New palm oil MoU with China not extension of previous one under BN

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives exchange was up 1.1% at 2,004 ringgit ($486.64) per tonne at the close of trade, after declining earlier on overnight losses in U.S. soyoil on the Chicago Board of Trade (CBOT).

KUALA LUMPUR: The memorandum of understanding (MoU) on China's import of an additional 1.9 million tonnes of palm oil from Malaysia, which was signed on April 25 this year, was not an extension of the old one inked on Nov 23, 2015.

The Ministry of Primary Industries said the MoU signed by the then Minister of Plantation Industries and Commodities in 2015 was only in relation to Malaysia-China cooperation on the quality and safety of palm oil exported to the republic.

The cooperation was to facilitate the country's palm oil trade to China. There was no commitment or guarantee that China would increase its import of Malaysian palm oil.

“Under the Pakatan Harapan (PH) government, the ministry is tasked with negotiating additional imports of Malaysian palm oil by China and at the same time explore opportunities under the Belt and Road Forum for International Cooperation (BRF) initiative," the Ministry of Primary Industries said in a statement on Tuesday.

Datuk Seri Najib Tun Razak, in his Facebook posting on Monday, claimed that the MoU, which was signed recently, was an extension of the talks and original agreement between China and the Barisan Nasional government during his premiership in 2015.

On April 25, China agreed to increase the volume of palm oil imports and the agreement was finalised in the MoU between the Malaysian Palm Oil Council and China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products.

"The main objective of the MoU is to enhance good relations in agricommodity trade, especially in the palm oil sector between the two countries.

"It will also increase the export of palm oil to China by an aggregate amount of 1.9 million tonnes worth RM4.56 billion for five years (2019-2023)," the ministry said.

The ministry said the cooperation allowed direct purchase of palm oil and palm-based products between Chinese government-linked companies and Malaysian palm oil exporters.

"This MoU does not restrict or limit Malaysia's palm oil exports to China. It is in addition to the existing palm oil exports to China by Malaysian exporters," he said.

The MoU also opens new opportunities for Malaysia to invest in jet biofuel plants estimated at RM2.06 billion (US$500 million) and unsaturated fats RM206 million (US$50 million). - Bernama