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Palm Downstream Tribune

Oleochemical

From Mud to Molecules to Value

Trade & Policy

Expanding Malaysia's Palm Oil Export Reach

VOL.11 NO.1 OCTOBER - DECEMBER 2026

Palm Oil Tribune

Market Outlook

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Contents

Palm Downstream Tribune

CONTENTS 5-9

Latest News Roundup A quick digest of the latest policies and market trends.

11-15 Oleochemical

Oleochemicals: From Mud to Molecules Part 1

Key Palm Oil Mid & Downstream Stakeholders: Ministries, Its Agencies And Related Associations in Malaysia and Indonesia

Event List 2026

17-22

ADVERTISERS INDEX

Oleochemicals: From Molecules to Value Part 2

1, 2, & 16

23-24

Oleochemical

Trade & Policy

Expanding Malaysia's Palm Oil Export Reach

Muar Ban Lee Group Berhad

Next Chapter Media

Back Cover

Palm Carbon Conference

News Roundup

Palm Downstream Tribune

Palm Oil and the Burden of the Label

Palm Oil’s Cinderella at the Sink

8 June 2026

18 August 2026

Why does palm oil so often have to explain itself when other ingredients simply appear on the packet?

Palm oil’s role extends far beyond food. Through oleochemistry, palm and palm kernel oils are transformed into soaps, detergents, shampoos, surfactants, glycerine and other cleaning products used every day.

Writing after noticing the words “Certified Sustainable Palm Oil” on a supermarket label in London, the columnist reflects on the unequal burden of explanation placed on palm oil. Sugar, soy and rapeseed rarely carry similar qualifiers, yet palm oil has become a symbol onto which complex debates over forests, climate and ethics are compressed. Palm oil entered certification and sustainability scrutiny early. But that transparency created an irony: the more the industry measured and disclosed, the more visible - and judged - it became. Certification gradually shifted from competitive advantage to market prerequisite, often without reliable premiums. Meanwhile, simple messages such as “No Palm Oil” proved powerful because emotion and clarity often travel further than technical explanations. The answer, is not to reject scrutiny but to communicate better by showing the human and environmental stories behind productivity, smallholders, wildlife corridors, methane capture and improved mills. The deeper question is fairness. If sustainability is genuinely universal, comparable commodities should face comparable standards. Palm oil should continue explaining itself but it should not be the only crop sitting for the examination.

The article in The Star highlights palm kernel oil as the quieter “Cinderella” of the palm family. Rich in lauric acid, it has useful properties for personal-care and cleaning formulations. During the Covid-19 pandemic, demand for soaps, cleansers and detergents brought renewed attention to this often-overlooked downstream product. Yet the deeper message is not really about chemistry. Palm oil can help make the soap, but it cannot make people use it. Proper handwashing, clean public washrooms and basic maintenance are also about mindfulness and civicness: being conscious of how our actions affect others, and taking shared responsibility for the spaces we all use. Malaysia’s challenge is often not merely inadequate facilities, but poor follow-through. Empty dispensers, leaking taps, wet floors and neglected maintenance can undermine otherwise good infrastructure. A little mindfulness - leaving the washroom as we would hope to find it - is also a small act of civic respect. The central lesson is simple: good hygiene is both a personal habit and a civic act. Palm oil may supply the cleanser, but mindfulness, courtesy and civic responsibility must still come from us.

News Roundup

Palm Downstream Tribune

Indonesia Plans Commodity Exchange for Palm Oil, Nickel and Coal

From Kernel to Knowledge: Where Palm Oil’s Next Value Lies

24 August 2026

25 August 2026

Indonesia is preparing to launch a new national commodity exchange covering palm oil, nickel and coal, part of President Prabowo Subianto’s wider effort to strengthen oversight, pricing transparency and state monitoring of strategic exports.

Two articles in the Star covered the oleochemical sector. Palm oil’s downstream future may increasingly depend on a small but strategic part of the fruit: the kernel. Palm kernel oil is an important feedstock for fatty alcohols and surfactants used in detergents, shampoos, cosmetics and other oleochemicals.

The exchange is scheduled to begin operations on 1 January 2027 and is expected to establish domestic reference prices for key commodities. The initiative follows the creation of state export-monitoring company Danantara Sumberdaya Indonesia (DSI), which was introduced to help tackle under-invoicing and improve supervision of commodity shipments. Prabowo stressed that DSI would monitor exports rather than take control of them. In its first two months, the agency reportedly tracked more than 6,500 transactions involving palm oil, nickel and coal, representing about US$14 billion in exports. Monitoring is expected to expand to 50 ports, with additional strategic commodities potentially included later. For palm oil, the development could be significant. A stronger domestic pricing benchmark may improve transparency and give Indonesia greater influence over how its most important export commodities are valued internationally. The key test will be implementation: ensuring that greater state oversight improves market efficiency without creating unnecessary bureaucracy or disrupting established trading channels.

