December 19 2003 - MALAYSIAN palm oil exporters should aggressivelypromote their products in China, ahead of the 2005 deadline for China toabolish tariffs on South-East Asian agriculture products under a freetrade agreement (FTA).

These companies stand to gain from the tariff-busting agreement which isexpected to throw China’s market for vegetable oils and fats wide open,Malaysian Palm Oil Promotion Council chief executive officer Datuk HaronSiraj said.

China currently imports about 2.4 million tonnes of Malaysian palm oil,which is 80 per cent of its total annual purchase, and this figure islikely to grow when the republic’s FTA with the region is implemented.

As the bulk of palm oil exported is used for edible purposes, the world’smost populous nation will most likely see increasing demand for palm oilin the future, auguring well for Malaysian exporters.

With China becoming an open market in 2005, Malaysian companies shouldgrab the opportunity to push and promote their palm oil ahead ofcompetitors, Haron told Business Times recently.

The FTA between China and Association of South-East Asian Nations, whichbegins on January 1 2005, will see some 590 Malaysian products tradedfreely including vegetable oils, cocoa products, and detergents.

Malaysia exports 1.3 million tonnes, or 10.8 per cent, of the 11.9 milliontonnes of crude palm oil it produces annually, which currently trades inthe region of RM1,800 per tonne.

Its total exports of palm oil products which include palm kernel oil,oleochemicals, palm-based products and palm kernel cake were valued atRM19.62 billion last year.

Malaysia’s palm oil sector is expected to see a reduction of exports toIndia as the country is turning to Indonesian CPO, which is being tradedat almost RM400 cheaper than the Malaysian commodity.

Despite the possible setback, Haron remained upbeat regarding the futureof Malaysian palm oil exports.

In the event that palm oil prices drop to between RM600 and RM700 pertonne, Haron said, the commodity can be converted into bio-diesel and usedas fuel which is more cost-effective than turning it into vegetable oil.

If times are bad, we still will not go hungry as palm oil is veryversatile and can be transformed into even fuel. However, we would like toretain the status of the commodity as a quality edible oil and only turnto bio-diesel as a last resort,” Haron said.