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21/6/2022

PALM OIL:
CURRENT ISSUES & CHALLENGES
Nik Aznizan Nik Ibrahim
International Trade Unit
Economics and Industry Development Division
Malaysian Palm Oil Board (MPOB)

Diploma in Palm Oil Milling Technology & Management (DIPOM 2022)


29 June 2022 | MPOB Head Office

01 Palm Oil Position in the Global


Oils and Fats 2021
04 What are the FACTS and ANSWERS?
02 The Importance of the Malaysian
Oil Palm Industry 05 The Future of Palm Oil
03 Current Issues & Challenges 06 Conclusion

Presentation Outline

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21/6/2022

Palm Oil Position in the


Global Oils & Fats 2021

PALM OIL IN GLOBAL OILS AND FATS, 2021

Production PO SBO RSO SFO Others*


241.36 Mn T 32% 25% 11% 8% 24%

Export PO SBO SFO RSO Others*


95.18 Mn T 54% 14% 12% 7% 13%

*Cotton oil, Groundnut oil, Sesame oil, Corn oil, Coconut oil, Butter (as fat), Lard, Tallow & Grease, Linseed oil, Castor oil.
Sources: Oil World; MPOB
MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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MAJOR PALM OIL PRODUCERS & EXPORTERS, 2021


INDONESIA INDONESIA
59% 56%

PRODUCERS EXPORTERS

OTHERS OTHERS
MALAYSIA PRODUCING MALAYSIA PRODUCING
24% COUNTRIES 31% COUNTRIES
17% 13%

PO Production PO Export
76.39 Mn T 51.03 Mn T
Sources: Oil World; MPOB
MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

MAJOR PALM OIL CONSUMING COUNTRIES, 2021


5 major palm oil consuming countries representing 56% of the total global palm
oil consumption.

01 Indonesia, Malaysia, 05
Total : 76.23
22% 4%

million tonnes

02 India, China, 04
11% 9%

03 EU,
10%
Note: Consumption includes edible & non-edible
Source: Oil World

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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The Importance of
Malaysian Oil Palm
Industry

MALAYSIA: EXPORT VOLUME OF OIL PALM PRODUCTS, 2021


2021 2020 Diff.
Product
(MnT) (MnT) (%)
Palm Oil 15.56 17.39 10.6
Total:26.73 MnT
30
• CPO 4.56 4.45 2.4
Total:24.26 MnT
• PPO 11.00 12.95 15.0
25

Palm Kernel Oil 1.08 1.22 11.7


20

Palm Kernel Cake 2.30 2.57 10.6


Mn T

15
Palm Palm-Based 2.88 3.09 6.6
Palm
10
Oil Oil Oleochemicals
Palm Palm 17.39
15.56
5 Oil Oil Biodiesel 0.36 0.38 4.3
16.22 17.43
0 Finished Products* 0.56 0.58 4.2
2021 2020
CPO PPO PK Oil PK Cake Oleo Biodiesel FP Others Other** 1.52 1.50 1.3

TOTAL 24.26 26.73 9.3


Note:
CPO Crude Palm Oil
Source: DOSM
PPO Processed Palm Oil
* Finished Products - Shortening, Veg. Fat, Veg. Ghee, Soap, etc.
** Others – Palm Kernel Shell, Oil Palm Fibre, Sludge/Residue Oil, etc.
MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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MALAYSIA: EXPORT VALUE OF OIL PALM PRODUCTS, 2021

Palm Kernel Oil Palm-Based Oleochemicals


RM6.67 Bn RM26.80 Bn
(6%) (25%)

Palm Oil
RM64.62 Bn RM108.52 billion
(60%)
Others
RM10.43 Bn
(10%)

Source: DOSM

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

MALAYSIAN PALM OIL EXPORT DESTINATIONS, 2021

3.60 Mn T
INDIA
31.3%

CHINA 1.87 Mn T
31.4%

E.U 1.64 Mn T
15.4%

TURKEY 0.70 Mn T
14.2%

KENYA 0.67 Mn T
29.2%

MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

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PERFORMANCE OF THE MALAYSIAN OIL PALM INDUSTRY


2021 VERSUS 2020
Difference Difference
Indicator 2021 2020
Volume/Value %

Planted Area (Mn ha) 5.74 5.87 (0.13) (2.2)