Yet ageing plantations, replanting, genetics, weather and fruit-set uncertainties could constrain future kernel supply even as new processing capacity expands. The second article shifts from scarcity to value capture. Indonesia is retaining more palm kernel oil for domestic processing, while China adds further chemistry and value to imported intermediates. Europe’s regulations may also influence where downstream processing occurs. Malaysia’s response should therefore go beyond building more factories: it must strengthen specialty chemistry, research, intellectual property, skilled talent, traceability and customer-focused innovation. Together, the message is clear: secure the molecule, but more importantly, put more knowledge and value into it before it leaves Malaysia.

News Roundup

Palm Downstream Tribune

From Coca to Palm: Colombia’s Alternative Crop Story

Indonesia’s B60 Push Could Reshape Palm Oil Demand

31 August 2026

9 September 2026

In Colombia, smallholders once dependent on coca are turning to oil palm as a legal and more stable income source, illustrating how agriculture can become part of wider rural economic transformation.

Indonesia is preparing for another major step in its biodiesel programme, with plans to move from B50 to B60 in 2027. The shift would increase domestic consumption of crude palm oil and could tighten the volume available for exports and other uses.

Since the 1990s, Colombia has promoted crop substitution through subsidies, technical assistance and tax incentives, encouraging farmers to grow alternatives such as cacao and oil palm. In San Pablo, northern Colombia, an estimated 275 smallholder oil palm growers operate, nearly 90% independently. According to the Roundtable on Sustainable Palm Oil (RSPO), these growers have helped revitalise the local economy, create employment and strengthen food security, making oil palm a key source of income. Colombia is Latin America’s largest oil palm producer, with 609,142 hectares planted in 2024, up 2.2% year-on-year. Alongside coffee, oil palm is among the country’s largest crops by planted area. Expansion brings sustainability responsibilities. Producers are increasingly pursuing environmental certification and satellite monitoring as international buyers, particularly in Europe, demand stronger safeguards against deforestation. The Colombian experience shows how responsibly managed oil palm can provide alternative livelihoods for smallholders and help communities move away from illicit rural economies.

The government is now assessing whether Indonesia has sufficient CPO supply and biodiesel production capacity to support the higher mandate. Particular attention is being given to expanding production of FAME - fatty acid methyl ester, the conventional palm-based biodiesel component - for both subsidised and commercial diesel markets. However, the final B60 formulation has not yet been decided. Authorities are studying whether the blend should include 10% hydrotreated vegetable oil (HVO) alongside FAME. HVO is estimated to cost about 1.5 to two times more than FAME, and technical testing is still at an early stage. Indonesia’s Oil Palm Plantation Fund Management Agency has been tasked with assessing FAME requirements, with findings expected by December 2026. These results should help determine the eventual blend specification and production volumes. The broader significance is clear: B60 would further transform palm oil from an export commodity into a strategic domestic energy feedstock.

News Roundup

Palm Downstream Tribune

Malaysia Targets High-Value Downstream Expansion in Key Indian Market

Indonesia Allocates Two Million Hectares of Sugarcane to Drive E20 Bioethanol Mandate

30 September 2026

6 October 2026

Malaysia is strategically shifting focus toward expanding high-value palm oil derivatives to India, diversifying beyond conventional crude palm oil shipments. Addressing an industry forum in Mumbai, Plantation and Commodities Minister Datuk Seri Dr Noraini Ahmad highlighted that Malaysian palm oil exports to India reached 2.26 million tonnes during the first eight months of 2026. This reflects a 40% year-on-year surge, capturing nearly 18% of Malaysia's total production.

The Indonesian government is establishing a five-year roadmap to mandate a 20 per cent bioethanol blend (E20) in gasoline, integrating transport decarbonisation with its existing B50 biodiesel strategy. Speaking at the 2026 Indonesia International Sustainability Forum, Coordinating Minister for Food Affairs Zulkifli Hasan highlighted that expanding domestic biofuel production will reduce fossil fuel reliance, drive green job creation, and leverage the national carbon pricing framework to attract international transition capital.

