06.01.2021 (www.theedgemarkets.com) - KUALA LUMPUR (Jan 6): There are huge growth opportunities for Malaysian palm oil in the African continent, the Chief Executive Officer (CEO) Forum at the Palm Oil Trade Fair and Seminar 2021 (POTS 2021) was told today.
Vimal Shah, chairman and co-founder of fast-moving consumer goods company Bidco Group, based in Kenya, said the African continent as a whole imports seven million tonnes of palm oil a year, of which 37% or 2.2 million tonnes are from Malaysia.
Consumers on the continent, he said, look at the best prices and trading terms when purchasing palm oil, and it is up to those who export to this region to decide where to source the palm oil from. “In fact, any Malaysian seller is welcome to sell to Africa, because the markets are free. We just launched on Jan 1 the African Continental Free Trade Area (ACFTA), which makes 35 countries in Africa, one single free trade area for trading across the region,” he said.
Vimal added there are no negative perception surrounding palm oil in African markets, and that consumption of the edible oil has been deemed to be good. He also said imports of palm oil into the African continent grew by as much as 10% during the pandemic.
From a longer-term perspective, Vimal said the continent has about 600 million hectares of unused arable land, with high labour availability. “I think palm oil would be able to be produced in Africa, because there is land mass available. I am talking from a long term perspective here, we could feed the world, we could leapfrog into technologies,” he said.
He added that urbanisation is rapid and on the rise in the continent, and that per capita consumption of palm oil could rise to 15kg.
In particular, the use of palm oil in soap is a real growth prospect in the continent amid the Covid-19 pandemic, he said.
“When I look at the prospects of Malaysian palm oil in Africa, they are amazingly big. There needs to be a concerted effort by the countries, by everyone, to do something about. Indonesia has been doing this a lot because I think processing in Africa is going to be a big thing,” Vimal said.
He noted import duties would be 0% under the ACFTA for CPO, while tariffs on refined palm oil would be at about 25% to 35%, making palm oil processing and cultivation more attractive in the continent.
As to which African countries Malaysia should concentrate on when it comes to palm oil exports, Vimal named Mozambique, Madagascar, South Africa, Angola and Namibia as potential targets, due to their greater requirements for palm oil.
Palm oil futures contracts on Bursa Malaysia saw gains today. At market close, futures contracts for delivery in January 2021 were up by RM63 at RM4,029 a tonne.
Meanwhile, spot prices for the vegetable oil stood at RM3,893 a tonne as of Jan 5, according to data provided by the Malaysian Palm Oil Board (MPOB).