CPO Production (MnT) 18.12 19.14 (1.02) (5.4)
FFB Yield (T/ha) 15.47 16.73 (1.26) (7.5)
Oil Extraction Rate (%) 20.01 19.92 0.09 0.5
PO Imports (MnT) 1.18 0.95 0.23 24.3
PO Exports (MnT) 15.57 17.39 (1.83) (10.5)
Closing Stocks (MnT) 1.61 1.27 0.35 27.6
CPO Price (RM/T) 4,407.00 2,685.50 1,721.50 64.1
Export Revenue (RM Bn)* 108.52(p) 73.33 35.19 48.0
Source: DOSM, MPOB
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

MALAYSIA: TOP 10 MAJOR EXPORT PRODUCTS, 2021

RANKING:
1. Electrical & electronic products
2. Petroleum products
3. Chemicals and chemical product

4.Palm oil
5. Rubber products

TOTAL EXPORT: RM 1.24 trillion


Source: MATRADE (2021)
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

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APPRECIATION TO OIL PALM

Malaysian RM50 banknote


honouring oil palm as the major agriculture
crop (Circulation since 16 July 2009)

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

Current Issues &


Challenges

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PALM OIL GLOBAL ISSUES

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

CONSUMERS’ PERCEPTION OF PALM OIL

• Deforestation
Environmental • Loss of biodiversity
Impact
• Greenhouse gases (GHG) emissions

People’s • Saturated fat


Health • Food safety – 3-MCPDE and GE

Social Impact • Forced and child labour

3-MCPDE: 3-monochloropropanediol ester


GE: Glycidyl ester )

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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PALM OIL GLOBAL ISSUES: PALM OIL FREE LABELLING

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

PALM OIL GLOBAL ISSUES: PALM OIL FREE LABELLING IN EUROPE


2500

1980 2020
2000

1680
1502
NO OF PRODUCTS

1500

1000

687 729

500
318
189

0
2012 2013 2014 2015 2016 2017 2018 2019
YEAR

Source: Sundram (2020)


MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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PALM OIL LABELLING: DIFFERENTIATION APPROACH

We do not use any


palm oil from
Indonesia or
Malaysia, and only
use palm oil from
sustainable farms in
Central and South
America, which are
not orangutan
habitats.

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

PALM OIL GLOBAL ISSUES: PALM OIL FREE CERTIFICATION

The International Palm Oil Free Certification Accreditation


Programme (POFCAP)
 Independent, not for profit certification programme
 Already approved to certify products in 20 countries including
Australia, England, Scotland, Northern Ireland, Wales, Spain,
Austria, Sweden, the USA, Italy, France & Finland
 To enable consumers, who wish to avoid palm oil for allergy,
dietary or ethical reasons, to see at a quick glance if a product
is palm oil free.

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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PALM OIL GLOBAL ISSUES: PALM OIL FREE CERTIFICATION

193
1,847

2
43
CCF: Choose Cruelty Free

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

PALM OIL GLOBAL ISSUES: PROCESSED CONTAMINANTS

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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PALM OIL GLOBAL ISSUES: ANTI PALM OIL CAMPAIGNS

Palm Oil is associated with


the risk of getting CANCER IS
NOT TRUE!!!!

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

PALM OIL GLOBAL ISSUES: FORCED AND CHILD LABOUR

Since 2009, US Department of Labor reported of


Forced & Child Labour in the oil palm plantations in
Malaysia

156 products
77 countries
Malaysia Electronics Forced Labour
Malaysia Garments Forced Labour
Malaysia Rubber Gloves Forced Labour
Malaysia Oil (palm) Child Labour, Forced Labour

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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What are the FACTS and


ANSWERS?

THE FACTS: LAND USE / OUTPUT (2017)

Source: OurWorldinData.org

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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THE FACTS: LAND USE / OUTPUT

Oil Palm – The Most Productive Oil Crop

 6 to 8 MT/Ha of oil yields can be achieved


by more efficient Oil Palm producers

 Oil Palm requires the least fertilisers and


pesticides among oilseed crops

Source: MPOC, The New Straits Times, MPOB,


Oil World 16/17, Palm Oil Action Group
Australia, The Guardian (2014)
MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

THE FACTS: FOREST FIRES

Source: ForFreeChoice
MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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THE FACTS: A HIGHLY REGULATED INDUSTRY

WILD LIFE MATTERS LAND MATTERS


• National Land Code 1965
• Wildlife Conservation Act
• Land Acquisition Act1960
2008 [Act 716]