To reinforce bilateral trade ties, Malaysia is transferring technical expertise in oil palm breeding, nursery management, and milling infrastructure to support India’s National Mission on Edible Oils—Oil Palm. On the domestic front, Malaysia projects full-year 2026 CPO production to hit 19.7 million tonnes—with 12.6 million tonnes harvested through August—and total exports expected to reach 16 million tonnes. Despite escalating global freight, energy, and insurance costs driven by ongoing geopolitical friction, Malaysia's established supply network continues to secure its position as a resilient primary supplier to global markets.

To secure feedstock supply without jeopardising food security, President Prabowo Subianto instructed Agriculture Minister Andi Amran Sulaiman to designate two million hectares of existing sugarcane acreage for ethanol processing. Sugarcane was chosen over corn or cassava due to its established agricultural footprint and superior operational feasibility. Concurrently, the state-owned Danantara Investment Management Agency (BPI Danantara) has been mandated to develop the domestic industrial processing infrastructure and refining capacity required to support the nationwide E20 rollout.

News Roundup

Palm Downstream Tribune

Plantation Sector Maintains Neutral Rating Amid Ten-Year Stock Highs

Palm oil is often associated mainly with cooking oil, but its real economic story stretches

14 October 2026

13 April 2026

Kenanga Research retains a neutral rating on Malaysia's plantation sector after September 2026 palm oil inventories climbed 24 per cent month-on-month to a decade-high 3.511 million tonnes. Official MPOB metrics indicate crude palm oil output surged 16 per cent to 2.117 million tonnes, while exports dropped 13 per cent to 1.120 million tonnes.

FGV Holdings Bhd has expanded its B100 biodiesel trial to plantation operations to evaluate the technical performance and operational feasibility of using 100% palm oil-based biodiesel under real working conditions. The six-month trial is being conducted at the Tun Abdul Razak Agricultural Research Centre estate in Jerantut, involving 17 assets, including tractors, agricultural machinery, electric generators and four-wheel drive vehicles.

Despite stock accumulation, average CPO prices held at RM4,615 per tonne, underpinned by robust biofuel demand and projected 2027 output deficits from El Niño dry spells. The research firm maintains its baseline price targets at RM4,500 per tonne for 2026 and RM4,700 per tonne for 2027. However, escalating diesel and fertiliser costs, alongside the scheduled June 2027 minimum wage hike to RM2,000, threaten planter profit margins. Full-year 2026 fresh fruit bunch yields are projected to contract 1 per cent to 20 million tonnes. Meanwhile, downstream operations contend with regional overcapacity, delaying non-plantation income contributions until 2028.

The trial will assess key performance indicators such as fuel consumption, engine performance, operational reliability, maintenance requirements and fuel quality. Plantation operations were selected to provide comprehensive operational data, as machinery is subjected to continuous use, varying terrain, high temperatures and different workloads. FGV said the initiative aligns with the government's aspiration to increase the biodiesel blending mandate to B20 and reflects the government’s commitment to advancing renewable energy solutions derived from locally produced palm oil. The company also views the trial as an opportunity to create greater value from palm oil through innovation while strengthening the FELDA ecosystem and supporting settlers. Findings from the trial are expected to provide valuable insights into the wider adoption of B100 biodiesel and contribute to the continued development of Malaysia's biofuel industry.

Oleochemical Market Outlook

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Oleochemicals

Oleochemicals: From Mud to Molecules Part 1

By Joseph Tek Choon Yee

Oleochemicals

Palm Downstream Tribune

Oleochemicals are one of those subjects I have long wanted to understand better. Much of my working life was spent closer to the mud - plantations, palms, fruit bunches, mills and the practical business of producing oil. Oleochemicals take us much further downstream, into atoms, molecules, reactors and chemistry. From mud to molecules, you might say. Organic chemistry was never my strongest subject in school. I did not pursue it further, nor am I a chemical engineer. Yet carbon has always fascinated me - this remarkably sociable atom capable of joining and rearranging itself into an extraordinary variety of useful compounds. Years later, visiting oleochemical plants in Pasir Gudang and elsewhere, I would stare at the maze of pipes, vessels, reactors and distillation columns with the curiosity of a student. Somewhere inside all that stainless steel, oils originating from fruit bunches I knew so well were being split, purified and transformed into fatty acids, fatty alcohols, methyl esters, glycerine and other molecules that eventually find their way into detergents, shampoos, cosmetics, pharmaceuticals, lubricants, plastics, coatings and countless industrial products

