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Last Updated: 12 October 2022

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MEDIA STATEMENT
MALAYSIA TO SUPPORT MODERNISATION OF CAMBODIAN
PLANTATION SECTOR
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1. CAMBODIA which recently ushered in the 65th anniversary of diplomatic relationship with Malaysia can be a land of opportunity for Malaysian downstream palm oil players who are keen to tap overseas markets.

2. As it is, Cambodia which has a population of 17 million is a large importer of Malaysian agriculture products, especially palm oil. In fact, trade volumes between the both countries have only gone up over the years. In 2021, Cambodia imported over seven million tonnes of palm oil compared with only over one million tonnes in the previous year.

3. In this regard, apart from making the Kingdom an export destination for a myriad of palm oil-related products, the Malaysian partner can embark on technology and know-how transfer which will ultimately assist the Cambodian agriculture and plantation sectors to achieve their full potential.

4. In the case of Cambodian rubber products, Malaysia is already a reference point for the standards. The same can be replicated for downstream palm oil products with more Malaysian companies investing in the development of Cambodia’s palm oil sector.

5. Malaysia is currently Cambodia’s third largest investor in Cambodia behind China and South Korea with foreign direct investment (FDI) worth US$3.53 bil from 1994-2020. Thus far, Malaysia’s investments are mainly focused on the banking, telecommunications, power generation and entertainment sectors. In 2021, bilateral trade between Cambodia and Malaysia was worth US$503.004 mil, up 13.03% over the previous year, according to the General Department of Customs and Excise of Cambodia (GDCE).

6. Cambodian exports to Malaysia stood at US$101.32 mil, up 2.22% while imports totalled US$401.7 mil, up 16.1%. All-in-all, the kingdom’s trade deficit with Malaysia for last year expanded by 21.71% to US$300.37 mil. Major Cambodian exports to Malaysia comprise milled rice, oil palm fresh fruit bunches (FFB), peppercorn, rubber, fabrics, electrical components, and other
industrial and agricultural products, while key imports include auto parts, food and beverages (F&B) and electronics products.

7. With the economy of both countries is recovering well from the COVID-19 setbacks, the Malaysian palm oil is once again penetrating into new markets with international road shows to energise the palm oil market gaining momentum. With over 70 years of experience in palm oil production. Malaysiais capable of enabling Cambodia to play catch-up to its achievement within a
span of five years with rapid technology and knowledge transfer.

8. Rest assured that European Union’s (EU) anti-palm oil campaign has not affected Malaysia’s production or exports. The allegations levelled on Malaysia over forced labour and destruction of the environment are baseless. In fact, 35% of the Malaysian palm oil bears the internationally-acclaimed Malaysian Sustainability Palmolien (MSP) certification. No other country in the world has this level of certification for their palm oil.

9. To complement palm oil downstream players who are interested in solidifying their overseas business presence, I wish to highlight that the Ministry of Plantation Industry and Commodity (MPIC) has embarked on the “Global Movement to Champion the Goodness of Palm Oil” campaign to spark awareness about the high quality of the Malaysian palm oil as well as to counter the various misinformation levelled at the country’s golden oil.

10.The Ministry is committed to strengthening the Agricommodities sector from time to time, especially the palm oil sector, to be stronger, competitive and market-oriented to meet the country's socio-economic development agenda.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
CARETAKER MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES
12 OCTOBER 2022

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Last Updated: 04 October 2022

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MEDIA STATEMENT
CPO PRICE WEAKNESS IS TEMPORARY; MPIC TO FOCUS ON LONG-TERM EDIBLE
OIL VIABILITY
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1. It has to be accepted that the softening of the Malaysian palm oil futures in recent times is pretty much expected in view of the weak global stock market, arising from inflation-induced interest rate hikes which have now triggered recessionary concerns.

2. Although CPO prices have come off their peak levels that exceeded RM8,000/metric tonne in March 2022 when the Russia-Ukraine conflict sparked a shortfall in sunflower oil, Kenanga Research has forecast “a still decent” average CPO prices of RM4,500/MT for 2022 and RM4,000/ MT in 2023.

3. Production costs may be pushed up by rising fertiliser, labour and transportation costs but all-in-all, costs should stay within the RM2,000 to RM2,500 per MT range, translating to still rather healthy upstream margins for the plantation sector.

4. As it is, both palm oil (circa 35% market share) and soybean oil (circa 25% share) remain the main edible oils in the world market although palm oil production has peaked while the US soybean harvest has just started for 2022.

5. Therefore, planters – both large corporations and smallholders – must have faith in the golden crop given demand for edible oil has been growing steadily for decades supported by rising population, affluence – and to some extent – more urban lifestyle.

