top of page

A Brighter Future for Oil Palm

Malaysia’s oil palm industry has grown into one that has a strong competitive edge, based on its progressing efforts to support sustainable palm oil production.

Since 2015, Malaysia has taken a global leadership role in continuously implementing sustainable oil palm cultivation and palm oil process innovations.

IN 1905, a young Frenchman named Henri Fauconnier arrived in Malaya in search of opportunities for fortune.

Two years later, in 1907, Fauconnier planted some oil palm seeds for its oil at the Tennamaram estate in Batang Berjuntai, Selangor — making it the first commercial oil palm plantation which laid the foundation for Malaysia’s palm oil industry development.

Little did Fauconnier know, Malaysia’s oil palm industry would go through a boom leading to plantations occupying 5.67 million hectares.

Malaysia exported around 25 million tonnes of palm oil and palm-based products in 2022.

Malaysia’s palm oil industry was valued at around RM137bil, contributing 35 billion ringgit to the nation’s total gross domestic product (GDP).

Malaysia is currently the second largest producer of palm oil in the world. The country currently accounts for 23% of world palm oil production and 31% of world exports.

Oil palm is a perennial crop, with trees producing economically viable volumes of fresh fruit bunches (FFB) throughout its entire 25-year economic life cycle.

“The oil palm is the most efficient oil-bearing crop in the world, requiring only 0.28 hectares of land to produce one tonne of oil while soybean, sunflower and rapeseed require 2.24, 1.49 and 1.37 hectares, respectively, to produce the same,” said MPOC.

These high-yield characteristics of oil palm can be considered a promise for profitable returns, while its superior economic competitiveness sets it apart from other oil bearing crops.

Moving towards nett-zero

Switching to alternative vegetable oils would not reduce the impacts given that other oil bearing crops have much lower yields per hectare than oil palm.

Research shows that oil palm is a zero-waste crop, making the industry in line with the 12th Malaysia Plan (12MP) which outlines plans of a carbon neutral nation by as early as 2050.

Oil palm biomass can be exemplified in palm trunks, empty fruit bunches (EFB), fibre, or shells.

Meanwhile, its wastewater can be classified into palm oil mill effluent (POME) that is generated from the processing of FFB into crude palm oil (CPO).

Palm trunks can be utilised for organic fertiliser, mulching, particleboard, fibreboard, plywood, paper production, and others, while oil palm fruits will produce oil palm fibres, palm kernel shells, and EFB after being harvested and crushed to extract the oils.

Its fibre waste can be used in many things like mulching, furniture, mattress, ropes, and sticks, while shell waste can be used as solid fuels for steam boilers in palm oil mills, and the steam generated is used to run turbines for electricity production.

EFB waste can be made into a renewable biological resource called biofuel, cultivation of straw mushrooms, and animal feed, especially livestock.

Malaysian Oil Palm estate’s standard practices uses EFB as organic fertiliser and mulching for their field due to the high moisture volume and rich nutrient content.

The palm kernel cake by-product that is produced after the kernel oil extraction from the mesocarp can be processed into organic fertiliser and animal feed, while the last by-product produced after the processing step in the palm oil mill is called POME.

Biogas — generated from POME via methane capture facilities — can contribute to a substantial amount of energy, especially in areas with no electricity.

Some of the mills are using biogas as their biological energy to run the mill operation. This is a great way to ensure zero waste in palm oil production.

Furthermore, the oil palm leaf extract (OPLE) is rich in antioxidant activity, a finding which a Universiti Putra Malaysia’s research had also reported.

Sustainable production practices

The East Asia Forum had once mentioned that Malaysia has a competitive edge over Indonesia based on its progressing efforts to support sustainable palm oil production.

This is because Malaysia took a global leadership role in continuously implementing oil palm cultivation and palm oil process innovations aimed at making palm oil production more sustainable and environmentally friendly.

Malaysia is committed to the United Nations Sustainable Development Goals (UN SDGs) agenda 2030 to drive and attain higher sustainability commitment within the oil palm industry, as reflected in Malaysia’s national development blueprint, the 12MP.

In line with the UN SDGs, Malaysia introduced the Malaysian Sustainable Palm Oil (MSPO) certification scheme in 2015, requiring plantations, independent and organised smallholdings, as well as palm oil processing facilities to be certified sustainable.

MSPO, which was made mandatory beginning Jan 1, 2020, addresses critical issues on deforestation; biodiversity loss and conservation of high biodiversity value areas; issues relating to climate change; planting on peatland; fire; haze; greenhouse gases (GHG); employment and work conditions; child and forced labour; communal Native customary rights land and ownership rights as well as employee health.

In 2022, the MSPO standards were revised and streamlined to five principles — management commitment and responsibility; transparency; compliance with legal and other requirements; responsibility to social, health, safety and employment conditions; and environment, natural resources, biodiversity and ecosystem services.

According to MPOC, the MSPO 2022 contains integration of the high conservation value (HCV) approach and states that a comprehensive HCV, environmental, and social impact assessment will be conducted before new plantings or establishments occur. The cut-off date had been set as Dec 31, 2019 — meaning no conversion of natural forest, protected areas, and HCV can take place after the aforementioned date.

These principles form the general requirements of a management system framework, based on the three pillars of sustainability — economic, environmental and social.

Protocol 29 of the International Labour Organisation, an indicator for labours, was also included as part of the MSPO 2022 revision, in addition to the GHG from land-used change and GHG measuring methods.

Other critical requirements added in the MSPO 2022 are the traceability and legality of FFB as well as ethical conduct.

Meanwhile, MSPO 2022 also contains an additional standard requirement to assess conformity for FFB dealers and palm oil traders against the MSPO to ensure all types of dealers under MPOB licensing, including exporters and importers that purchase and sell oil palm products will not change the chemical properties of the materials.

During the International Sustainable Palm Oil Forum 2023, Deputy Prime Minister Datuk Seri Fadillah Yusof, in his keynote address “Sustainable Trade and Responsible Business Practice in a New Global Area”, said Malaysia made government-mandated sustainability certification a requirement for its oil palm industry.

At time of writing, the MSPO Trace app shows that the total certified area, which includes certified planted area, infrastructure, buildings, roads and conservation, has reached 6,282,429.88 hectares. From this figure, a total of 5,339,115.13 hectares of planted area of independent smallholders, organised smallholders and plantations has been reached.

A total of 581 entities including mills, refineries and processing facilities, have achieved the MSPO Supply chain certification Standard (MSPO SCCS), as shown in the MSPO Trace app.

The MSPO SCCS covers management requirements and traceability of the production throughout the supply chain from the raw materials to processing and manufacturing of palm oil and palm oil-based products.

Malaysian palm oil biofuel exporters also meet the strict standards of sustainability required by European consumers including being certified by the German International Sustainability and Carbon Certification (ISCC).


bottom of page