What on earth are oleochemicals? For the uninitiated, oleochemicals are broadly chemicals derived from natural fats and oils. In Southeast Asia, palm oil and particularly palm kernel oil are important renewable feedstocks, while coconut oil also contributes. Their derivatives form some of the building blocks from which much more downstream chemistry develops. I was recently introduced to LAB and LABSA - Linear Alkylbenzene and Linear Alkylbenzene Sulphonic Acid. Every time somebody said LABSA, my Malaysian ears heard something suspiciously close to LAKSA. At least laksa I understood. One belongs in detergent and the other in a bowl; confusing them would certainly produce a memorable lunch. For the non-chemist, think of LAB as the raw chemical building block. Through a further step called sulfonation, it becomes LABSA, which can then be neutralised to form the active surfactant used widely in laundry and dishwashing detergents. In short, LAB starts the journey; LABSA brings it much closer to the detergent bottle.

LABSA belongs to a petrochemical surfactant route and is generally not a direct substitute for surfactants made from natural fatty alcohols. Its strong cleaning and foaming characteristics make it particularly useful in laundry and industrial applications, while fatty-alcohol-derived surfactants often serve somewhat different uses, including personal care. The two chemical routes can overlap in the broad cleaning market, but they are not simply interchangeable molecules. What makes today's market unusual is disruption. Where availability of some petrochemical surfactant inputs becomes constrained, users may turn to natural alcohol alternatives. That is an important business lesson for this chemistry novice: substitution is not always about finding something cheaper. Sometimes it is about finding something available. Behind this alphabet soup lies serious economics, which became particularly clear listening to Dr Julian Conway McGill of Glenauk Economics at the recent ASEAN Oleochemical Manufacturers Group (AOMG) Executive Dialogue event. If chemistry explains what we can do to a molecule, economics explains why we choose to do it - and increasingly whether enough of that molecule will be available.

Palm Downstream Tribune

Oleochemicals

Haven't we been here before? Dr Julian began by taking us back almost 20 years. In 2008, the oleochemical industry was already worrying about almost one million tonnes of new fatty-alcohol capacity, delayed plant start-ups and dramatically higher palm kernel oil, or PKO, prices. Nearly two decades later, another large wave of fatty-alcohol capacity has arrived, again accompanied by delays and high PKO prices. The latest expansion cycle is now reaching its tail end, with much of the new capacity having finally started after delays. One could be forgiven for wondering whether the industry has spent 20 years going around one enormous distillation column. But Dr Julian's more important point was that the supply world behind those factories has changed fundamentally. In the years around 2008, Indonesia's oil-palm industry was still relatively young and expanding rapidly. New planting meant more oil palm trees, more fruit and eventually more kernels entering the system. Today that plantation base is much more mature. The growth story has increasingly shifted from expansion towards rejuvenation, with replanting becoming more important relative to new planting. For an oleochemical industry dependent upon future PKO supply, that is anything but a subtle change. Twenty years ago, the industry worried about whether there would be too many factories. Today perhaps it should also ask whether there will be enough molecules to feed them.

The kernel hiding inside the story Most discussions about oil palm naturally focus on crude palm oil, or CPO, but the fruit actually gives us two chemically very different oils. The familiar orange-red flesh, or mesocarp, produces palm oil. Hidden inside the hard nut is a whitish seed - the kernel - which, when crushed, gives us palm kernel oil. One fruit, two oils, and increasingly two different economic stories. For much of the oleochemical industry, the kernel is especially important. PKO has a very different fatty-acid composition from palm oil and is rich in shorter-chain lauric-type fatty acids that make it especially valuable for fatty alcohols and downstream surfactants. There is something quite remarkable here. The natural lauric-oil world rests essentially on two tropical oils - palm kernel and coconut. Dr Julian's side note made the point memorably: natural fatty alcohol ultimately depends on these narrow agricultural sources. Think about that the next time you reach for the shower gel. A consumer standing under a shower in London, Shanghai or New York is unlikely to wonder whether part of the chemistry in the bottle began life inside a coconut or in the kernel of an oil-palm fruit somewhere in Southeast Asia. Yet that is how deeply agriculture and chemistry are intertwined. We tend to divide the world neatly into upstream and downstream, plantation and factory, agriculture and industry. The molecule ignores our organisational chart. It was another small revelation for the planter in me. We naturally look at the big orange fruit bunch and ask how much CPO it will produce. The kernel is physically smaller and can easily become the supporting actor in the plantation story. But downstream, size does not necessarily determine strategic importance. The tiny kernel contains chemistry the mesocarp cannot provide. Sometimes the smallest part of the fruit carries the biggest downstream question. Historically, palm and PKO expansion helped overcome natural-oleochemical feedstock constraints. Tallow and coconut oil had previously been important sources, but neither expanded in the way palm did. That old era of abundant feedstock growth cannot simply be projected forever into the future.