6. On average, consumption grew 3% year-on-year (y-o-y) during the recent decade while the 30-year average standing is even higher at 3.6% a year, according to the Kenanga Research report dated 28 September 2022 which reiterated its “overweight” outlook on the sector. Long-term prospect in tact

7. It is inevitable, however, that the negative impact of COVID-19 on economic activities, most notably the hospitality, travel and tourism sectors have weighted down palm oil demands to around 1% y-o-y since 2020.

8. However, the market report expects a reversion back to 3% growth as the global economy is gradually opening up again.

9. While concerns have been raised about demand staying subdued or even worsening due to an ensuing global economic slowdown amid hot inflation, rising interest rates and recession fears, such likelihood is only temporary as China which is a major palm oil consumer can be expected to gradually relax its zero-COVID-19 policy that has in a way hindered palm oil consumption and demand.

10.Most of all, the fundamental demand drivers are food and fuels, essential day-to-day consumables and above all else, Indonesia – the largest user of palm oil and palm biodiesel – has resumed road testing the B40 biodiesel since late July after a five- month delay. Indonesia currently runs a B30 blend with plans to adopt the B40 mix sometime this or next year.

11.Encouragingly, Malaysia’s plantation sector has also progressed with many larger concerns having already embraced the environmental, social and governance (ESG) principles as part of their day-to-day operations.

12.A testament to the success is that about 16 million MT of palm oil is now Malaysian Sustainable Palm Oil (MSPO)-certified as well as meeting some of the highest ESG standards for agriculture produce worldwide.

13.As observed by Kenanga Research, the better managed plantation groups are not resting on their laurels but pushing towards even higher palm oil yields of 6 MT per hectare which is about 10 times more efficient than other oil crops.

14.In the upcoming Budget 2023 which will be tabled on Oct 7, the Ministry of Plantation Industries and Commodities (MPIC) is pushing for a fundamental shift in strategy by focusing on intensive, yield and investment-driven growth in line with the increasing emphasis on sustainability by major producing nations and consuming markets.

15.Additionally, MPIC has also embarked on “The Global Movement to Champion the Goodness of Palm Oil” campaign to further complement efforts to boost awareness of the quality of the Malaysian palm oil as well as to counter the various misinformation and false allegations levelled at our golden oil.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
3rd OCTOBER 2022

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Last Updated: 04 October 2022

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MEDIA STATEMENT
MPIC ENSURES SUSTAINABILITY OF MALAYSIA’S KEY
AGRICOMMODITY PRODUCTS THROUGH DAKN 2030

1. Contrary to expectation, the two-year COVID-19/MCO (Movement Control Order) period of 2020-2021 were ‘booming years ’for Malaysia’s Agricommodity products with an overall increase of 64% from the pre pandemic period of 2018-2019.

2. Despite the country facing numerous economic devastations from the raging COVID-19 pandemic, the export value of Malaysia’s Agricommodity products remained strong, rising significantly over the four-year period from RM127.9 billion in 2018 to RM128.5 billion (2019) to RM151.3 billion (2020) and RM209.6 billion (2021).

3. To sustain the potential and growth of Malaysia’s Agricommodity industry, the National Agricommodity Policy 2021-2030 (DAKN 2030) was launched in March 2022 to further drive the
development of the country’s Agricommodity sector in a more sustainable, competitive and market-oriented manner. This is in tandem with new norms and increased leverage on digital technology in the post-COVID-19 era.

4. In essence, DAKN 2030 contains five core thrusts:

(i) sustainability;

(ii) productivity;

(iii) value-added creation;

(iv)market development; and

(v) inclusivity.

5. Below are six Agricommodity products that will benefit directly from the implementation of DAKN 2030:

(i) Palm oil: Efforts will be undertaken to increase exports and reduce stocks through export duty exemptions for crude palm kernel oil (CPKO) and processed palm kernel oil (RBDPKO) for
companies that meet the application criteria. As a result, the price of crude palm oil (CPO) has stabilised again while showing an increasing trend from June 2020 until now. In tandem with this is implementation of the Malaysian Sustainable Palm Oil (MSPO) certification to brand sustainable and quality Malaysian palm oil as well as strengthening strategic cooperation with Indonesia through the Council of Palm Oil Producing Countries (CPOPC).

(ii) Rubber: Plans are afoot to extend the use of rubber in Malaysia to road construction and the production of new and value-added products based on rubber such as seismic bearings, rubber gloves and others. At the same time Malaysia will co-operate with the world's main rubber producing countries namely Thailand and Indonesia under the framework of the International Tripartite Rubber Council (ITRC) to strengthen and stabilise international rubber market prices;

(iii) Timber: Malaysia will expand its participation in domestic and international timber, furniture and construction exhibitions to create demand for Malaysian timber products and to increase
networking and business opportunities in relevant countries; and At the same time, the country plans to increase cooperation between relevant agencies such as the Malaysian External Trade
Development Corporation (MATRADE) and the Malaysian Communications and Multimedia Commission (MCMC) to encourage the timber industry to expand access to the digital market through digital exhibition participation as well as to encourage marketing through digital platforms such as AliBaba and MineBizs, among others.

