PETALING JAYA: Palm oil remains the most important and affordable edible oil in the global supply chain, underpinning food security, employment and economic development worldwide.
Fastmarkets Palm Oil Analytics Singapore senior analyst Dr Sathia Varqa said palm oil accounts for one-third of global edible oil consumption, surpassing soybean, sunflower and rapeseed oils in the international market.
“Palm oil is highly competitive and affordable. It helps balance rising food prices and provides a stable edible oil supply to millions of consumers around the world,” he said at the recent Malaysian Palm Oil Board (MPOB) International Palm Oil Congress and Exhibition 2025 (Pipoc 2025) in Kuala Lumpur.
Sathia delivered a presentation titled “Palm and Lauric Oil Market Outlook 2026”, emphasising that palm oil is not only a food commodity but also a vital income source for millions of smallholders in Malaysia, Indonesia, and other producing nations.
Beyond food, palm oil is now a critical component in sustainable energy policies. Its role in biodiesel production has grown from 10% currently to 25% next year, he said.
“The ability of palm oil to reduce carbon emissions positions palm-based biofuels as an important contributor to green energy targets in producing countries – including Malaysia, which has already implemented the B20 biodiesel programme,” Sathia noted.
However, climate change continues to pose challenges across all agricultural commodities. Even so, palm trees demonstrate greater resilience and faster recovery from extreme weather than soybeans and sunflowers.
Sathia acknowledged several domestic challenges facing Malaysia’s industry, including ageing palms, low productivity, labour shortages, slow mechanisation and the wide performance gap between large estates and smallholder farms.
“These issues will not disappear by 2026. Malaysia needs short-, medium-, and long-term strategies, including accelerated replanting incentives and automation,” he said.
He added that Malaysia is now well-positioned to attract new investments, especially amid land policy uncertainties and rising regulatory risks in Indonesia.
“Malaysia’s advantage is stability. Investors want clarity in land rights, regulations, and governance. This is the right moment for Malaysia to draw new investment,” Sathia said.
Meanwhile, used cooking oil, particularly that derived from palm oil, can be processed and recycled into new forms of energy, including sustainable aviation fuel (SAF).
EcoCeres Renewable Fuels Sdn Bhd, a clean-energy company from China, is advancing this innovative pathway.
The company has established an operational plant in Johor with a production capacity of about 1,000 tonnes of products per day – comparable to its facilities in China.
EcoCeres Renewable Fuels executive vice-president of operations Dannis Poon said the company is planning a nationwide public awareness campaign to highlight the benefits of SAF.
“We hope that by January 2026, this campaign will encourage Malaysians to participate in collecting used cooking oil to recycle it into energy,” he said.
“For most people, this oil is simply waste, but for us, it is valuable because it can be converted into fuels, including SAF. We do not use fossil oils or earth-extracted resources. Instead, we process used cooking oil (from households and restaurants), industrial waste oil and food-grade oil residues as our primary feedstocks.”
Poon delivered these remarks during his talk titled “Latest Developments in Aviation Decarbonisation: Opportunities and Challenges” at Pipoc 2025.
EcoCeres deliberately avoids edible oils to prevent competition with the food sector and to minimise the carbon footprint associated with cultivation. Through its proprietary hydrotreating technology, waste oils are refined into several products: SAF for aviation, renewable diesel for industrial and transportation use and naphtha for the petrochemical sector.
“At present, the SAF we produce is supplied to international airlines such as Cathay Pacific, Hong Kong Airlines and British Airways under long-term contracts,” Poon said.
Explaining why Johor was selected for its expanded operations, he noted that the company evaluated several Asian countries, including Thailand and Indonesia, but ultimately found Malaysia’s investment-friendly policies more attractive.
“The existing oil and gas infrastructure, access to waste oil from the local food industry, and a business environment that aligns well with regional operations were key factors,” he added.
More than 99% of the Johor plant’s workforce comprises Malaysians, which he said reflects the company’s commitment to supporting local socioeconomic development.
“The feedstock is collected in Malaysia, processed in Malaysia, and may eventually be used by Malaysian airlines such as MAS and AirAsia,” said Poon.
However, he also highlighted several challenges. Malaysia produces only about 200,000 tonnes of used cooking oil annually, insufficient for large-scale refinery operations.
Other issues include inconsistent waste-oil quality – some being heavily contaminated or mixed with water – as well as international trade policies that impose tariffs, and the need for regional collaboration in Southeast Asia to secure a stable supply of feedstock.
“If every country builds its own plant, the feedstock will not be enough. We need to look at regional-level solutions,” Poon said.
