domestically, Malaysia remains the world’s largest exporter of palm oil and palm products. In 2011, it exported 24.3 million metric tons of the oil (Chin, 2011).
The Malaysian government has identified the palm oil industry as 1 of the 12 national key economic areas to spearhead its economic transformation program, whose goal is to transform Malaysia into a developed nation by 2020. The growth strategy for the palm oil industry is not to increase the acreage being planted with palm oil, but rather to increase production to 6 metric tons per hectare per year. “It is already a very productive crop,” Hisham Hashim said, “but we intend to increase productivity further through genetic methods and so on.” Another focus is on value-added downstream activities, such as processed foods, oleo derivatives, phytonutrients, and palm biodiesel.
Most of Malaysia’s palm oil–derived exports—almost 75 percent—are in the form of the crude palm oil itself, with products such as oleochemicals, palm kernel cake, palm kernel oil, and biodiesel making up far smaller percentages (May, 2012). The government would like to increase the amounts of these value-added products. “We are investing a lot in research and conservation to improve the products, especially the oleo chemicals and also the potential of turning it into biodiesel,” Hisham Hashim said.
The palm oil industry is a valuable segment of Malaysia’s economy; accounting for 8 percent of the country’s gross national income per capita, and is the fourth-largest contributor to Malaysia’s economy (RSPO, 2011). World palm oil production more than tripled between 1995 and 2011, so the global demand the palm oil products is very strong. In 2011, heavy rainfall, which disrupted harvesting, combined with increasing demand, caused the price of crude palm oil to jump to US$1,065 per metric ton. The main importers of Malaysia’s palm oil are China, the European Union, India, Pakistan, and the United States. Malaysia’s major competitor for these imports is Indonesia.
Palm oil has a variety of uses, Hisham Hashim said. Its traditional use has been as cooking oil, but it is now used as a food additive and an industrial lubricant as well as in the production of various cosmetic ingredients. “We have a very active palm oil research area in Malaysia that helped to generate these other important products,” he said. One