Palm Oil Companies Urged To Venture Into Downstream Activities

JOHOR BAHARU, July 12 (Bernama) -- The government is encouraging more palm oil companies to venture into downstream activities to realase Malaysia's ambition of becoming an international hub for the industry.

Minister of Plantation Industries and Commodities Datuk Amar Douglas Uggah Embas said the ministry will dish out more incentives and programmes to attract an increased number of palm oil companies into downstream activities.

"The future of the palm oil industry depends on the capacity to develop the downstream activities. The government is confident that we can move ahead to make Malaysia an international hub for palm oil products for the future," he said here Saturday.

Uggah was speaking to the media after visiting IOI Loders Croklaan's intergrated palm oil plant in Pasir Gudang.

He said, Malaysia's palm oil industry needs to expand into downstream activities as its Crude Palm Oil (CPO) production is limited, alongside land for plantations.

In 2020, Malaysia's oil palm plantations are expected to reach the limit of 5.5 million hectares, producing 30 million tonnes of palm oil products, while the downstream industry has no such limitations.

Last year he said, palm oil exports were highly biased towards the upstream and mid-stream segments, with the total contribution to the overall industry at 74 per cent, while for downstream, it was a mere 17 per cent.

"There is big potential in the downstream segment where production provides a more lucrative per unit revenue stream at about 41 per cent higher than the output from the upstream sector," said the minister.

According to Uggah, the ministry has introduced two programmes, the EPP 6 (to produce high-value derivatives) and the EPP 8 (food and health) to drive more Malaysian palm oil companies into downstream activities.

He said RM2.27 billion in investment had been committed to date for both the EPP 6 and EPP 8, while RM427 million in grants have also been disbursed to ten Malaysian palm oil companies involved in downstream activities.

"So far, grants have been disbursed for the production of higher-value added palm oil derivatives such as surfactants, agro-chemicals, bio-polypols, bio-lubricants, glycerol derivatives, tocotrienols and carotenes," he added.


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