Palm Oil & Rubber

Palm Oil & Rubber

Palm Oil

Accounting for more than 5% of Malaysia’s annual exports, the palm oil sector has often been described as one of the key contributors to the national economy, and remains so with the sector moving up the value chain and introducing high-end palm products in food and health-based segments, among others. In the same vein, efforts have been taken to further boost smallholders’ productivity amid increasingly limited agricultural land. This two-pronged approach toward a more efficient palm oil supply chain targets to generate RM178 billion in GNI by 2020 through the implementation of 8 EPPs.

Once Malaysia’s leading cash crop, farmers’ decision to switch from tapping rubber to growing oil palms in Malaysia in the 1980s contributed to the decline in natural rubber production. This NKEA hopes to turn the situation around through improvements and enhancements to the industry’s upstream activities, and ensuring availability of domestic supplies to develop higher-valued rubber products.

List of EPPs
  • Legend
  • Operational
  • Work In Progress
  • Not Started
    Palm Oil & Rubber
    NoEPPs2020 GNI (millions)JobsLocationStatus
    EPP 1
    Accelerating the Replanting and New Planting of Oil Palm4,612.0N/A Nationwide 
    EPP 2
    Improving Fresh Fruit Bunch Yield10,172.71,600Nationwide 
    EPP 3
    Improving Worker Productivity1,692.482,500Nationwide 
    EPP 4
    Increasing the Oil Extraction Rate (OER)13,711.110,000Nationwide 
    EPP 5
    Developing Biogas Facilities at Palm Oil Mills2,934.02,000Nationwide 
    EPP 6
    Developing High Value Oleo Derivatives and Bio-Based Chemicals5,813.505,858Johor, Penang, Selangor 
    EPP 7
    Commercialising Second Generation Biofuels3,261.51,044Sabah 
    EPP 8
    Expediting Growth in Food and Health-Based Segment4,924.7082,500International 
    EPP 9.1
    Ensuring Sustainability of the Upstream Rubber Industry3,244.2233,766Nationwide 
    EPP 9.2
    Increase World Market Share of Latex Gloves to 65% by 202020,75029,000Selangor 
    EPP 9.3
    Commercialising Ekoprena and Pureprena1,300560Negeri Sembilan 
    Business Opportunities

    Malaysia’s palm oil industry is expected to grow in the next decade, powered by business opportunities in upstream expansion, development of existing downstream palm oil activities, as well as biodiesel production worth RM57.6 billion by 2020. These business opportunities aim to address key challenges to the industry, which include increasing mechanisation to reduce the plantation industry’s dependence on labour and raise yields.

    • BO 1Expansion of Plantation Land Bank
      Faced with increasing production costs and limited suitable lands available in Malaysia and Indonesia, local palm oil plantation companies are turning to new areas in Myanmar, the Philippines, and even West African nations to expand upstream activities.
    • BO 2Development of Existing Downstream Activities
      Malaysia is currently the world’s largest commercial exporter of tocotrienols, exporting RM50 million of the supplement to major markets (USA, Europe, Japan and South Korea). With increased awareness on the advantages of tocotrienols, the palm oil-based supplement industry could be poised for growth in the coming years.
    • BO 3Development of National Biodiesel Activities
      Besides helping to reduce greenhouse gas emissions, the higher blend of biodiesel—from 5% to 7% palm biodiesel with 95% petroleum diesel by the end of 2014—will enhance palm oil utilisation, reduce palm oil stocks and boost prices.

      The B5 biodiesel programme was implemented in stages since June 2011 across Malaysia. By July 2012, the Cabinet had mandated the implementation of the programme across the nation. As of November 2013, 35 depots nationwide with inline blending facilities had been set up by the Government and participating petroleum companies. As of May 2014, 21 biodiesel plants have been commissioned since 2006 with total production capacity of 2.96 million tonnes per year.

      Beginning November 2014, the Government has implemented the biodiesel B7 (blend of 7% palm biodiesel with 93% petroleum diesel) in Peninsular Malaysia. B7 will be supplied to Peninsular Malaysia in stages involving 2,952 retail stations, fisheries, fleet users and skid tanks for transport starting December 2014. The implementation of the B7 programme in Peninsular Malaysia will utilise 439,000 tonnes of biodiesel per year which will contribute to savings of 508 million litres of diesel a year. The plan was implemented in Sabah and Sarawak in December 2014 in stages.

      This followed the Cabinet approval for the implementation of the programme for the transportation and fisheries sector in stages on 17 October 2014. Depending on the readiness of the 15 petroleum depots equipped with biodiesel blending facilities in East Malaysia, it is anticipated that the whole of Malaysia will be using B7 in 2015.

      The B7 programme in East Malaysia will contribute to an increase 137,000 tonnes of biodiesel per year with savings of 159 million litres of diesel a year. As a whole, the B7 biodiesel programme for Malaysia will see the consumption of 576,000 tonnes of biodiesel and contribute to savings of 6.7 billion litres of diesel a year for the transportation and fisheries sector.

      The development of National Biodiesel Activities through the blending of palm biodiesel in the national diesel supply is an integral part of the policy.
    Economic Transformation Programme
    The ETP Transformation Story
    The Economic Transformation Programme (ETP) is a comprehensive effort that will transform Malaysia into a high-income nation by 2020.
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