Malaysia is hoping to expand its palm oil exports to Bangladesh

Malaysia is seeking to increase its palm oil exports to Bangladesh in order to expand its worldwide market share in the industry. The government has also engaged with Middle Eastern countries including Saudi Arabia and Iran, as well as Eastern Europe and South Asia. 

Bangladesh imports about US$2 billion in edible oils (palm oil and soybean oil) each year, with per capita oil and fat consumption increasing by nearly 100 percent from 11.8 grams in 2013 to 22 grams in 2021. In 2020, 20 percent of the 1.4 million tonnes of imported palm oil came from Malaysia, with the rest coming from Indonesia. 

After Indonesia, Malaysia contributes between 25 and 24 percent of overall palm oil production and exports. Palm oil will account for approximately 70 percent of Malaysia’s total agricultural output in 2020, and it will cover roughly 20 percent of the country’s territory. 

Bangladesh, which imports more than 1 million tons of palm oil each year, could become a key new market for Malaysian palm oil, especially if the EU sticks to its plan to ban raw palm oil imports from Indonesia and Malaysia by 2030, citing allegations that palm plantations contribute to deforestation. 

Palm oil-based fuels will be phased out in 2023 under the EU’s amended Renewable Energy Directive, popularly known as RED2, and biofuels made from food crops would be phased out entirely by 2030. 

Malaysia can eventually offset some of the losses from the EU by increasing its export markets to nations like Bangladesh. Bangladesh imports 3 million tonnes of oils and fats (1.5 million tonnes of palm oil) since domestic supply is insufficient to meet demand. Bangladesh’s palm oil consumption is expected to rise to 1.9 million tons by 2025, up from 1.4 million tons in 2020, according to the Malaysian Palm Oil Council (MPOC). 

This can be linked to the country’s rising economy, which has risen to become South Asia’s second-largest since independence, with the country first overtaking India in terms of per capita GDP in 2020. Furthermore, Bangladesh’s GDP per capita is expected to reach $3,253 in 2026, compared to $3,018 in India, and rising urbanization will contribute to an increase in edible oils. 

As a result, the country’s population of 170 million people has experienced an increase in per capita consumption of oils and fats over the last decade, from 11.8 kilograms in 2013 to 18.9 kilograms in 2019, as more people consume processed foods. 

Malaysian manufacturers can also start to take more of the Bangladesh market from Indonesia, which is reducing its raw palm oil exports in order to encourage more investment in local resource processing skills. 

Demand for crude palm oil (CPO) will drive customers to Malaysian producers as Indonesia attempts to export refined palm oil. As Indonesia put higher tariffs on CPO exports to acquire funding for its ambitious downstream plans, Malaysia has surpassed Indonesia to become the largest CPO exporter to India in 2020/21. 

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