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ETP ANNUAL REPORT 2011
Business Opportunities
Global demand for oils and fats, including palm oil, has grown
in the last decade driven by increasing world population, higher
incomes and changing dietary habits. Malaysia’s palm oil industry
is expected to grow over the next 10 years driven by three
business opportunities worth RM57.6 billion by 2020. These
Business Opportunities (BOs) involve expansion of upstream
activities, development of existing downstream activities
and development of biodiesel activities. The BOs address key
challenges to the industry which are increasing mechanisation
to raise upstream yields and filling the knowledge and expertise
gaps for downstream jobs.
Business Opportunity 1
Expansion of Existing Upstream Activities
Besides the steps taken in Palm Oil EPPs 1-4 to sustain upstream
activities, Malaysian plantation companies have begun to look for
land suitable for plantations abroad, focussing in Indonesia and
Africa. By 2020, companies are expected to have an additional two
million hectares in Indonesia, other parts of Southeast Asia and in
West Africa. This BO will potentially contribute an additional GNI
of RM17.6 billion by 2020.
Business Opportunity 2
Development of Existing Downstream Activities
Malaysia is already a major basic oleochemicals player and has
potential to grow by expanding the current production with stable
palm feedstock availability in Malaysia and increasing regional
demand. For the food and health based segment, the gradual
Summary of Palm Oil and Rubber NKEA
Incremental GNI Impact
2020 Target
RM230.9 billion
(inclusive of Rubber)
Additional jobs 41,600
Critical targets for 2012
Palm Oil
Accelerate the replanting of oil palm plantation backlog and development of new palm oil areas to 140,000 hectares
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Form 7 new regional cooperatives to group more independent smallholders together
Improve labour productivity via sales of Cantas and diamond sharpening tool
Improve national oil extraction rate to 21.05 per cent
Encourage uptake of connection to the Feed in Tariff system by biogas plants
Ensure completion of 21 biogas plants under construction
Rubber
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Accelerating the replanting of rubber estates backlog and development of new rubber areas by smallholders to 51,000 hectares
Ensure 12,000 tonnes of production of Ekoprena and Pureprena
increase in demand backed by a growing population is expected
to drive the increase in production of palm-based food and health
products. This BO will potentially contribute an additional GNI of
RM11.2 billion by 2020.
Business Opportunity 3
Development of National Biodiesel Activities
Malaysia has a large amount of unused biodiesel production
capacity. Out of the national capacity of 3.5 million tonnes, only
117,000 tonnes were produced by the biodiesel plants in 2010,
almost all of which are exported. To accelerate the development
of biodiesel usage in Malaysia and to reduce the CPO stockpile
in the market, the Government has introduced B5, a 5 per cent
biodiesel blend with petroleum diesel in 2011 in Klang Valley,
Negri Sembilan and Malacca as a start. This BO will potentially
contribute an additional GNI of RM1.6 billion by 2020.
Moving Forward
The Malaysian palm oil and rubber industry faces immense
competition from fast-growing competing producers such as
Indonesia and Thailand. The way forward is through productivity
improvements as well as accelerating the replanting and new
planting initiatives besides tapping into niche markets as
first movers to command a significant market share ahead of
competing nations. Continued efforts and collaborations between
the Government and the private sector will be vital to ensure that
the EPPs stay on track to meet the GNI target of RM230.9 billion
GNI in 2020.