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Malaysian palm oil industry fuels growth of biomass

As an area in which Malaysia has gained expertise and renown as a global leader, the local palm oil industry is poised to offer skilled foreign companies exciting opportunities in biomass production.

With the palm oil industry already contributing to 8%, or RM50 billion, to Malaysia’s Gross National Income (GNI) and the biomass market projected to contribute RM30 billion to GNI, foreign investors are also sure to reap value from the country’s position as the world’s second-largest producer of palm oil.

If we talk about opportunities in biomass utilisation, we have fertiliser, which is the lowest value, energy and palletisation. There is an international market for pallets and we can export to Korea, Japan or China at an international market price of around RM400 (US$125.54) per tonne.

“We can also use conversion technologies to convert biomass to fermentable sugars, and then into ethanol. That is about 3-5 years away from commercial scale, globally. We want that (conversion of fermentable sugars into ethanol) to happen in Malaysia and offer incentives for companies who want to do that,” said Bas Melssen, Executive Vice President and Head of Strategic Innovation at Agensi Innovasi Malaysia (AIM).

AIM was set up by the Government as a statutory body to drive Malaysia’s transformation into an innovation economy, towards its development into a high-income nation. Melssen said currently, biomass conversion technology mainly resides abroad. To attract companies with this expertise to Malaysia, the Government provides incentives structured around the participation of a local company in the biomass project.

This is to promote technology transfer and discourage foreign companies from exploiting the country’s natural resources.

For companies that invest with a long-term view, however, there is a wealth of opportunities to benefit from. These include the 4.85 million hectares of oil palm plantations in the country, which contribute to 37.3% of the world’s total palm oil production. In 2011 alone, Malaysia produced 16.99 million tonnes of palm oil a day, with steady production forecasted to continue in the next decade.

This provides valuable opportunities for the biomass sector, as every part of the oil palm tree can be used in the creation of biomass products. Capitalisation of these opportunities, meanwhile, will not only benefit companies investing the sector, but also the Malaysian economy.

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