Call to boost competitiveness

This is written by my colleague Zaidi Ismail.

KUALA LUMPUR: MALAYSIA'S palm oil sector must go all out to boost its competitiveness as crude palm oil (CPO) prices are extremely volatile, fluctuating against a backdrop of uncertain supply and demand situation as well as strong competition from the world's other 16 edible oils and fats.

Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said the global economic slowdown in the third quarter has contributed towards raising the domestic stocks level, which resulted in lower crude palm oil (CPO) prices compared with 2011.

In the last few months, CPO prices on the Malaysian Derivatives Exchange have been hovering between the RM2,300 and RM2,500 a tonne level compared with an all-time high of over RM4,000 in 2008.

"The government has implemented measures to enhance the competitiveness of the palm oil industry, including restructuring the export duty on CPO and providing replanting incentives beginning this year.

"This move is aimed at reducing the CPO stocks and strengthening its prices," Dompok said in his keynote address here yesterday at the 24th annual Palm and Lauric Oils Conference and Exhibition 2013: Price Outlook 2013/2014.

He added that in situations of uncertainty, price discovery is necessary for the traders, especially in mitigating risk factors and Malaysia, as the preferred benchmark for the pricing of palm oil globally, has attracted strong attention from international traders.

Dompok said as at December 2012, foreign trading participation for crude palm oil futures (FCPO) contract was recorded at 30.2 per cent, an increase from 28.7 per cent in 2011.

He said Malaysia, which is the second largest producer of CPO after Indonesia, will continue to drive the growth by seeking opportunities to expand partnerships to strengthen connectivity with the rest of the world.

Malaysia recorded a palm oil production of 18.8 million tonnes last year, accounting for some 10 per cent of global palm oil output.