Exports wish list: Malaysian palm oil sector reveals hottest prospects for overseas growth
When we spoke with the Malaysian Palm Oil Council (MPOC) last year, CEO Datuk Dr Wan Zawawi Wan Ismail had already shared the council’s plans to move beyond China and India – Malaysia’s current top export destinations for palm oil – in order to diversify the country’s export markets.
“The current palm oil market has only two major palm oil exporters with Indonesia taking about 70% and us taking about 26% to 27%, and it has been this way for some time now. [If] we don’t diversify our export markets and find new markets to break into, this will remain forever stagnant and Malaysia will never move beyond this 27%,” he told FoodNavigaotr-Asia.
“So we need to diversify to break away from traditional markets and this stagnation, and although India and China remain very important markets to us and will continue to be a focus, we are also focusing energies on other parts of the world.”
According to MPOC Director for Marketing and Market Development Faisal Iqbal, some of the key opportunities that the council has identified lies in emerging and developing markets, with the closest to home being other South East Asian countries such as Vietnam and the Philippines.
“Some key sectors of growth we have identified in this region are the foodservice sectors in Vietnam and the Philippines, as well as the consumer cooking oil market in the Philippines,” he said.
“The food service sector in the Philippines is estimated to see a CAGR of 4.67% over the next five years to hit US$9.3bn in value, and Vietnam is projected to grow by 8.65% to hit US$37.28bn. The edible oils market in the Philippines is predicted to grow 4.74% to hit US$2.36bn – [all] very optimistic numbers with good potential for palm oil entry.”
Looking a little further, MPOC has also identified countries in the Middle East and Africa as good potential markets, with the HORECA and food production sectors seen as the most likely to show higher demand for palm oil post-COVID-19.
“In Turkey for example, we have seen the confectionery products sector grow some 50% between 2010 to 2020, and this growth pattern is expected to continue on, which means that palm oil consumption will continue to grow here,” said Iqbal.
“Turkey is also very much of interest to us as it is in a strategic location to explore re-export opportunities to other regions such as the Balkans and Central Asia.
“Another good potential market here is Egypt, where palm olein is on an upward trend to meet a growing demand from the HORECA sector, particularly after the improvement of the tourism which was severely impacted by COVID-19 over the past two years, as well as for use in cooking oil.
“As for Sub-Saharan Africa, one major factor driving the attraction for us here is the continuous population growth, which is driving palm oil demand in this region. We know that locally-produced oils and fats here are not sufficient to meet local needs, therefore the demand for price-competitive palm oil is there.”
Kenya and Mozambique in particular were noted to have been registering consistent palm oil import growth numbers over the past two years, both to meet an uptake in local consumption as well as demand from landlocked countries such as Rwanda and the Democratic Republic of Congo.
In addition, Africa has one more potential advantage going for it – the African Continental Free Trade Area (AfCTA) was recently implemented in January 2021, which is expected to regulate the movement of goods within African countries and make these more consistent. If implemented well and successfully, this would create an environment of fewer logistical barriers for palm oil entry.
Developed countries also on the list
In addition to these, developed markets such as Japan and Dubai are also on MPOC’s hit list. Japan in particular is being eyes for its packaged food sector.
“The potential for the packed food sector in Japan for Malaysian palm oil is huge – this is expected to hit a value of US$204bn over the next five years, [and] as we know palm oil is very suitable for use in the food manufacturing sector due to its natural properties,” said Iqbal.
“There’s also Dubai which will be seeing a lot of B2B palm oil demand due to a post-COVID-19 impact where global events will start to be held, such as Expo Dubai.
“Other countries in the region will also be seeing a boost in demand due to global events, such as Qatar due to FIFA 2022, and Saudi Arabia due to the return of religious tourism. [What] we need to do now to break the barriers with all of these markets is to engage more proactively with them.”
To target these relatively new markets, MPOC has also laid out a spate of planned engagement activities across 2022 targeting food manufacturers, edible oil importers, HORECA stakeholders, government agencies and so on in the Philippines, Vietnam, Japan, Cambodia, South Africa, Algeria and more.
“MPOC’s focus in 2022 for new export markets is spread across almost 40 different locations around the world,” said Iqbal.
“We have planned multiple methods of engagement from seminars to conferences to road shows, site visits, digital platforms and more, [and we are confident in] that Malaysian palm oil export diversification to more global markets is possible.”