CASHING IN ON THE INDIA ADVANTAGE
by Tan Sri Datuk Dr Yusof Basiron
This article was published in the Indian Express Group,New Delhi, 31 August 2007

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The Malaysian palm oil industry is growing by leaps and bounds. Malaysian palm oil overall production at the end of 2006 stood at 15.88 million Metric Tons and the net export at 14.40 million tons. With the country accounting for about 43 percent of the world production, today Malaysia stands at an enviable position of being one of the leading producer-exporter of palm oil in the world.

With demand for vegetable oils increasing rapidly, the Malaysian palm oil industry has entered a new phase. The product, which till now was seen as a major food product, has now taken the place as alternate fuel produce. Tan Sri Datuk Dr. Yusof Basiron, CEO, Malaysian Palm Oil Council (MPOC) predicts that with the current and projected high prices for petroleum and the inherently high quality and productivity of Malaysian palm oil, it is almost assured of a key role in the global biofuel trade.

Palm oil exports and the India connection
With approximately 91% of its total production being exported, Malaysia is currently the largest palm oil exporter. The leading importers are China (3.6 million MT p.a.), EU (2.6 million), Pakistan (0.97 million) and India (0.56 million). In spite of the fact that India also has a well established oils and fats processing industry, it nevertheless has to depend on imported oils, including palm oil for its needs. One of the factors underlying India-Malaysian palm oil trade that has gone down well with the Malaysian authorities is that the duty on the product has been reduced twice, once in April 2007 and again in July 2007 and currently stands at 45 percent as against 80 percent earlier on crude palm oil. This has helped the Malaysian palm oil suppliers in a big way. With duty slashed, palm oil will now be able to compete with other oils on a more level playing field.

Says Dr. Yusof, “With the reduction in import duty, I hope to see the Malaysian palm oil exports to India growing from the existing half million MT to one million MT in the next one to two years.”

Quoting figures from the World Bank, he further says, “India has a long way to go given the big consumption disparity between Indians and consumers worldwide. In India the consumption is 12kg per person per annum as compared to the world consumption of 20-24 kg per person per annum, the energy requirement as outlined by the World Bank. However, we are quite optimistic as far as the Indian scenario is concerned and are hopeful that in the near future the exports will grow.”

A viable alternate fuel source
The global prices of crude petroleum oil have hit an all time high. This has led countries around the world to come out with alternate sources of fuel supply. This has forced consumers, especially
those in European countries, to become more dependent on bio-diesel than before. Oil palm is mainly grown in Malaysia and Indonesia. Palm bio-diesel is fast becoming a viable and attractive alternative to petroleum as it is the most efficient vegetable oils crop. Unlike seasonal crops, oil palm, a perennial crop,ensures a steady and consistent supply. Furthermore, the oil palm is well known to have high yields, an average of 3.5 to 5 tonnes of oil per hectare annually, which makes it the most effective of oil crops.

The Malaysian Palm Oil Council (MPOC) feels that palm oil will certainly qualify as second generation biofuel in reducing carbon dioxide emission by more than 80 per cent, with a little more fine-tuning in its processing technology.

Bright future ahead
The future of Malaysian palm oil industry in India looks bright. With duties slashed and bilateral trade between the two countries picking up, Dr Yusof says that a strong case is being made out to extend use of alternatives, such as biofuels. “Biodiesel is now the most preferred source of alternative fuel. Furthermore, around the world, Biodiesel markets are opening up. This will prove beneficial to the industry as this will help in creating more demand for palm oil.”

By TAN SRI DATUK DR YUSOF BASIRON,
Chief Executive Officer, Malaysian Palm Oil Council (MPOC)
yusof@mpoc.org.my