Sabah must push for expansion of downstream palm oil sector, says Deputy Minister

Plantation and Commodities Deputy Minister Datuk Chan Foong Hin (right) with state Industrial Development Minister Datuk Phoong Jin Tze with POIC Sabah group CEO Datuk Fredian Gan (left).

KOTA KINABALU: Sabah's palm oil industry needs to urgently expand its downstream sector to bridge the gap with counterparts in Peninsular Malaysia, says Datuk Chan Foong Hin.

The Deputy Plantation and Commodities Minister said that the ministry was committed to actively supporting Sabah's efforts to expand its downstream palm oil industry that will not only balance development but also increase revenue through value-added palm oil products.

In 2023, he said Sabah produced 4.5 million tonnes of crude palm oil, with 21.8% exported in crude form.

"This contrasts sharply with the peninsula's export rate of only 5.5% of crude palm oil, highlighting the substantial potential for Sabah's downstream palm oil industry growth," he said in a statement Tuesday (April 30).

Chan said a higher rate of crude palm oil exports results in less raw material available for downstream value-add or refining.

He said it was important for Sabah to diversify beyond upstream production and put in place a strong industry supply chain that maximises potential from upstream to downstream sectors to safeguard the sustainability of the palm oil industry.

Chan said this after a recent four-day tour of Sabah's east coast where he visited the Palm Oil Industrial Clusters (POIC) in Lahad Datu and Sandakan as well as met with two companies specialising in palm oil downstream activities.

The two companies were Mewah Datu Sdn Bhd, a subsidiary of Singapore's Mewah Group, and Gamalux Oils Sdn Bhd from Pakistan, both situated in POIC Lahad Datu.

He said the two POICs along Sabah's east coast played a pivotal role to drive the industrialisation efforts and become core centres for high-value palm oil and palm biomass downstream industries.

"Sabah's POICs offer comprehensive port and logistics infrastructure that can accelerate economic growth and industrial development.

"This makes it a highly appealing and promising investment destination.

"I am also excited to learn about Gamalux's plans for oleochemicals expansion in 2025, marking a significant milestone as the first unit in Malaysian Borneo. This event not only demonstrates Gamalux's ambitions but also its strong confidence in Lahad Datu as a growing hub for sustainable industrial development within the palm oil sector," said Chan.