Bangladesh has sought investment from Malaysia in its palm-oil industry aiming to develop the sector and to expand exports, sources said.
Bangladesh High Commissioner to Malaysia Md Shameem Ahsan made the request at a meeting with Secretary General (Secretary) of the Ministry of Plantation and Commodities of Malaysia.
In response, the Malaysian side assured of looking into their investment in the refinery facilities of Bangladesh, in particular.
The Bangladesh High Commissioner to Malaysia at the meeting focused on the issues of common interests including increased cooperation in the field of development of palm oil sector especially investing in the palm oil centric industries (e.g., refinery) in Bangladesh to diversify exports, according to a letter.
The High Commissioner also flagged the idea of making Malaysian palm oil competitive in the context of the continuously increasing trend of the export of the palm oil to Bangladesh (previously taken over by Indonesia), reads the letter.
An overall assessment of the current situation of Malaysian palm industry has been highlighted in the high commission's note.
The note fears that there is little chance of shortage in the supply of palm oil from Malaysia despite the possibility of a high market price of the item.
"Due to the current global situation, triggered by the Russia-Ukraine war and other developments, domestic policies adopted by neighbouring Indonesia and lower palm oil production due to unfavorable weather conditions (El Nino Factor), shortage of labour leading to a significant increase in the production costs, among others, have led to a sharp upward trend in the Malaysian palm oil market recently," says the letter.
If the situation does not improve in the foreseeable future, the price of palm oil may continue to increase in the international market, also says the letter.
The average domestic market price of crude palm oil in Malaysia was US$ 806 per tonne in 2023. According to the stakeholders in the Malaysian palm oil sector, the Russia-Ukraine war is believed to be the main factor for the increase in the price of edible oil in the international market.
Sunflower oil ranks second only to palm oil and soybean oil in global edible oil consumption. Ukraine is the largest producer of sunflower oil in the world, followed by Russia.
According to the high commission, these two countries control about 78 per cent of sunflower oil in the global trade. Due to the Russia-Ukraine war, the supply of sunflower oil in the world market continues to decrease at a significant rate. Its impact is visible in the entire edible oil market and the price of edible oil in the international market continues to rise.
Indonesia is the top producer of palm oil in the world, followed by Malaysia. Together, contribution of these two countries is about 86 per cent of the world's total palm oil production.
The South Asia region accounted for 18 per cent of the total Malaysian palm oil exported in January-November 2023.
During the January-November 2023 period, Malaysian palm oil exports to Bangladesh registered a total of 224,393 MT, an increase of 3.13 per cent against the same period last year. Bangladesh holds a market share of 6 per cent as one of the largest importers of Malaysian palm oil in this region with positive import growth.
Malaysia's palm oil industry witnessed a mixed performance in 2023 where crude palm oil production and stocks registered strong growth.
At the beginning of the year 2024, the Malaysia Palm Oil Board (MPOB) and Malaysian Palm Oil Council (MPOC) made a forecast that the crude palm oil price would range between US$832 and US$ 896 per tonne in 2024.
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