Navigating New Frontiers: Malaysia’s Palm Oil Industry and the Rise of Emerging Markets
As global trade dynamics continue to shift, Malaysia’s palm oil industry faces increasing pressure from traditional markets, particularly in Europe and North America, due to concerns over sustainability and environmental impact. In response, Malaysia is pivoting towards emerging markets and forging new trade partnerships that offer untapped opportunities for growth. Countries in Southeast Asia, Africa, and the Middle East are rapidly becoming key consumers of palm oil, driven by rising demand in food products, cosmetics, and biofuels. This strategic move not only ensures the continued relevance of Malaysia’s palm oil exports but also serves as a countermeasure to the challenges posed by trade wars and tariff barriers in established markets. By diversifying its trade partners, Malaysia aims to reduce dependence on Western markets, enhance resilience in the face of geopolitical tensions, and solidify its position as a global leader in palm oil production. This shift towards emerging markets presents new economic prospects for Malaysia, while also positioning the palm oil industry as a key player in the evolving global trade landscape.
Figure 6: Countries that import palm oil, 2023
Malaysia’s extensive palm oil production scale places it at the forefront of agricultural exports, with plantations spanning over 5 million hectares in Peninsular Malaysia and Borneo. This scale allows Malaysia to remain highly competitive in the global market, with palm oil accounting for approximately 5% of the country’s total exports. As demand for palm oil grows in emerging markets and among new trade partners, Malaysia continues to leverage its position to influence global trade flows.
New markets, especially in regions like Africa, the Middle East, and Southeast Asia, are increasingly driving demand for palm oil. This shift toward emerging economies highlights the diversification of Malaysia’s trade partnerships beyond traditional markets like India, China, the European Union, and Pakistan. As these emerging markets ramp up their consumption of palm oil, the strategic importance of Malaysia’s industry grows, positioning the country as a key player in shaping global supply chains.
Malaysia’s vast production network is now aligned with the rise of new trade corridors, allowing the country to forge economic and political ties with developing nations. The expanding role of Malaysia’s palm oil in sectors like food production, cosmetics, and biodiesel is not only a driver of economic growth but also places Malaysia in a powerful position to impact global pricing and trade policies, especially as these new trade partners become more integral to global agricultural markets.
Figure 2: Performance of Malaysian palm oil industry, February 2025
In the face of evolving global dynamics, one of the most effective strategies for growth in the palm oil industry is the exploration of emerging markets and new trade partners. While Malaysia’s palm oil has traditionally been exported to established regions, expanding trade relationships with emerging markets is becoming increasingly vital for the industry’s future. These emerging markets offer fresh opportunities for growth, diversifying export destinations and reducing dependence on traditional markets.
By targeting newer regions with growing economies and rising consumer demand, Malaysia’s palm oil industry can tap into a broader range of consumers. This helps to mitigate risks associated with reliance on specific markets, which can fluctuate due to political, economic, or social changes. Emerging markets in Africa, the Middle East, and Latin America represent untapped potential, where demand for edible oils is growing due to expanding populations and changing dietary habits. According to the Malaysian Palm Oil Board (MPOB), in 2023, Malaysia exported approximately 17.3 million metric tons of palm oil, generating over RM 75 billion in export revenue. While Europe, China, and India remain significant players, emerging markets are gradually taking a more prominent role. For example, countries in Africa and the Middle East are showing increased interest in Malaysian palm oil, driven by their growing food industries and expanding urban populations. By strengthening trade ties with these regions, Malaysia can further diversify its export base, ensuring the stability and sustainability of its palm oil sector in the long term.
Figure 3: Global palm oil exporting countries
The limited market exposure of Malaysia’s palm oil in the U.S. can be traced to a shift towards alternative oils, such as soybean and sunflower oil, driven by consumer health trends. These oils are gaining favor due to growing concerns about heart health and the rise of plant-based diets in the U.S. Palm oil’s environmental impact, notably deforestation and habitat destruction associated with plantations in Malaysia and Indonesia, has sparked regulatory scrutiny and increased pressure for more sustainable sourcing practices.
In response, Malaysia’s palm oil industry has begun shifting its focus to emerging markets with fewer regulatory challenges and greater demand for affordable edible oils. Countries in Asia, Africa, and Latin America offer new opportunities, where palm oil is an essential ingredient in cooking and processed foods, and where health concerns may not yet dominate consumer preferences. Malaysia has also been promoting its sustainability credentials through certifications like the Malaysian Palm Oil Certification Standard (MSPO), which highlights responsible production practices.
Moreover, Malaysia is diversifying its trade partnerships, seeking to strengthen ties with regions such as Africa and South America, where palm oil consumption is on the rise. These markets are seen as key to overcoming the stagnation in more mature markets like the U.S. While challenges remain in rebranding palm oil in the West, emerging markets present promising growth opportunities, ensuring Malaysia’s palm oil sector can thrive in a changing global trade environment.