(iv) Cocoa: DAKN 2030 seeks to implement the Domestic Market Support Service Programme (KSPD) by helping cocoa farmers market their beans with reasonable purchase price offers, thus
reducing the activities of middlemen who offer uncompetitive prices. Additionally, efforts will be directed at carrying out virtual promotional activities where the industry has attended several
virtual exhibition programmes through webinar, zoom stage presentation, live chat and online business matching platforms.

(v) Pepper: A potential effort is to directly sell pepper and its related products to special or niche markets to increase the competitiveness of the Malaysian pepper industry; This entails the
introduction of value-added pepper products such as sterile pepper (Mikrokleen) and pepper powder for markets that are more concerned with food safety and quality as well as farm-level
specialty products such as creamy white pepper (LPK). So far, the Malaysian Pepper Board (MPB) has successfully penetrated the value-added pepper product market and the special pepper
market in Japan, Sweden, South Korea, China, Taiwan, Hong Kong, Spain and Polynesia, to name a few markets.

(vi) Kenaf: The initial plan is to introduce cluster farms of 20 to 50 hectares to replace small-scale farms that are less economical and cultivated by existing kenaf growers. Additionally, the focus is also to develop a Research Centre for Research, Innovation Technology And Incubation Of Small Enterprises (RINTIS) to produce entrepreneurs in premium fibre processing activities apart from increasing the research and development (R&D) efforts of kenaf at upstream, intermediate and downstream levels.

6. MPIC is committed to sustain the country's agricommodity sectors in order to ensure continuous impactful economic recovery and improvement post COVID-19, despite facing the inflation
challenge predicted to be in 2023. DAKN 2030 is the guideline for the ministry in maximizing the potential of the circular economy through agricommodity biomass. This is to strengthen the position of the agricommodity sectors in economic recovery post COVID19.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
26th SEPTEMBER 2022

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Last Updated: 22 September 2022

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MEDIA STATEMENT
MPIC GRABS OPPORTUNITY TO PENETRATE BAKERY FATS
MARKET IN CHINA TO STRENGTHEN MALAYSIA’S PALM OIL
DOWNSTREAM SECTOR

1. THE encouraging outlook of China’s baking industry with baking fats (shortening) being one of the key raw materials augurs well for the downstream segments of Malaysia’s palm oil sector.

2. With baked goods such as cakes and bread becoming increasingly popular among the Chinese populace, so does the demand for palm oil-derived shortening and margarine which are both vital raw materials in the production of bakery-related products.

3. With the annual production of shortening in China far from meeting its growing domestic consumption demands which is escalating every year, the country has resorted to importing the main raw material from Indonesia and Malaysia whose export of shortening to China stood at 7,655 metric tonnes (MT) in 2021.

4. On the same note, China’s margarine market is also growing rapidly with an annual growth rate of 20%. The world’s most populous country which is also the second largest global economy
mainly imports margarine from Indonesia, with 650 MT coming from Malaysia in 2021, an increase of 10% from 590 MT in 2020.

5. Even though Malaysia’s ‘cake’ in China’s bakery industry is small at this moment, the world’s second largest palm oil producer is capable of expanding its market share in China’s bakery ingredient market with the right promotion and marketing strategies. With this is mind, home-grown shortening and margarine manufacturers should proactively weigh in on prospects of forging tie-ups with reputable bakery enterprises in China.

6. Although there are still sporadic lockdowns due to its ZeroCOVID-19 policy, the gradual re-opening of China’s borders to business travellers in the near future can serve as a good
opportunity for Malaysian bakery fats players to build business contacts, thus riding on this growing opportunity.

7. From 2017 to 2021, the market size of China’s bakery market has risen to 265.7 bil yuan (RM172.53 bil) from 187.7 bil yuan (RM121.88 bil) with an average compounded annual growth rate
(CAGR) of about 9% which is much higher than the growth rate of the global baking industry’s market size. It is expected that the market size of China’s baked food industry will reach 287.4 billion yuan (RM186.62 bil) in 2022.

8. Moreover, the registration of bakery-related companies in China has surged from 2,040 to 6,395 during the 2017-2021 period with an average CAGR of about 33%. In 1H 2022 alone, the number of registered Chinese bakery-related companies stood at 2,815. 2021 also saw the investment in China’s bakery industry topping 26 other industries with a total amount of 6.14 bil yuan (RM3.98 bil) which is attributable to post-COVID-19 recovery in economic activities.

9. To complement palm oil downstream players who are interested in solidifying their overseas business presence, I wish to highlight that the Ministry of Plantation Industries and Commodities (MPIC) has embarked on “The Global Movement to Champion the Goodness of Palm Oil” campaign as a platform to spark awareness about the high quality of Malaysian palm oil as well as to counter the various misinformation and false information levelled at our golden oil.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
21st SEPTEMBER 2022