Oleochemicals

Count the flesh, but don't forget the nut There is another upstream wrinkle. Dr Julian's analysis suggests some newer oil palm planting materials may also have lower kernel extraction rates. That observation transported me back to my own plant-breeding days. I remember one practical calculation used in evaluating oil palm breeding material. It was called Total Economic Product, or TEP: TEP = Oil Yield + (Kernel Yield × 0.6). The 0.6 was not some sacred biological constant handed down from the oil-palm gods. As I recall, it was an economic shortcut used to express the value of kernel alongside mesocarp oil, broadly reflecting their relative economics at the time. Oil-palm researcher Dr Hereward Corley wanted a practical way of comparing the total products of different breeding materials in value terms. It gave us a wonderfully simple reminder: Count the flesh, but don't forget the nut. I would not assume, however, that 0.6 remains the right coefficient today. Markets and relative product prices have moved greatly since the 1980s, and it would be interesting to recalculate the relationship before resurrecting the old formula as contemporary economics. The principle remains sound; the number need not be eternal. That principle is becoming unexpectedly relevant. Oil-palm breeders have understandably spent decades pursuing more mesocarp and higher oil yield, and the industry has benefited enormously. Yet the palm produces two commercially valuable oils. If genetic progress increases mesocarp-oil output while proportionately less kernel is recovered, the plant breeder may have achieved exactly what was intended while the downstream lauric industry discovers that its preferred feedstock is becoming relatively scarcer. Nobody got the breeding wrong. The economics moved. And when economics moves far enough, yesterday's secondary trait can become tomorrow's strategic one. Perhaps, after all these years, the oleochemical producer has something useful to whisper back to the breeder.

Palm Downstream Tribune

Oleochemicals

Palm Downstream Tribune

The plantation receives rainfall, not an index Weather adds another uncertainty. Dr Julian's caution on El Niño was particularly interesting from a planter's perspective. His argument was not that El Niño–Southern Oscillation (ENSO) should be ignored, but that one should be careful about translating a dramatic climate index directly into an equally dramatic palm-oil production forecast. Timing matters. Geography matters. Rainfall distribution matters. The Oceanic Niño Index (ONI), Southern Oscillation Index (SOI) and other indicators tell us something important about the climate system, but the palm itself does not read meteorological charts. The plantation receives rainfall, not an index. For the crop, what ultimately matters is how many millimetres fall, when they fall, how long the dry period lasts and how severely soil moisture becomes depleted.

Haze, parthenocarpy and a little beetle

The old problem returns

Then another obvious possibility was raised: haze may matter to kernel recovery too. This is where the science deserves careful wording.

The central message therefore goes beyond today's PKO price. The structural context has changed. Oil-palm acreage that once expanded rapidly is ageing. Replanting does not automatically reproduce the same kernel-growth trajectory.

The tiny oil-palm pollinating weevil, Elaeidobius kamerunicus, performs the enormous task of transferring pollen and contributing to good fruit set. Where fertilisation fails, some fruits can develop without a properly formed seed or kernel what scientists call parthenocarpy. For the lay reader, think of it simply as producing the flesh but missing the nut. Dr Julian's presentation raises haze as a possible concern for fruit set and therefore kernel recovery, but the causal bridge should not be overstated. The evidence is not yet strong enough for us to claim confidently that haze directly suppresses pollinating weevils and consequently causes parthenocarpy. Yet the wider biological question matters. Anything seriously interfering with pollination and successful fertilisation can ultimately affect fruit set and kernel formation. If kernels become strategically more valuable downstream, these relationships become more economically important too. There is something wonderfully humbling about this. We can build billion-ringgit chemical complexes and manipulate molecules with extraordinary precision, yet part of this sophisticated value chain still begins with a tiny beetle carrying pollen from one flower to another.

Other natural lauric sources are limited. More fatty-alcohol capacity has arrived, while genetics, weather and fruit set introduce additional uncertainties. For decades, palm helped liberate natural oleochemicals from feedstock scarcity. Now feedstock may once again become the strategic question except this time there are many more claimants. Oleochemical producers want the kernel. Food manufacturers want it. Indonesia wants to process more of it at home. China wants the molecules made from it. Regulators increasingly want to know where it came from. Everybody wants the molecule. Unfortunately, nobody consulted the palm. So perhaps the important question is no longer merely how much oleochemical capacity the world can build. It is who gets the molecule - and who captures the value after getting it? That is where Part 2 continues.