ENVIRONMENTAL MATTERS
PESTICIDE USE
• Environmental Land Conservation Act 1960
• Pesticides Act 1974 (Pesticides (revised 1989)
Registration) Rules 1988 • Quality Act 1974 (Environmental Quality)
• Pesticides (Licensing for sale & storage)
Rules 1988 C D (Prescribed Premises) (Crude Palm Oil)
Regulation 1977
• Pesticides (Labeling) Regulations 1984 • Environmental Quality (Clean Air)

B E •
Regulation 1978
Environmental Quality (Prescribed
Activities) (Environmental Impact
Assessment) Order 1987
LABOUR & EMPLOYESS MATTER
F
• Labour Law
A
>60
• Workers’ Minimum Standard of Housing &
Amenities Act 1990
• Occupational Safety & Health Act1977 BIODIVERSITY
• Factories & Machinery (Noise Exposure) • National Biodiversity Policy 2016-2025
Regulations 1989 LAWS &
• Passport Act 1966
• Education Act 1996 REGULATIONS

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

THE FACTS: LICENSING OF THE MALAYSIAN OIL PALM INDUSTRY


MPOB licenses all critical activities
of the Malaysian Oil Palm Sector
and enforces its orderly conduct

Licence
Categories

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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THE FACTS: PALM OIL IS NOT THE MAJOR CAUSE OF DEFORESTATION

Beef is the main driver of deforestation of all major agricultural commodities


Deforestation linked to major agricultural commodities
1990 - 2008
63
mil ha

10 13 8 6 5 4 3 1

Beef and Pig and Soy Maize Palm oil Wood Rice Sugar cane Rubber
other poultry products
ruminant
products

Oil palm companies are the most committed to No Deforestation


Companies with at least one relevant commitment to no deforestation
as at 2016
Oil Palm Soy Timber/Pulp Cattle

59% 53% 21% 12%

Source: Climate Focus Report (2016)


MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

THE FACTS: OIL PALM PLANTED AREA VS. GROWTH RATE

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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THE FACTS: FORESTED AND NON–FORESTED AREAS, MALAYSIA, 2013-2017

2017 18,323,502
14,844,874

2016 18,241,716
14,702,224

18,389,686
Year

2015
14,554,254

2014 18,273,201
14,639,166

2013 18,062,091
14,881,849

0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 18,000,000 20,000,000
Area (Hectares)

Forested Non – Forested


Land area of Malaysia is
million hectares
Source: Ministry of Water, Land and Natural Resources (2018)

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

THE FACTS: SHARE OF LAND COVERED BY FOREST

Source: OurWorldinData.org

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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THE FACTS: POLICIES TOWARDS SUSTAINABLE OIL PALM CULTIVATION

To cap the total oil palm cultivated


area to 6.5 MILLION HECTARES
01
No more planting of oil palm in
peatland areas and to further 02
The Cabinet of Malaysia on 22 strengthen regulations with regard
March 2019 had endorsed the to existing oil palm cultivation on peat
following policies toward
sustainable oil palm cultivation To ban the conversion of forest
reserved areas for oil palm cultivation 03

To make available oil palm plantation


maps for public access 04

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

THE FACTS: MALAYSIA’S COMMITMENT TOWARDS SUSTAINABILITY

Malaysia voluntarily agrees to cut the GHG emission intensity by 45% by 2030 relative to
emission intensity GDP in 2005 as part of its commitment to COP21. As of 2013, 33%
reduction has been achieved.

The Malaysian oil palm industry in now focusing on improving productivity and yield, rather
than expanding land. Malaysia reiterates its commitment made at the Rio Summit in 1992
to retain at least 50% of the land area under forest cover. The area under forest cover in
Malaysia is 55.6% (2017).

Malaysia, as a world leader in sustainable palm oil production, has put in place various
environmental measures while successfully uplifting the lives of rural communities through
palm oil cultivation. This has proved that oil palm industry certainly contributes to
achieving the United Nations Sustainable Development Goals.

