Friday, March 11, 2011

Malaysia should focus on new emerging markets

Malaysia, the world's second largest palm oil exporter, should focus on new emerging markets to offset declining sales in other countries like main buyers China and India.

TH Plantations Bhd chief executive officer Datuk Zainal Azwar Zainal Aminuddin said this would include markets such as Eastern Europe and Pakistan.

"We used to be number one but now overtaken by Indonesia. We have to be more aggressive in cushioning this.

"This effort should be spearheaded by the Malaysian Palm Oil Council," Zainal told Business Times at the sidelines of the Bursa Malaysia Palm and Lauric Oils Conference and Exhibition Price Outlook 2011.

Indonesia overtook Malaysia in 2007 to become the world's number one palm oil producer but traders said the republic continues to grab Malaysia's market share by selling cheaper palm oil to China and India.

As a result, Malaysia's exports to China and India have been declining over the past few years partly due to the undercutting.

India and China also protect their own vegetable oil farmers by increasing import tariffs.

IJM Plantations Bhd chief executive officer and managing director Joseph Tek Choon Yee however said the decline is more of a technical correction rather than Indonesia's move.

"The supply demand situation right now is simply too tight. Although Indonesia and Malaysia account for 85 per cent of the world's palm oil market share, there is still not enough palm oil for the world.

"I believe this is more of a technical correction, China and India demand will come back again in the future," said Tek.

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