US CBP Withhold Release Order (WRO) on Sept 30 last year on allegations of forced labour. Nevertheless, FGV has appointed independent auditing firm Elevate Ltd expedite the auditing process which will eventually pave way to the lifting of the (WRO). FGV is not alone in such quandary as another Malaysian palm oil giant Sime Darby Plantation Bhd (Sime Plantation), too, is not spared from the WRO action. The world’s largest producer of Certified Sustainable Palm Oil (CSPO) is expected to deliver its impact report submission to the US CBP by end-April which will go towards the lifting of the WRO imposed on the company since December 2020.

Interestingly, Sime Plantation has recently revealed that it is transforming all its 33 Malaysian palm oil mills into certified food safety facilities by end-2023, after which the same standards will be rolled out across the group’s operations in Indonesia, Papua New Guinea and the Solomon Islands. On my part, I am seeking meetings with the US CBP and the EU by July this year to
set the record straight on forced labour allegations while once and for all, address the fallout from WROs issued by the US CPB to FGV Holdings and Sime Plantation in 2020.

On a similar note, Malaysia will be represented at the dispute proceeding on the EU’s alleged discrimination against the national palm oil industry from May 8 to 18 for us to provide our side of the story on the matter. I call on all Malaysians to work together with us to address the anti-palm oil propaganda by Western countries which is clearly aimed at bringing down our country's palm oil industry. I will ensure we put up an "aggressive" fight against these foreign pressures and provide them with all the relevant evidence. We will show them that Malaysia is not a
nation to be fooled around with.

Datuk Zuraida Kamaruddin is Malaysia’s Plantation Industries and
Commodities Minister.

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Last Updated: 23 May 2022

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MEDIA STATEMENT
ECONOMIC MISSIONS TO EGYPT AND QATAR STRENGTHEN MALAYSIA
AGRICOMMODITY

1. Minister of Plantation Industries and Commodities Malaysia, YB Datuk Hajah Zuraida Kamaruddin, has concluded her Economic and Agricommodities Promotion Mission to Egypt and Qatar from 16 April 2020 to 20th April 2020. During the mission, she has taken the opportunity to meet up with her counterparts from both countries; chaired the Roundtable Meeting with Egyptian and Qataris Agricommodities Players, meeting up with the Local Investment Authorities, Academicians, and the Local Women Entrepreneurs and Diaspora.

2. Among the Ministers and foreign dignitaries who met up with YB Datuk, Zuraida Kamaruddin are H.E. Mrs. Navine Gamea- Ministry of Trade and Industry of Egypt; H.E. Minister Dr. Ali El Moselhy- Ministry of Supply and Internal Trade of Egypt; H.E. Dr. Abdullah Bin Abdulazizi Bin Turky Al Subaie- Ministry of Municipality, State of Qatar; H.E. Sheikh Mohammed bin Hamad bin Qassim Al-Abdullah Al-Thani- Minister of Commerce and Industry of Qatar; H.E. Dr. Sherif el Gabaly, member of Egyptian Parliament and Chairman of EgyptianMalaysian Business Council. She also had a meeting with Counselor Mohamed Abdel Wahab- CEO of General Investment and Free Zones of Egypt, and Professor Dr. Hanafy Hashim, Head of Food Science & Technology, as well as Professor Dr. Gamel Abdrabuh, Dean of Faculty of Agriculture, Universiti AlAzhar.

3. As part of MPIC’s initiatives in promoting Malaysian agricommodity products, the round table discussions will bridge the trade promotional activities, business cooperation, and information exchange between governments and key players from within the industry, particularly for palm oil, rubber, and timber products.

4. The palm oil price has been at the forefront of edible oil news since the pandemic started in 2020 and due to recent ongoing conflict in Europe. The current price surge is driven by the outlook for the supply of substitute vegetable oils due to uncertainty over sunflower seed oil from Ukraine and Russia. Tight supply from the producing countries has also impacted the global palm oil price.

5. Malaysian Palm Oil Board (MPOB) anticipated crude palm oil (CPO) production to improve by 4.9% to 19 million tonnes this year, from 18.12 million tonnes in 2021, resulting in palm oil stocks increasing 21.1% to 1.95 million tonnes, from 1.61 million tonnes in 2021. This is excellent news to the industry players and market onlookers. It shows Malaysia is prepared to meet the encouraging demand for palm oil from the market, including from Egypt and Qatar. A few promising ideas, such as including Malaysia Palm Oil in the Egyptian Food Subsidy Scheme and exploring the private sectors, are further the applications of the rubberized road in Qatar. Further discussion is being conducted, and Malaysia is hopeful that the initiatives will benefit all involved parties.

6. The Hon. Minister has conducted missions to several countries beginning the year 2022 to increase exports of Malaysian commodities, especially palm oil. The countries visited are Saudi Arabia, Iran, Turkey, Pakistan, India, Bangladesh, Egypt, and Qatar. Malaysian companies also took part in these Ministerial missions to strengthen and re-establish bilateral relations. Among
the achievements are proposals to establish joint venture partnerships in India and Pakistan. There were also proposals from Qatar and Egypt to invest with Malaysian companies to set up production facilities in Malaysia. This is seen as a strategic move that will accelerate the commodities export to the regions.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
20 APRIL 2022