Palm oil is a key driver of Malaysia’s agriculture and agro-based sectors, generating approximately RM91.4bil in export revenue and sold in more than 180 countries between January and November 2021.
According to Plantation Industries and Commodities Minister Zuraida Kamaruddin, the palm oil industry is a strong, resilient and innovative industry that is of strategic importance to the country.
“Malaysia has steadfastly worked towards promoting the important message that palm oil is a nutritious and affordable food for all.
“Our scientists – who have also collaborated with renowned research institutions worldwide – continue to explore new technologies to ensure that the industry remains dynamic, spawns high-income jobs and entrepreneurial opportunities, as well as raises export earnings,” she says.
She adds that the Government is striving to establish a zero-waste industry that is highly sustainable, well-regulated and mindful of the needs of its end-users and workers.
In Malaysia, palm oil has had a positive impact with a domino effect that directly benefits local communities by not only establishing necessary infrastructure, but also uplifting their livelihoods.
She shares, “Malaysian palm oil has had an overwhelmingly positive impact at home, by alleviating rural poverty, increasing employment, bringing infrastructure, education and healthcare, as well as improving the quality of life of small farmers and their families, even in remote areas.
“It is a decade-long story of achievement and social progress. This is an unassailable fact that has been documented by the United Nations and the World Bank, among leading international bodies.”
Sold in more than 180 countries, palm oil generated about RM91.4bil in export revenue between January and November 2021.
Potential in Asia Pacific markets
On a wider outlook of the palm oil trade in the Asia Pacific region, Zuraida reveals that traditional China and India markets in particular hold ‘significant promise’.
The reason is that India and China imported a total of 5.48 million tonnes of palm oil in 2020, alongside 4.95 million tonnes from January to November last year.
In total, this accounted for 35% of Malaysian palm oil exports over this period, which is why China and India are expected to become the largest markets for Malaysia’s palm oil industry in the foreseeable future.
Moreover, China and India boast vast populations – 1.44 billion people and 1.39 billion respectively – that will support increased imports of vegetable oil, including the nutritious and affordable palm oil.
“Malaysian Palm Oil products, which are readily available and competitively priced, are poised to meet the growing demand,” she says.
When it comes to China, Zuraida shares that Malaysia is right on the doorstep of the Chinese consumer market, owing to the establishment of the Palm Oil Research and Technical Service Institute of Malaysia in 2005.
“(As such), we believe the institute will expand the use of Malaysian palm oil in the formulation and manufacture of China’s food and non-food products.
Legislative and regulatory threats
An ongoing battle for the acceptance of Malaysian palm oil in the European Union (EU) is the anti-palm oil campaign, in the legislative and regulatory threats via actions initiated by Brussels, as a gatekeeper to the region.
Given the interconnectivity of the global supply chain, the EU is an important market for many of Malaysia’s largest palm oil exporters, with some of their biggest customers based in Europe.
The main challenge, she says, lies in the fact that the European Commission and the European Parliament are seeking to regulate Europe’s imports of palm oil.
She explains, “This is associated with the trade protectionism agenda of the EU, which is a major producer of rapeseed oil.
“However, the productivity and versatility of rapeseed oil are not as competitive as those of palm oil.
“There is no doubt that Malaysia has a superior product in terms of productivity, versatility and price.”
Against this backdrop, what Zuraida seeks to build is a relationship with the EU that is based on trust and fair trade, rather than ‘geopolitical tensions’.
“Malaysia has always adopted a diplomatic approach in addressing trade issues relating to its commodities. We will therefore continue to engage the EU constructively to resolve this issue.
“Malaysia’s environmental stewardship and leadership have been acknowledged by the world over. Brussels should therefore also accept the progress made by the Malaysian palm oil sector to drive sustainability.
“If improvements are deemed necessary, the EU should consider offering assistance – technical or financial – to move matters forward,” she opines.
At the same time, within Malaysia, efforts are geared towards the consultation process over the upcoming EU due diligence proposals, which she says will provide an opportunity to ensure that Malaysia’s trade interests are incorporated into regulations.
She adds, “We will also utilise various avenues to exchange unambiguous information with the EU on the sustainability of our palm oil industry.
“These include the Asean-EU Joint Working Group on Palm Oil and other collaborative projects.
“Still, the ‘softly-softly’ approach may not always work out and Malaysia must be prepared to take firm action whenever required.
“This has happened with our attempt to engage the EU via the World Trade Organisation over the latter’s stance against the use of palm oil in their biofuel and renewable energy sectors, which did not produce a mutually-acceptable solution.
