KUALA LUMPUR: The oil palm industry is hoping for a fundamental shift in strategy in the upcoming Budget 2023, focusing on intensive, yield and investment-driven growth in line with the increasing emphasis on sustainability by major producing nations and consuming markets.
Industrial regulator, Malaysian Palm Oil Board (MPOB) said given Malaysia's commitment in achieving the targets set under the United Nations Sustainable Development Goals (UNSDGs), more allocation is needed to finance efforts to improve social inclusion and environmental sustainability of the palm oil industry.
The industry currently covers 15 of the 17 UNSDGs, which encompasses key aspects of environmental, social and corporate governance (ESG).
"There is growing demand for certified sustainable palm oil that major producing countries like Indonesia and Malaysia have to deliver,” MPOB director-general Datuk Dr Ahmad Parveez Ghulam Kadir said to Bernama, noting that both countries account for more than 80 per cent of the global palm oil output.
He said the government should continuously provide support for specific causes such as the dynamic nature of technology and concerns in the oil palm plantation operation, especially with regards to budget allocations.
He also emphasised that the adoption of high mechanisation practices in plantations would improve the industry’s ESG compliance.
Additionally, given the government’s commitment to ensure a sustainable Malaysian palm oil industry through the Malaysian Sustainable Palm Oil (MSPO) Certification standards, more allocation is needed to raise awareness on ESG importance among palm oil consumers and to push producers to increase ESG compliance.
"The extra allocation is also needed by producers to comply with ESG requirements and by the enforcement agency to verify the industry’s compliance to ESG indicators,” Ahmad Parveez said.
Palm oil is currently the most-used vegetable oil globally, accounting for more than 35 per cent of all vegetable oil production, yet it had received the most criticism with claims of causing adverse environmental impacts.
On the sector’s post-pandemic recovery, particularly in the production of palm oil, he said that the MPOB is hoping for more talent development programmes for the oil palm sector to reduce the dependency on foreign workers.
"To reduce dependency on foreign workers, oil palm plantation companies are encouraged to recruit local workers.
"The government could consider providing an incentive for the plantation companies to have all local workers,” the director-general said.
Meanwhile, he noted that the biomass sector has also been cited as a major area of development for the country, particularly in terms of the utilisation and production of high value-added biomass products and services.
"This requires a comprehensive biomass policy, as well as research, development, commercialisation and innovation to create indigenous technology.
"This will create new jobs, while at the same time protecting the environment through the reduction of greenhouse gas emissions,” Ahmad Parveez said.
The MPOB also hopes that a special allocation could be given to the Palm Oil Research and Technical Service Institute of MPOB (PORTSIM) to carry out research, development and commercialisation activities in China.
This could help to increase Malaysian palm oil’s share in the high-value downstream food, animal feed and oleochemical sectors in the world’s most populous country, he said.
"This is also in line with the 12th Malaysia Plan with regards to producing high value, diverse and complex products through technology adoption, as well as strengthening technical cooperation in product innovation among local and international research centres.
"It will also enhance sustainable socio-economic resilience by providing more aid and subsidies, especially for smallholders amidst the rising cost of production,” he said.
On the palm oil sector’s outlook, Ahmad Parveez said for the July-December 2022 (2H 2022) period, crude palm oil (CPO) production is projected to increase by 1.9 per cent from the 9.75 million tonnes produced in 2H 2021.
The growth will be driven by an expected increase in the area of mature oil palm plantations and the expected influx of foreign workers in oil palm plantations, in addition to the positive yield trend until October and better weather factors in 2022.
Meanwhile, CPO exports in 2H 2022 are projected to decrease by 12.8 per cent compared to 2.47 million tonnes in 2H 2021 due to expected lower demand from major importing countries, especially India, following abundant supply from Indonesia. - Bernama