Malaysia set to sign trade agreement with China for palm oil and agricultural commodities
25/06/2024 (Oils & Fats International) - The Malaysian government is set to sign a trade agreement with China for palm oil and agricultural commodities later this year, The Star reported the country’s deputy Plantation and Commodities minister Chan Foong Hin as saying.
The memorandum of understanding (MoU) would also be a milestone to mark 50 years of diplomatic relations between Malaysia and China, Hin was quoted as saying in the 10 June report.
“With our collaborative efforts, palm oil trade will deepen and continue to reach new historic highs,” he said, adding that increasing exports of palm oil products to China was part of the ministry’s new direction.
China had been Malaysia’s largest trading partner for 15 consecutive years, he said.
“In 2023, Malaysia exported RM192.2bn (US$40.8bn) worth of goods to China, with agricultural commodity exports accounting for over RM20bn (US$4.2bn),” Hin said.
“Exports of palm oil and its products take the largest share … at RM11.03bn (US$2.3bn), followed by rubber (RM5.43bn/US$1.15bn)), timber (RM2.83bn/(US$601M), cocoa (RM684M/US$145M), tobacco (RM18.43M/US$3.9M) and pepper (RM11.88M/US$2.4M).”
Although Hin said he had received many requests about expanding palm oil exports to China, Malaysia’s production had stagnated at about 18M tonnes/year of crude palm oil.
Of the 18M tonnes, 3M tonnes had been allocated for domestic consumption, while the remainder was exported to China and other global buyers.
“The real question is how we can maximise the value of those 18M tonnes,” he said.
Palm oil production in Malaysia is limited as the country has capped the number of oil palm plantations at 6.5M ha to preserve primary forest cover.