By SHAHEERA AZNAM SHAH / Pic By BLOOMBERG
Malaysia’s palm oil production is able to fill the shortage of edible oil in China as a result to its global trade conflict with the US.
IOI Corp Bhd group CEO Datuk Lee Yeow Chor said Malaysia could be exporting between two million and three million tonnes of palm oil to China yearly.
“The feedback we have received from Chinese oil-based producers is that they have definitely stopped buying soybeans from the US due to the 25% tariff.
“They can import soybeans from other countries, but it could never replace the amount of supply from the US. As such, they have agreed that Malaysian palm oil can fill the edible oil gap,” he said at the group’s AGM in Putrajaya last Friday.
Lee, who is also the Malaysian Palm Oil Council (MPOC) chairman, said the strong export activities to China would only be seen at the beginning of 2019 as the republic is still high on its edible oil stock.
“We will have to wait at the moment because (China’s) vegetable oil stock is relatively high.
“We expect that they would want to replenish the stock early next year when it runs low, and (that would see) more of our palm oil imported by China,” he said.
The US and China have been involved in a trade war and exchanging a list of tariff goods, resulting in the 25% import tariff on US soybeans by China, which came as a response to the tariff on Chinese goods worth US$34 billion (RM141.94 billion).
On Oct 22, Primary Industries Minister Teresa Kok told the Dewan Rakyat that the trade conflict between the two countries had led to higher exports of Malaysian palm oil up until August 2018.
She said Malaysia’s export of palm oil to China rose 9.3% to 1.81 million tonnes between January and August this year compared to 1.65 million tonnes during the first eight months of 2017.
Meanwhile, on the recent maiden visit by the European Commision to Malaysia, Lee said the representatives from the Malaysian Palm Oil Board and MPOC had extensively expounded on Malaysian palm oil cultivation and processing practices.
“The minister (Kok) has managed to convince the European Commission to send delegations to Malaysia and allow us to participate in the panel that looks deeper into the indirect land use change.
“It is a good sign that they are open to coming to Malaysia and our palm oil agencies will be able to give them the correct figures on our palm oil industry, which is important in determining the level of risk of biofuels,” he said.
Commenting on the upcoming Budget 2019 which will be tabled this Friday, Lee hopes that the government will solidify its intention to implement the B10 biodiesel programme in order to address the palm oil’s falling price and higher inventory.
“The government should push towards B10 biodiesel as there have been enough consultations with the stakeholders and carmakers.
“It is time for the government to make a decision and revive its earlier policy on implementing the B10 for transportation, while considering at least B7 for industrial use,” he said.
Lee added that palm oil producers are also hoping for more investment grants and incentives to be allocated by the government for the downstream segment.
“We hope the government will continue to give investment grants and incentives to new downstream enterprises and to foreign downstream companies that have the high-technology equipment,” he said.