PUTRAJAYA: Malaysia’s palm oil industry is expected to only see minimal impact on the 24% tariff imposed by the United States due to a lower rate compared to competitors and limited export to the US, according to the Malaysian Palm Oil Board (MPOB).
MPOB director-general Datuk Dr Ahmad Parveez Ghulam Kadir said Malaysia is still the cheapest option among the top exporters.
“Other major producers are being taxed even more, Indonesia faces a 32% tariff and Thailand 36%. In that sense, we have the advantage,” he said at a press conference in conjunction with the signing of a memorandum of agreement today between MPOB and SumiSaujana TCM Chemicals to commercialise palm-based polyol.
He added that the US accounts for only about 10% of Malaysia’s palm oil exports, mainly for niche industrial uses rather than general cooking.
“The volume is quite small, but it’s still an important market. The US, especially, continues to need palm oil for specific sectors like confectionery. It’s not used like in other countries for everyday cooking, so it serves a niche market. The demand should remain, as it doesn’t directly compete with other oils.”
But the tariff may initially affect Malaysia due to possible supply chain disruptions, Ahmad Parveez said. “The final influence will be on their own consumers because it will impact the final product. The product will have to be paid by the consumers in the future.”
However, he said the US tariff will not become a major issue in the long run.
Ahmad Parveez also highlighted ongoing challenges from the European Union Deforestation-Free Regulation and Renewable Energy Directive II.
“For us, we are diversifying our palm oil – not only for commodity oil but also for other high-value applications,” he said.
He added that the ministry, together with MPOB, is not focused on any single country.
“We try to diversify and ensure our palm oil is accepted globally. We’re exploring other markets. Last year, for example, our exports to the Philippines increased quite drastically.
So, Ahmad Parveez, said, if there is any hurdle in the US or Europe, it wants to make sure that our good relationship with all the consumer countries is always strong. “There are many large markets out there. If you compare 2024 versus 2023, actually our export has been increasing by around 70% last year.”
As Malaysia is chairing Asean this year, he said, the country has an opportunity to strengthen regional trade ties. “And I hope that with Malaysia leading Asean, we will see increased exports to our Asean neighbours, who are much closer to us.”
According to CIMB Securities, the US tariffs will raise the cost of palm oil for US end-users.
“The tariff-induced price increase is likely to drive US food manufacturers and consumers to substitute palm oil with more competitively priced domestic alternatives such as soybean oil – benefiting US soybean farmers.
“For US buyers unable to easily replace palm oil in their product formulations, the higher input costs could lead to either increased consumer prices or margin compression for producers,“ it said.
