ASEAN: Regional Trends in Economic Integration, Export ... - USITC

BOX 8.1 Palm oil: Profile of ASEAN Integration a
Natural limits restrict the ability of ASEAN nations that are not palm oil producers to become more integrated with
existing ASEAN palm oil production industries. One reason is the need to locate mills close to plantations so that
the mills can begin processing the oil palm fruit very shortly after harvest (usually within 24 hours) before the fruit
and oil begin to spoil. b Palm oil is widely used and traded throughout ASEAN, with four countries producing
commercially significant amounts and all ASEAN countries consuming palm oil for food and nonfood purposes.
Most ASEAN members, however, grow few or no oil palm trees, having too little land (Brunei, Singapore) or too
unfriendly a climate (Burma, Cambodia, Laos, Vietnam) for commercial-scale palm oil production.
Although growing oil palm trees and producing crude palm oil may not be an option for these ASEAN members,
they consume it and are capable of refining crude palm oil and processing it into food (usually the majority of
consumption for poorer ASEAN countries) or industrial products (see table). c Vietnam, in particular, has a
growing refining capacity and is a draw for foreign refining investment, including from Malaysia, because of a
growing domestic market. d Most of the palm oil refined in Vietnam is likely to be consumed domestically, as that
country routinely experiences shortfalls in vegetable oil production compared with consumption. But Vietnam
reportedly sold several million dollars worth of palm oil to China in 2008, indicating that, as with other, much
smaller ASEAN palm oil producers, some trade occurs outside of the Indonesian and Malaysian markets.
Palm oil: Domestic consumption, by ASEAN country, type, and marketing year (thousand MT)
Country 2005/06 2006/07 2007/08 2008/09 2009/10 (est.)
Burma 304 330 365 375 390
Food 304 330 365 375 390
Industrial 0 0 0 0 0
Indonesia 4,255 4,523 4,651 4,467 4,914
Food 3,710 3,852 3,987 3,801 4,200
Industrial 465 586 579 581 629
Malaysia 2,926 3,109 2,986 2,995 3,277
Food 720 804 820 840 910
Industrial 1,986 2,080 1,936 1,920 2,080
Philippines 223 130 89 79 78
Food 200 110 68 64 63
Industrial 23 20 21 15 15
Singapore 50 50 76 105 105
Food 50 50 76 105 105
Industrial 0 0 0 0 0
Thailand 671 694 747 1,002 990
Food 388 350 397 500 500
Industrial 227 250 260 400 400
Vietnam 326 415 428 451 485
Food 326 415 428 451 485
Industrial 0 0 0 0 0
Source: USDA, FAS, Production, Supply and Distribution database (accessed May 4, 2010).
Note: The marketing year for Indonesia, Malaysia, and Singapore is October to September; for the
Philippines, Thailand, and Vietnam, January to December; for Burma, September to August. Figures may not
add to totals shown because of feed waste consumption.
a For a more detailed discussion of economic integration in free trade areas, such as that envisioned for the
ASEAN Economic Community, see chapter 1. See also Sally, “Regional Economic Integration in Asia,” 2010, 4–
5.
b USITC, hearing transcript, February 3, 2010, 43 (testimony of Rosidah Radzian, Embassy of Malaysia);
government official, telephone interview by USITC staff, April 16, 2010.
c Brunei, Cambodia, and Laos do not have confirmed consumption amounts during 2004–08, although their
proximity to price-competitive palm oil from Indonesia and Malaysia and the regional preference for vegetable oils
as a part of the diet strongly suggest that these countries, at a minimum, consume palm oil as a food. For Brunei,
its participation with Indonesia, Malaysia, and the Philippines in the EAGA, an initiative that encompasses
production, processing, and trade in palm oil, lends support for this conclusion.
d Industry representatives, interview by USITC staff, Kuala Lumpur, Malaysia, March 12, 2010.
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