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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THE FACTS: ON-GOING EFFORTS AND NEXT STEP

To plant 1 million forest tree


species within the next 10 years
(sponsored primarily by the oil palm
industry members)
The Malaysian oil palm industry is
proactive in wildlife conservation
efforts, working together with
organization such as Sabah
Central Forest Spine (CFS) - linking Wildlife Department to support
4 main forest complexes which form wildlife rescue and conservation
the central mountain range in efforts
Peninsular Malaysia. CFS will be
crucial in creating ecological Heart of Borneo (HoB) - Malaysia
connectivity for Peninsular Malaysia participates with Indonesia and Brunei
and will ensure species survival in the “Heart of Borneo” Initiative to
conserve approximately 20 million
hectares of ecologically
interconnected rainforest, with about
30% of the area are in Malaysia.

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

THE FACTS: TOTALLY PROTECTED SPECIES IN MALAYSIA


Sumatran Rhinoceros

Dugong

Orang Utan

Clouded Leopard Proboscis Monkey

Sun Bear
Green Turtle Julung-Julung Crocodile Hawksbill Turtle

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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THE FACTS: GOVERNMENT-INDUSTRY-NGO COLLABORATION

Sabah Wildlife Conservation Colloquium January 2012


Jointly Organised by Sabah Wildlife Department (SWD), Malaysian Palm Oil Council (MPOC),
Borneo Conservation Trust, Danau Girang Field Centre & HUTAN

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

THE FACTS: STABLE POPULATION OF ORANG UTAN

ORANG UTAN’S BIGGEST THREATS (Source: HUTAN)

• Found outside protected areas


• Fragmentation and isolation
• Poaching
• Human-wildlife conflict

In 2016, this
In 2004,… only 40% figure had
of orang utan habitat was increased to
within the protected area
85%
MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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THE FACTS: ANNUAL PROFITS OF FORCED LABOUR

Developed Economies
and EU also profited
from forced labour

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

THE FACTS: PALM OIL ECONOMICS (2013 – 2014)

Palm oil imports contributed widely throughout


the global economy including in food, energy
and multiple consumer products.
1. Over $44bn of traded palm oil was associated with an
indirect contribution to value added in downstream
industries of nearly $17bn; or an indirect and induced
contribution to GDP of nearly $39bn.
2. Palm Oil is associated with a contribution to tax
revenues in the world of $4.3bn.
3. Palm Oil is associated with creating and sustaining
2.9m jobs globally.

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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THE FACTS: SOCIAL RESPONSIBILITY

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

THE FACTS: SOCIAL RESPONSIBILITY

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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THE FACTS: THE MALAYSIAN OIL PALM INDUSTRY: CONTRIBUTES TOWARDS POVERTY
ERADICATION
Year Average Income (RM) (USD)
FELDA Settler* Independent National Poverty
Smallholder** Line Income***
2007 2,221 (533) 1,209 (290) 740 (177)
2008 3,278 (786) 1,094 (262) 691 (166)
2009 2,459 (590) 944 (226) 800 (192)
2010 3,419 (820) 1,259 (302) 720 (173)
2011 4,648 (1,115) 1,413 (339) 800 (192)
2012 3,926 (941) 1,868 (448) 763 (183)
2013 3,787 (908) 1,520 (365) 860 (206) The oil palm industry has
2014 3,874 (929) 1,952 (468) 930 (223) consistently contributed towards
poverty eradication and narrowing
2015 2,689 (645) 1,175 (282) 930 (223)
of the income gap between rural
Oil Palm Smallholder is defined as farmer who owns land or in and urban folks by creating rural
Source: aggregate of less than 40.46 hectares (100 acres). Average size
* FELDA townships where residents enjoy a
is 3.9 ha.
** MPOB good quality of life with adequate
*** Ministry of Economic Affairs Two Categories of Smallholders social infrastructure (e.g. housing,
1) Organized smallholder health, religious facilities)
2) Independent smallholder

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

FUTURE MALAYSIAN OIL PALM INDUSTRY THROUGH TECHNOLOGICAL


BREAKTHROUGH AND PRODUCT DIVERSIFICATION

• Adopting new technology to provide solid foundation for


precision agriculture to increase productivity.
• Moving into mid and downstream expansion as these Robotics
sectors are more resistance to CPO price fluctuation.
• Realising our aspiration as regional food hub with higher Artificial
productivity and diversification to the downstream sector. Intelligence
• Enhancing renewable energy utilisation by promoting Drones
palm-based biomass production.
• Shifting from petrochemical to biochemical based through
value addition of palm oil products.
Big data
• Development of high skilled human capital who are well analytics High-skill
trained with “Internet of Thing (IoT)” to improve productivity human capital
Automation

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MECHANISATION & AUTOMATION RESEARCH


CONSORTIUM FOR OIL PALM (MARCOP)
• Acts as a Government – Industry platform to discuss,
develop and adopt Quantum Leap Technologies that
could reduce dependency of labour shortage in the
industry for medium and long term target.