Policy Watch

Palm Downstream Tribune

Oleochemicals: From Molecules to Value Part 2

Oleochemicals

By Joseph Tek Choon Yee

Oleochemicals

Palm Downstream Tribune

In Part 1, I travelled from the plantation mud of my more familiar world into oleochemicals and discovered something paradoxical. After decades in which palm helped free natural oleochemicals from raw-material constraints, the industry may once again be learning to respect scarcity. The kernel matters. But once its oil has been transformed into molecules, another contest begins: who gets the molecule, what do they do with it, and who captures the most value? That takes us immediately to Indonesia.

Indonesia tells the molecule to stays home Indonesia has long used differential export taxes and levies to encourage palm products to be processed domestically rather than exported in less-processed form. I describe the strategy simply: policy tells the molecule to stay home a little longer. Dr Julian McGill’s analysis makes the shift tangible: around 70% of Indonesian PKO is now used domestically, encouraged by differential export taxes that favour processing at home. There is some historical irony. Indonesia’s downstream strategy followed a path Malaysia had pioneered earlier, but applied it on the scale of a much larger feedstock base. Over time, such incentives shape not just prices but where refineries, fractionation plants, oleochemical facilities, suppliers and skills cluster. Indonesia is therefore no longer asking merely whether palm products should be processed at home, but how far downstream the molecule should travel before it leaves. For Malaysia, that matters. Indonesia historically exported relatively little PKO in fractionated form, but the analysis shows fractions rising to around 40% of Indonesian PKO-related exports, approaching Malaysian levels. Less raw PKO is freely available while more specialty fractions find their own markets. Palm kernel stearin, for example, has applications in specialty fats and cocoa-butter substitutes. This is best described as part of the contest of chemistry versus confectionery. The same humble kernel can eventually help wash our hair or find its way towards something resembling chocolate. It shows why total PKO production tells only part of the story. The question is also what people choose to turn it into. Allocation matters alongside production.

Oleochemicals

Palm Downstream Tribune

When geopolitics enters the detergent bottle Economics normally tells us scarcity encourages substitution. But chemistry is not always that accommodating. LABSA and natural-fatty-alcohol-derived surfactants are not normally straightforward substitutes; their performance and applications differ. Yet supply disruption can change purchasing behaviour. Where geopolitical shocks constrain petrochemical surfactant inputs, manufacturers may turn to natural fatty alcohol even when it is more expensive and not the ideal technical substitute. That is a useful lesson: Substitution is not always about finding something cheaper. Sometimes it is about finding something that still arrives at the factory gate. Suddenly the detergent bottle contains a little geopolitics too.

China: customer and competitor Then there is China. Is China a client or competitor? The answer appears to be both. China has become an important destination for Southeast Asian fatty alcohol, but it can take that imported building block further downstream into surfactants used in detergents, shampoos and cleaning products, some subsequently exported. For the non-chemist, the business model is what matters: Southeast Asia supplies an important chemical building block; China adds another layer of chemistry -and another layer of value.

From capacity to value capture Malaysia's oleochemical achievement should not be understated. We possess substantial global manufacturing capacity and decades of industrial experience. But another factory is not automatically another competitive advantage. Equipment can be bought, reactors installed and processes licensed. Harder to reproduce are proprietary formulations, application expertise, patents, process know-how, specialty products, technical service and relationships with customers who buy solutions rather than simply tonnes.

There is nothing wrong with that. It is exactly what successful downstream industrialisation is supposed to achieve. But China's example does not mean Malaysia lacks similar capability. Malaysia already manufactures surfactants and specialty oleochemical derivatives. Our challenge is to deepen, broaden and commercialise more of what we already know how to do.

A feedstock disadvantage hurts enormously when two producers sell almost identical commodities on thin margins. It matters less when one transforms the molecule into something specialised enough for customers to pay for performance, reliability and knowledge.

So the question is no longer can Malaysia do it? It is: how much more value should we capture here before the molecule leaves our shores?

Indonesia may sometimes possess an advantage before the molecule enters the factory. Malaysia must create more advantage before it leaves.

