KEYNOTE ADDRESS BY

YAB DATO’ SRI HAJI FADILLAH BIN HAJI YUSOF
DEPUTY PRIME MINISTER AND
MINISTER OF PLANTATION AND COMMODITIES

PALM LAURIC OIL CONFERENCE AND EXHIBITION 2023,
7 MAC 2023, SHANGRI-LA HOTEL, KUALA LUMPUR

Bismillahirrahmanirrahim

Salutation

Assalamualaikum, Salam Sejahtera and Salam Malaysia Madani,

1. I would like to record my appreciation to Bursa Malaysia for taking the initiative to organize the annual Palm & Lauric Oils Conference & Exhibition 2023 (POC2023). I am honored to be a
part of this prestigious event alongside various stakeholders from the oils and fats market. Today’s gathering marks the 34th Anniversary of POC. This is indeed a milestone, and I hope this
event will continue to grow as an important platform in the palm and lauric oils industry.

Ladies and gentlemen,

2. The palm oil sector has been instrumental in the socioeconomic development of the rural population and is one of the backbones of the Malaysian economy. This industry has contributed
significantly to the Malaysian Gross Domestic Product, foreign exchange earnings including generating employment opportunities and in uplifting the standard of living in Malaysia. This industry continues to be the main driver of the agricommodity sector in Malaysia.

3. In 2022, Malaysia produced 18.45 million metric tonnes of Crude Palm Oil (CPO), an increase of 1.9% from 2021 at 18.12 million metric tonnes. The total revenue of palm oil and other palm-based products in 2022 stood at RM135 billion, higher by 24.4% as compared to RM108.52 billion in 2021 due to higher export prices in 2022.

4. Rest assured, the Government of Malaysia will continue to facilitate the industry through an effective ecosystem to spur the growth of the palm oil industry, especially in creating niche products and high value added downstream activities. Thus, it is my hope that the industry will share the same vision and support the government initiatives in its aspiration of promoting shared prosperity.

Ladies and gentlemen,

5. As most of us are aware, the palm oil industry has met its fair share of skeptics and debates. In November 2021, the European Union introduced the European Deforestation-free Regulation
(EUDR) as part of the EU Green Deal, to limit deforestation caused by the consumption of agricultural commodities and products from around the world. The regulation list palm oil as one
of the commodities that drive deforestation and forest degradation through the expansion of agricultural land. As a result, the implementation of EUDR is expected to significantly impact the
use of palm oil in the EU, and create a negative image of Malaysian palm oil, which will lead to a reduction in exports to the EU and possibly globally. Needless to say, we are not taking the
issue lightly, and the government and industry are working hand in hand to counter this negative campaign and unfair narrative, which we view as nothing less than an attempt at creating another trade barrier for palm oil . We are even joining forces with other Palm oil producing countries to ensure that our palm oil is not grossly misrepresented.

6. That said, The Malaysia palm oil industry must continue its ongoing efforts in ensuring that palm oil production does not negatively impact environmental well-being. It is important for palm oil producing nations to highlight the measures we have taken in order to achieve that goal. At the same time, it is pertinent for the Malaysian palm oil industry to continue to support the
production of sustainable palm oil, in particular the Malaysian Sustainable Palm Oil (MSPO) in line with world demand. Malaysian palm oil meets the stringent requirements of consumer
markets, and is risk free for its buyers. Through MSPO, sustainability issues raised, particularly biodiversity loss, land conflict, deforestation and forced labour are addressed. I would like to stress that food safety concerns must also be given the utmost priority and I commend all the efforts taken by the industry to ensure that health and safety are not compromised.

7. In addition, the Government has been aggressively promoting the certification of palm oil to industry players since the initiation of the MSPO certification standard. As of 31 January 2023, the uptake of MSPO has been well received by the industry, as more than 97% of oil palm planted areas and more than 98% of palm oil mills in Malaysia have been MSPO certified. There have also been several collaborations for a continuous commitment on the production of sustainable palm oil. Among them is a strategic partnership between the Malaysian Palm Oil Certification Council (MPOCC) and Bursa Malaysia Derivatives Berhad (BMD) to promote sustainability-related initiatives in the palm oil sector. Through this collaboration, MSPO-certified CPO is integrated intothe derivatives market delivery process through BMD’s Crude Palm Oil Futures (FCPO) and East Malaysia Crude Palm Oil Futures (FEPO) contracts. Hence, all FCPO and FEPO must be traded from the MSPO-certified palm oil mill beginning 1 April 2022. This mutually beneficial partnership is seen as a platform to promote sustainability and responsible practices among palm oil players across the supply chain. As such, Malaysia further reiterates its openness to work and collaborate with other organizations and importing countries, especially towards better understanding, acceptance, and recognition on the sustainability efforts and initiatives made by our palm oil industry.

Ladies and gentlemen,

8. The world population is growing steadily and the world is under pressure to meet global demands for food and fuel. We need crops that are sustainable and productive. Palm oil, being the
most productive crop in the world can meet this growing demand and provide the food security that our world needs. Besides providing the oils and fats needed for the world population, palm
oil has been found to be versatile in its applications.

9. Apart from that, we have also seen how the global oils and fats market took many turns since 2019 driven by many major events such as the COVID-19 pandemic, international conflicts, droughts and floods that have affected the global supply chain as a whole. The impacts of these events are felt even now. It is also during these occasions, the interlinkages of the usage of palm oil in various industries, from food to livestock, indicate the prominent role played by this commodity.

10. In addition, I believe there is an urgent need for the industry to focus on technological advancement within the agricommodity sector. I strongly urge the industry to consider investing more in mechanization and automation, given that stable palm oil price have contributed to higher profits so far. As such, it is the right time
to reinvest for the betterment of the industry by tapping into the latest agricultural technologies. Both domestic and foreign technology firms are encouraged to develop cutting-edge solutions
to boost the use of mechanization in oil palm plantations. This should be the way forward for the industry at large. In this regard, as announced by our YAB Prime Minister in the 2023 Budget on 24 February 2023, the Government will provide RM50 million in matching grants to promote automation in the plantation sector through the use of robotics and artificial intelligence (AI).

Ladies and gentlemen,

11. The Ministry applauds Bursa Malaysia’s effort in its Carbon Trading platform. In this regard, I would like to draw your attention to the fact that my Ministry is currently charting an implementation plan for carbon as a commodity. The Ministry is also currently developing a National Biomass Action Plan that includes 5 sectors (plantation, agriculture, livestock, fisheries and forestry) and is expected to be completed in July 2023. My aspiration is to have a sustainable circular economy within these sectors by the systematic use and processing of biomass into high-value added products which can generate additional income to the industry as a whole. One of the high-impact project that will be embarked by
MPOB within the 12th Malaysia Plan will be the production of lignocellulose from biomass that can be utilized in various sectors such as food, pharmaceutical and cosmetic industries. I hope my Ministry together with Bursa and relevant agencies will continue the collaboration in this endeavor.

12. Before I end my speech, I would like to highlight that palm oil prices, similar to any other commodity prices; are subject to price volatility. Hence, companies must effectively manage price risk. One of the mechanisms to manage such risk is through hedging and leveraging on crude palm oil futures contracts (FCPO). In this regard, I applaud Bursa Malaysia Derivatives FCPO contract which has served as the global price benchmark for palm oil. I hope the FCPO will continue to be an important platform for traders all over to do their activities and encourage the competitiveness of contract pricing.

13. With that, I would like to once again congratulate Bursa Malaysia for organising this conference, and to the delegates, I wish you a productive time here.

Thank you.