• Current area of concern is on the harvesting of FFB.

• Implementation strategy will be based on the


technology acquisition programme, where identified
technologies’ producer and developer will be funded to
produce the desired solution.

• Source of funds are from the government and the


industry through one-year CESS collection dedicated
for MARCOP.

Revised MSPO Standards - Improved Sustainability Requirements


Introducing & Incorporated the Social Impact Assessment (SIA) approach to all level of
the MSPO Standard User.
03
Introducing & Incorporated the Introducing & Incorporated
High Conservation Value
02
Green House Gas Calculation
(HCV) approach to major part
of the palm oil industry.
04 (GHG) for the entire supply
chain.

The MSPO Standard supports Anti-corruption: In-line with


the Sustainable Development
Goals (SDG) 2030 by
01 05 National amended MACC Act
(Section 17A) which requires
incorporated the elements into mandatory corporate
the revised Standard. accountability.

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The Future of Palm Oil

WORLD POPULATION GROWTH & CONSUMPTION OF OILS AND FATS

300 10.0
7.8 billion 9.0
World Consumption of Oils & Fats

250.0
250 238.3
228.5 8.0 World consumption of oils
219.2
210.7 237.5 and fats is projected to
Population (billion)

191.5 200.3 204.3


7.0
200
(million tonnes)

178.2
184.4 increase by
171.7 6.0
147.7
153.9
159.9 164.1 5.3% from 237.5 mil.
150 131.6
139.4 5.0 tonnes (2020) to 250
121.4 125.5
113.4 117.9 4.0 mil. tonnes (2050)
100 to meet the demands of
3.0
9.8 billion population
2.0
50
1.0
0 0.0

Consumption Population
Sources: Oil World 2021 *Forecast: UNITED NATIONS DESA

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2020 – 2030 GLOBAL MEGATRENDS OPPORTUNITIES FOR THE OIL


PALM INDUSTRY

Climate Change and Shift in Global


Resource Scarcity Economic Power

Technologies Rapid
Breakthrough Urbanisation
Demographic and
Social Changes
MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

COVID-19 TRIGGERS FOOD TRENDS & OPPORTUNITIES

Eating for Immune Health Steals


the Spotlight
01 Meat Analogues Go Mainstream

02
Call for More Nutritious Foods.

Urban Farming Potential Unlocked


03

Call for Increased Food Safety


04
05 Demand of functional/
06 remedy food is high
Source: IFT.org

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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ECONOMIC POWER SHIFT BETWEEN E7 AND G7

2009 2050
G7
US$ 29.0 US$ 20.9 We E7
trillion trillion
GDP GDP are in US$ 69.3 US$ 138.2
trillion trillion
this GDP GDP
G7 E7 space
(US, Japan, (China, India,
(US, Japan, (China, India,
Germany, UK, Brazil, Russia,
Germany, UK, Brazil, Russia,
France, Italy, Indonesia, Mexico,
France, Italy, Indonesia,
Canada) Turkey)
Canada) Mexico, Turkey)

MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

Conclusions

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MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

Malaysian oil palm industry aligns all its sustainability efforts to the SDGs - have
developed an articulation on how we approach and contribute to the SDGs.

Palm oil is a vegetable oil that contributes to the attainment of SDGs, in other
words, If there is no palm oil, it would be difficult to attain these SDGs.

Nature’s Gift To
Malaysia,
Malaysia’s Gift To
The World!

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

NIK AZNIZAN NIK IBRAHIM


Malaysian Palm Oil Board
E-mail: aznizan@mpob.gov.my
Website: www.mpob.gov.my

Malaysian Palm Oil Board (MPOB)


6 Persiaran Institusi
Bandar Baru Bangi
43000 Kajang
Selangor MALAYSIA

MINISTRY OF PLANTATION INDUSTRIES & COMMODITIES

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Thank you

Malaysian Palm Oil Board (MPOB)


No. 6, Persiaran Institusi,
Bandar Baru Bangi,
43000 Kajang, Selangor
MALAYSIA
www.mpob.gov.my

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