Oleochemicals

Being close to the molecule still matters High PKO prices sound like universally bad news for Southeast Asian manufacturers, but Dr Julian argues they may actually strengthen the region's relative position because producers elsewhere must secure the same scarce feedstock from much farther away. Expensive feedstock hurts everybody, but expensive feedstock nearby may still be preferable to expensive feedstock half a world away. Yet proximity should never become an excuse for complacency. History is full of countries sitting beside valuable raw materials while somebody elsewhere became richer by knowing what to do with them. Malaysia has travelled this road before. We did not remain merely growers. We built mills, refineries, ports, laboratories and oleochemical plants around the crop. The next step may be subtler. It may sit inside a patent, an application laboratory, a customer formulation, a lower-carbon process or a molecule designed for a particular performance. The next factory may partly be inside somebody's head. That is why human capital and intellectual property increasingly matter as much as physical capacity.

Palm Downstream Tribune

20 2

Palm Downstream Tribune

Oleochemicals

Europe and the moving chemistry This brings us to Dr Julian's most provocative observation. He was considerably less diplomatic when discussing aspects of European policy. His description was essentially “bodoh dan sombong” - foolish and arrogant. Strong language, but behind it lies a more serious economic argument. His presentation points out that declining EU palm-oil demand can also undermine the availability of PKO associated with that supply chain. Europe is extending EUDR coverage further into palm-derived oleochemical products. According to Dr Julian’s analysis, additional palm-derived intermediates are due to enter the regulatory scope from 30 December 2027, a year after the current legislation is expected to take effect, while surfactants and detergents classified under HS 3402 remain outside that product scope. HS, or Harmonised System, codes classify traded goods globally. The result is a curious asymmetry: the same palm-derived molecule can face different rules depending on how far the chemistry has progressed before reaching Europe. Take a covered palm-derived intermediate made in Southeast Asia and ship it to Europe for further conversion: it carries the relevant due-diligence obligations. Perform another layer of chemistry in Malaysia, Indonesia or China first and export the resulting HS 3402 surfactant: the finished surfactant currently sits outside that same product scope. Same underlying palm supply chain. Different point of conversion. Different regulatory treatment. This can be reduced to one memorable line: The molecule does not disappear. The chemistry moves. That is the basis of his warning that Europe risks shooting itself in the foot. Regulation intended to address deforestation may unintentionally make some European downstream processing less attractive while encouraging more value addition elsewhere. The environmental objective can still be legitimate while the industrial consequence remains unintended. It reminds me of the Cobra Effect -when a well-intentioned policy changes incentives in such a way that the eventual outcome runs partly against what the policy was meant to achieve. Malaysia can complain about Europe - or ask whether Europe has just provided another reason to do more of the chemistry here. I prefer the second question.

Oleochemicals

Palm Downstream Tribune

The molecule needs a passport None of this means Malaysia should resist traceability or environmental accountability. Quite the opposite. A chemical customer increasingly wants more than purity, composition and performance. Where did the feedstock originate? Can its provenance be demonstrated? What emissions travelled with it? Was it responsibly produced? The modern molecule increasingly needs a biography. Perhaps it needs a passport. Malaysia has spent years developing certification and traceability upstream. The opportunity is to carry credible information further downstream and turn sustainability into part of the commercial proposition. Imagine two drums of fatty alcohol meeting the same technical specification. One arrives with credible traceability, carbon information and dependable sustainability documentation; the other arrives with much less evidence. Will sophisticated customers forever regard them as commercially identical? Perhaps not. That is where sustainability begins moving from something we must prove towards something worth selling. Indonesia possesses a far larger feedstock base and has deliberately structured policy to encourage domestic downstream processing. Malaysia must understand its competitive effects. But reducing industrial strategy to a permanent tax race carries its own danger. Indonesia adjusts a levy, Malaysia responds; Indonesia changes again, Malaysia follows. Before long, industrial strategy becomes fiscal ping-pong. Malaysia's more durable response is to strengthen things harder to reproduce through another tax adjustment: research capability, intellectual property, application centres, engineering knowledge, skilled talent, automation, energy efficiency, customer intimacy and specialty chemistry. Help industry climb the value chain rather than endlessly compensate it for standing on the lowest rung. Our ambition need not be to possess the cheapest carbon entering every factory gate. It should be to make that carbon worth considerably more by the time it leaves.