Anti-palm oil sentiments on the global stage, particularly arising from the European Union and the United States (US), are not new to the Malaysian palm oil industry.
The key accusations levelled at Malaysian palm oil are violations of labour and human rights, which are among the biggest challenges facing the sector’s growth worldwide, says Zuraida.
When it comes to the US State Department’s demotion of Malaysia to Tier 3 in its ‘Trafficking in Persons Report 2021’, she stresses, “It is unfair and an overly simplistic assessment. We will continue to work with the US government to address its concerns and set the record straight.
“At this juncture, any intervention from the Malaysian government should be focused on improving workers’ rights through legislation, enforcement and labour policies.
“We hope for cooperation and goodwill, especially since Malaysia has renewed a strong commitment to addressing labour-related issues.”
Positive progress for workers’ rights
Against criticism that there has been insufficient progress in championing the rights of workers, she acknowledges that while the industry faces challenges related to labour issues, the Government is continuously working to improve governance and enforcement practices, via the tools of the Malaysian Sustainable Palm Oil (MSPO) certification standard.
The MSPO standard is built on seven principles that form the general requirements of a management system framework. This, in turn, promotes the three pillars of sustainability – to be economically viable, socially acceptable and environmentally sound. The principles cover:
Management commitment and responsibility
Compliance to legal requirements
Social responsibility, health, safety and employment conditions
Environment, natural resources, biodiversity and ecosystem services
Development of new plantings
Each of the seven principles also has specific criteria and indicators that the certification bodies use during the audit process, to determine compliance and award certification.
In addition, she says that there has been positive progress in the right direction, with the Ministry of Human Resources (MOHR) launching the Working for Workers (WFW) programme in May last year.
WFW is a dedicated platform that caters to over 15 million workers, primarily foreign workers, to submit and report complaints related to labour issues online.
The nature of complaints covers contract disputes, late payment of salary, being forced to work while on leave, unfair dismissal, failure to report the employment of foreign workers, improper treatment, as well as employees being prevented from working from home while the various Covid-19 movement control orders were in place.
“This is an important tool for ensuring workplace compliance with Malaysian laws. I have full confidence in MOHR to ensure the success of this programme.
“At the same time, our largest exporters and government-linked companies have signed up to a range of standards and commitments to protect the interests of employees,” she says.
Zuraida is also committed to looking into the best way forward for the industry, especially when it comes to sustainability aspects that relate to environmental, social and corporate governance considerations, as well as the United Nations’ Sustainable Development Goals.
Advocating women in the plantation sector
A strong advocate for the advancement of women, she is planning to extend this passion into the plantation sector.
“Improving the rights of women – in particular, expanding female participation in Malaysian life – has been a key objective of my political career. I am proud to have founded the Institute of Empowered Women and the Women’s Institute for Research, Development and Advancement,” she shares.
Zuraida, who also serves as the president of the Council of Malaysian Women Political Leaders and Malaysia’s country ambassador for the association, highlights that she looks forward to working with ministry officials, the private sector, civil society and other key stakeholders to ensure that women working throughout the palm oil sector supply chain have the same rights and opportunities to succeed.
She adds, “I have also said that I would like to see more women leaders appointed to corporate boards and as heads of various agencies. Let me set an example that others can follow.
“Since the palm oil industry has traditionally been a male-dominated one, I foresee some resistance to my ideas.”
However, she points out that the management consulting firm McKinsey – in a study themed ‘Delivering through Diversity 2018’ – revealed a positive correlation between having a big proportion of women leaders in large companies and the corporate financial performance.
This was particularly so in senior executive roles, where the majority of strategic and operational decisions are made.
“Similarly, I believe the palm oil industry will reap the results of women’s participation and gender mainstreaming,” - Zuraida
In moving forward, Zuraida notes that based on her experience founding non-governmental organisations and charitable groups – especially the ones focused on women’s rights – there is an opportunity to bring fresh ideas to the plantation sector.
This is because the plantation sector has already made ‘wonderful advancements’ for Malaysia over many decades, by uplifting millions out of poverty in rural areas and creating jobs, generating tax revenues and rendering economic growth.
She believes that this can be the case with women in the palm oil industry as well.
She concludes, “From my initial conversations with a few palm oil companies and the Ministry officials, there is a strong collective willingness to support reform where needed and I am very heartened and encouraged by this.
“This will provide a strong basis for all stakeholders to work together to implement changes. Improving the palm oil community can only lead to the industry thriving at every level.”