RI, Malaysia plan more palm oil-based products
RI, Malaysia plan more palm oil-based products
KUCHING, Malaysia (Reuter): Malaysia and Indonesia plan to
expand their oleochemical and downstream palm oil industries in a
big way to retain their share of the global vegetable oils
market, officials said.
The two oil palm growers, faced with increasing rivalry from
other edible oils, are working on various strategies to produce
more palm oil-based goods to boost foreign exchange earnings,
said officials from the palm oil research institutes of both
countries.
"We're suggesting that the export sector of palm oil be
optimized by going down to product development such as
cosmetics," Mohamed Arif Simeh, senior executive of the Palm Oil
Research Institute of Malaysia (PORIM), told Reuter.
Arif, who spoke on the prospects of the Malaysian palm oil
industry at an Asian vegetable oils seminar in east Malaysia's
Sarawak state, said in an interview that PORIM has recommended
incentives to encourage more downstream palm industries under a
new five-year industrial masterplan for Malaysia to be unveiled
on May 14.
"The government will decide on what exactly the incentives
will be," Arif said. "There are viable products which we can make
by deepening the oleochemicals industry, instead of letting the
Japanese and Europeans take advantage of these."
Arif said what PORIM was suggesting was basically a reversion
to the mid-1970s strategy, where Malaysia banned exports of crude
palm oil, forcing all exports of the commodity to be in the form
of refined oil or finished goods.
"This may have caused the West to be unhappy but we had some
value-added material to our palm oil exports," he said.
Although Malaysia produced 7.9 million tons of palm oil last
year to retain its position as the world largest grower of the
crop, its future in the business could not be guaranteed due to
land and labor constraints, said Arif.
"Historically, although production in 1995 was about six times
that of 1975 and export earnings higher by seven times, the
annual growth in export volumes have declined from an impressive
57.2 percent in the 1976-80 period to 2.9 percent currently," he
said.
Arif said the oleochemical sector in Malaysia was relatively
small, with marginal foreign investment.
Factories
There are now 11 factories with a combined annual capacity of
one million tons, compared to five companies with a capacity of
150,000 tons, when the sector began in the 1980s, he said.
"There is little product diversity and neither are there
efforts to invest in new product development," he said.
"The basic oleochemicals are being exported to developed
markets for conversion into higher value-added products such as
detergents, toiletries, cosmetics, textiles, plastics, rubber
products and pharmaceuticals."
Puryobo Guritno, director of Indonesia's Palm Oil Research
Institute, said the country's oleochemicals industry was moving
slowly, with only six out 15 licensed companies operating due to
a lack of technical support and expertise.
"We are now inviting foreign joint-venture partners," he told
Reuter.
He said palm oil producers could no longer depend on export of
raw material such as crude palm oil and palm kernel oil "as we
are competing with 16 other vegetable oils".