Bangladesh And Malaysia Plan Bilateral Pact On Palm Oil

Kuala Lumpur, Malaysia | December 17, 2009 by D-8 Secretariat

Bangladesh is interested to have a government-to-government buying arrangement to ensure there is steady supply and price of palm oil

The Bangladeshi government is keen to procure palm oil from Malaysia using its state-owned trading arm to ensure consistent edible oil supply and price stability prevails in the domestic market, reported Malaysian News Agency, BERNAMA.

Plantation Industries and Commodities Minister Tan Sri Bernad Dompok told Bernama that Bangladesh was keen on a bilateral arrangement, and Malaysia welcomed the proposal as it would encourage more exports of the commodity to the populous South Asian nation.

“Bangladesh is interested to have a government-to-government buying arrangement to ensure there is steady supply and price of palm oil is maintained in the local market,” said Dompok.

“This will also help Malaysia export more to Bangladesh because their current per capita consumption is only 8.6 kg compared to world’s average consumption of 22 kg, there is good opportunity for growth,” he said.

Bangladesh’s Commerce Minister Faruk Khan conveyed the government’s interest to Dompok, who was in Dhaka to inaugurate the Malaysia-Bangladesh Palm Oil Trade Fair and Seminar (POTS) 2009 last week.

The state-run Trading Corporation of Bangladesh (TCB) will be entrusted to procure the supply on behalf of the government, which for the first time will intervene in the import business that was completely dominated by the private sector.

Annually, Bangladesh imports about 1.4 million metric tonnes of palm oil for its domestic consumption, largely from Indonesia and Malaysia.

In 2008, Malaysia exported about 217,264 metric tonnes to Bangladesh.

But this year’s January to October figures had been dismal — only at 57,726 metric tonnes — after many Bangladeshi buyers bitten by the rising price shifted to Indonesian suppliers who offered cheaper rates.

The Palm Oil Credit Payment Arrangement (POCPA) will also be considered in the bilateral discussion likely to be held in Kuala Lumpur next month.

D-8 member countries, such as Malaysia and Indonesia, are world’s highest producers of palm oil, supplying up around 90% of total world production. However, the usage of palm oil is still relatively limited to edible items, and has not yet effectively explored for the usage in bio-diesel purposes. The challenge between food and energy needs is yet the biggest hurdle to be solved. Indonesia is on a continuous research to explore the possibilities to use janthropa to cover this need, but the result has not been reached yet. D-8 Director, Ambassador Kia Tabatabaee said that D-8 Organization is putting all its effort to support the development of this sectors, and implied that it can also learn from other countries to seek further potentials in this promising fields.

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