Malaysia's palm oil industry has bolstered the economy since the colonial era. Palm oil continues to account for more than fve per cent of the country's annual exports. However, more needs to be done to boost production and generate high-value products to maintain Malaysia's position as the world's leading downstream palm oil player.
A major challenge faced by the local industry is limited land space. Nonetheless, oil palm planted area expanded to 5.23 million hectares while scientists have mapped the oil palm genome and small farmers have benefted from Government incentives to boost productivity. Efforts have also been taken to capitalise on opportunities in the downstream segment of the palm oil industry, such as in the food and health-based segments, which have shown strong potential for growth.
The push to move into higher-value segments of the industry accounts for a major initiative under this NKEA. However, the country still has further inroads to make in exploring downstream opportunities. In 2013, only 18.6 per cent of Malaysian palm oil exports were made up of downstream products, compared to the 81.4 per cent of exports comprising upstream products.
Therefore, it is imperative for Malaysian companies to invest further resources in downstream segments or in research and development (R&D) to ensure the industry’s long-term sustainability.
Measures under the Palm Oil NKEA are targeted to generate RM178 billion in GNI by 2020. Towards this end, this NKEA will continue focussing on increasing upstream productivity and value-adding downstream activities.