[UPDATED] M’sia, Indonesia to discuss latter’s plans to set CPO benchmark

PUTRAJAYA – Malaysia will hold a meeting with the Indonesian government to discuss the republic’s intention to set its own crude palm oil (CPO) benchmark price, said Deputy Prime Minister and Minister of Plantation and Commodities Datuk Seri Fadillah Yusof.

He said the matter needs to be discussed jointly as Indonesia’s plans will affect the entire oil palm industry chain, not just in Malaysia, but also globally.

The deputy prime minister said a meeting to resolve this matter beneficially for all parties has been proposed to take place in the second week of February.

“A discussion must be held before any decision on price setting is made for the benefit of the plantation sector in both nations,” he said in a press conference after attending the Plantation and Commodities’ Ministry’s new year mandate event here today.

Indonesian Trade Minister Zulkifli Hasan reportedly said the republic planned to establish its CPO benchmark price before June and will no longer have to depend on Kuala Lumpur.

Indonesia is the world’s largest palm oil producer, with almost 50 million tonnes of CPO annually.

On January 12, Malaysia Palm Oil Board director-general Datuk Ahmad Parveez Ghulam Kadir said the CPO price this year was expected to fall between RM4,000 and RM4,200 per tonne compared with RM5,087.50 a tonne in 2022.

Fadillah said the issue of the European Union’s ban and trade barriers imposed on palm products would also be discussed when the two countries meet.

He said the agri-commodity sector achieved RM268.2 billion in trade value last year while the trade balance stood at RM146.5 billion.

“Agri-commodity products export revenue reached RM207.3 billion or 13.4% of the country’s total export revenue,” he added.

Fadillah said he was confident this year’s agri-commodity trade performance would remain positive despite a 1.1% drop last year compared with 2021.

“The agri-commodity sector contributed RM61.3 billion, or 5.5% of Malaysia’s gross domestic product for January to September 2022,” he said.

Meanwhile, Fadillah said the agri-commodity industry still needs around 63,000 foreign workers, primarily for the oil palm sector.

He said labour shortages in the oil palm sector had severely impacted productivity in the industry and resulted in an estimated RM20 billion loss of revenue last year. – Bernama, January 26, 2023