Challenges for the Palm Oil Industry

Malaysia is the world’s second largest palm oil exporter, just behind Indonesia.


The declining of global palm oil demand began way before the Covid-19 pandemic, when the European Union (EU) imposed a ban on the community.


Sabah is the biggest palm oil producing state in Malaysia. Due to the MCO, several palm oil plantations in the state were forced to shut down by the state government.



On April 20, FGV Holdings Berhad halted the operation of five palm oil plantations in Sabah’s Sahabat region.


Several positive Covid-19 cases were recorded in the region; hence it is currently under Enhanced Movement Control Order (EMCO).


FGV also supported Sabah’s state government for allowing palm oil plantations in six districts to operate after weeks of temporary closure.


Overall, FGV was seen to be only concentrating on Sabah when it comes to the issue of palm oil.



According to media intelligence, FGV was not popular in the mainstream media. It was covered the most by the national news agency Bernama. But it did not attract the attention of Astro Awani.


Nevertheless, FGV attracted business media such as The Edge Markets and Focus Malaysia. The news reported by the business presses were about the palm oil operation in Sabah.



In addition, Sabah state government gave special permission for jetties involved in the transportation of palm oil, oil and gas to operate. However, the export for palm oil products have declined by 41.7% during the MCO.


According to the Malaysian Palm Oil Board (MPOB), Malaysia’s palm oil exports to India would possibly hit its all-time low due to the lockdown in both countries.



Previously, there was a strained relationship between Malaysia and India because of a remark made by then Malaysian Prime Minister Tun Dr Mahathir Mohamad.


The former premier said that India had invaded Jammu and Kashmir as he commented on the conflict in the region.


In return, India called for a ban on importing palm oil products from Malaysia. Besides, it is not difficult for India to find an alternative, which is to import from Indonesia.


As the current government has changed, it is advisable for Malaysia to rekindle its bond with India, which would benefit the local palm oil export.