4/4/04 (The Star)  -  DESPITE the bullish development in biodiesel and continued palm oil demand globally, Malaysian palm oil stands to lose its competitive edge due to a lack of effective branding, marketing efforts and risk communication strategies.

This makes the commodity vulnerable to the revival of anti-palm oil campaigns in the West. 

The latest attack is from the European Union, which planned to restrict the entry of palm-based biodiesel into Europe for fear that further expansion of oil palm plantations would lead to deforestation and a loss of biodiversity.

In the late 1980s, the reputation of palm oil was badly tarnished by the American Soybean Association, which questioned the health aspects of the tropical oil.

Oilpalmworld Sdn Bhd advisor and former Malaysian Palm Oil Association chief executive officer M.R. Chandran told StarBiz that large allocation of funds were needed for effective market and risk communications strategies or “story telling” to the growing number of palm oil consumers worldwide.

 
M.R. Chandran
“We must push for larger investment in branding. The government must give more incentives to companies to undertake branding exercises. 

“Malaysia has been successful in producing this wonderful and healthy commodity but we are losing our competitive edge due to perception problems overseas as Malaysia is not branding its oil palm properly,” said Chandran.

He said despite the good research work undertaken by Palm Oil Research Institute, Malaysian Palm Oil Board, Malaysian Palm Oil Promotion Council and research and development centres of top public-listed plantation companies, “palm oil was still perceived as a cheap vegetable oil.”

“The tragedy is that we seem to be quite content in marketing the product at huge discounts to soy and rapeseed oil. All the good stories we have to tell are not being told properly,” he added.

Chandran said managing risk was also an important priority to ensure professionalism in the palm oil industry.

“As we progress towards an industrialised economy, Malaysia is wedged between Indonesia, India, China, Vietnam and other developing countries and the newly industrialised economies of South Korea, Taiwan and Singapore,” he said.

With Malaysia facing competition from the low-wage structured countries, Chandran said: “We have no choice but to move up the higher value-added sectors that require less labour. The unfortunate thing is we are producing more graduate job seekers and as a result, have large numbers of frustrated unemployed degree holders.”

He said issues like subsidies and complacency must also be addressed given the current slow foreign direct investment flows.