by SHAHEERA AZNAM SHAH / pic by MUHD AMIN NAHARUL

CHINA has agreed to import an additional 1.9 million tonnes of palm oil from Malaysia, estimated to be worth RM4.56 billion, to be delivered until 2023.

Ministry of Primary Industries (MPI) said the Malaysia Palm Oil Council (MPOC) and China Chamber of Commerce of Foodstuff and Native Products (CFNA) signed a memorandum of understanding (MoU) yesterday to raise China’s palm-related investment in the country.

“MPOC had signed the MoU with CFNA in Beijing yesterday. The primary objective of this agreement is to increase investment and collaboration between both countries in the palm oil industry.

“China remains Malaysia’s main trading partner for palm oil and palm oil based products, after the European Union and India,” MPI said in a statement yesterday.

According to MPI, the import value is based on the average palm oil price in 2018, which was estimated at US$600 (RM2,490) per tonne at an exchange rate of RM4 per US$1.

Under the MoU, both countries also agreed to facilitate further investment in biofuel for the aviation industry and food products.

“The agreement allows for capital investments in bio-jet fuel under RM2 billion and saturated fats RM200 million, subject to market feasibility,” the ministry added.

Both countries also agreed to promote the usage of China’s currency in palm oil investment, subject to the approval of Bank Negara Malaysia (BNM).

“Both countries will cooperate in dealing with several of the trade issues, among them is to encourage the use of the Chinese currency, yuan, for palm oil trading, subject to the approval of BNM.”

The agreement includes the promotion of investment and cooperation in new sectors in the palm oil industry.

“Among other initiatives agreed was for both countries to continue exploring and collaborating on new areas in the industry.

“Malaysia and China will periodically report on the implementation of the programmes and activities under the MoU through the Production Capacity and Investment Cooperation Working Group,” MPI said.

In 2018, China imported 3.07 million tonne of palm oil from Malaysia, which amounted to RM8.4 billion. MPI said the palm oil export value to the republic had declined last year compared to 2017.

Last month, China injected RM3.69 billion into Malaysia’s economy by purchasing 1.6 million tonnes of palm oil.