Oil Palm-based Industries

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Oil Palm-based Industries

The oil palm industry in SCORE is ideally positioned to serve the growth markets of Greater China and meet accelerating demand for oleo-chemicals, biofuels and palm oil by-product.

The forecast growth in demand for palm oil represents a huge long-term opportunity for Malaysia, the world’s second-largest exporter. And it is Sarawak – and especially the SCORE region – that offers the greatest potential, as the rest of the country has little land available for new plantations.
Long-term tax breaks, investment and capital expenditure incentives and subsidies for R&D are already attracting major plantation and refining projects and promoting the development of new downstream processing facilities.

The food industry currently buys 80% of the world’s palm oil production. Palm oil is ideal as a healthy substitute for animal fats, in chocolate and margarine, cake mixes, sauces and many other products, because of its low cholesterol and high nutrient and vitamin content. It is also widely used in cooking, and its stability and neutral flavour make it one of the best and healthiest oils for frying.

Palm oil is increasingly used in the production of household and cosmetic products, including soaps and detergents, creams and pharmaceuticals, and major new international markets are opening up with the widespread adoption of biofuels.

Malaysia accounts for 39% of global palm oil production and 44% of the world’s exports. Sarawak has been producing palm oil at an accelerating rate since the 1980s and now accounts for 20% of the country’s production.

Global demand for edible oils such as palm oil will continue to grow over the coming decades and is expected to reach 240 million tonnes in 2050, up from 125 million tonnes in 2008.
The most exciting growth area for palm oil in the next few years will be the production of biofuels. As concern mounts about the world’s dependence on fossil fuel, many countries are insisting that a certain proportion of biofuel should be introduced to create palm oil/bio-diesel blends. By 2020, 10% of the fuel sold throughout the EU will be bio-diesel, and in China the figure will be 15%.

The development strategy for the palm oil industry in SCORE involves expanding acreage by promoting investment in plantations and capturing more value by increasing refining capacity. RECODA is working to attract more downstream investment in oleo-chemicals, bio-diesel, PKE and by-products such as paper and biomass and pushing ahead with the development of POIC (Palm Oil Industrial Cluster) facilities and infrastructure in Tanjung Manis and Bintulu.
Feasibility studies have shown that Sarawak offers scope to double the size of its palm oil industry and develop another million hectares of oil palm plantations by 2020.

The planned expansion, mainly focused on the land within SCORE, will create significant investment opportunities to meet the needs of the global food industry and the accelerating long-term demand for biofuels.

Investors in SCORE’s palm oil industry will enjoy a wide range of tax, investment and capital expenditure incentives and specific subsidies for R&D and new product development.

Global annual demand growth for palm oil products is forecast to be 8.5% and prices are expected to remain high. Demand for oleo-chemicals will expand rapidly and countries like Indonesia will seek to increase their market share, while the growth of bio-diesel will open up many new opportunities.

Palm oil production and processing are labour intensive activities that could potentially create up to 70,000 new jobs in Sarawak by 2030 and add USD3.6 billion to GDP.