From molecules to knowledge This brings me back to those oleochemical plants in Pasir Gudang that once fascinated the corporate planter and researcher in me. Malaysia has already achieved something important: we took a tropical agricultural commodity and built a sophisticated chemical industry around it. But industrial success has a habit of moving the finishing line. Indonesia is keeping more feedstock at home. China shows how an ASEAN intermediate can acquire another layer of chemistry and value. Europe’s regulations may influence where still more processing takes place. Malaysia does not need to discover the road from molecules to knowledge - we are already on it. The challenge is to travel further and faster. That means improving upstream productivity, recognising the kernel’s growing strategic value, securing traceable feedstock, lowering carbon intensity and developing more proprietary chemistry and stronger customer capabilities. Our factories do not need to close for Malaysia to lose ground. Plants can remain, ships can keep sailing and production statistics can still look respectable while intellectual property, formulations, customer relationships and higher margins accumulate elsewhere. Then, lo and behold, the end game may not arrive with a dramatic announcement. It may simply dawn one morning after years of comfortable incrementalism. A factory is only as powerful as the molecule it can secure. Malaysia’s future depends on something more: how much knowledge and value we put into that molecule before we let it go.

Palm Downstream Tribune

Trade & Policy

Expanding Malaysia's Palm Oil Export Reach For decades, Europe has been one of the key destinations for Malaysian palm oil. However, tightening sustainability requirements, evolving consumer preferences and regulatory measures such as the European Union Deforestation Regulation (EUDR) are reshaping global trade flows. As a result, Malaysia’s palm oil industry is broadening its export strategy and strengthening its presence in regions across Asia, Africa, the Middle East and Central Asia. Export diversification has become a strategic priority for reducing dependence on any single market while improving resilience against geopolitical uncertainty, trade policy changes and fluctuating global demand. Although Europe remains an important export destination, its share of Malaysian palm oil exports has gradually declined in recent years. Meanwhile, demand continues to expand in regions where rising populations, urbanisation and industrial development are driving higher edible oil consumption.

India and China remain among Malaysia's largest export destinations, supported by sustained demand from the food processing, hospitality and consumer goods sectors. Beyond these traditional markets, Malaysian exporters are actively exploring new commercial opportunities in Central Asia, the Middle East and Africa. These regions are experiencing rapid population growth, increasing disposable incomes and expanding food industries, creating favourable conditions for long-term demand for palm oil. Recent trade missions organised by the Malaysian Palm Oil Council (MPOC) have helped strengthen commercial engagement across several emerging economies. Business engagements in Central Asia have generated promising commercial opportunities, reflecting growing interest in Malaysian palm oil for food manufacturing and industrial applications. Similar initiatives across Africa and the Middle East continue to strengthen business relationships while increasing awareness of the quality, versatility and sustainability credentials of Malaysian palm oil.

Trade & Policy

Palm Downstream Tribune

While identifying new export opportunities is important, long-term success depends on more than securing new buyers. Increasingly, global customers are seeking suppliers capable of delivering traceable, certified and value-added products that meet evolving sustainability requirements. This has encouraged greater investment in refining, specialty fats, oleochemicals and downstream processing, allowing Malaysian companies to compete on product quality, reliability and innovation rather than price alone. At the same time, digital traceability systems, stronger supply chain transparency and compliance with international certification requirements are becoming important competitive advantages. As more importing countries strengthen their sustainability expectations, producers that can demonstrate responsible sourcing and sustainable production practices will be better positioned to secure long-term market access. Looking ahead, Malaysia's export strategy is no longer focused solely on increasing shipment volumes. Greater emphasis is now shifting towards building a more diversified customer base, expanding value-added exports and enhancing resilience against changing global market conditions. By broadening its international reach while continuing to strengthen its sustainability credentials and product quality, the palm oil industry is positioning itself for more balanced, competitive and sustainable long-term growth. Ultimately, export diversification is not simply about replacing one market with another. Rather, it is about positioning Malaysia’s palm oil industry for long-term success through a broader international reach, greater resilience and continued competitiveness in an evolving global marketplace.

Event List

Palm Downstream Tribune

12 - 13 JAN

9 - 11 FEB

10 - 12 FEB

17 - 19 APR

Palm Oil Economic Review and Outlook Seminar (R&O) 2026

37th Palm & Lauric Oils Price Outlook Conference & Exhibition (POC2026)

3rd International Simposium Ganoderma (ISGANO) 2026

Pakar Pertanian Expo (PPE)

TBC, Kuala Lumpur, MY

Adimulia Hotel Medan, Sumatera Utara, INA

22 - 23 APR

23 - 24 APR

6 - 7 MAY

14 - 16 MAY

2nd HaiSawit Symposium (HASI) 2026

International Palm Oil Millers Conference (IPOMC) 2026

16th PALMEX Indonesia 2026

4th AgTech International Agro Expo

Berjaya Times Square Hotel, Kuala Lumpur, MY

Royale Chulan KL, MY

Hall A1 & A2, Jakarta International Expo (JIEXPO), Kemayoran, INA

25 - 27 JUN

7 - 9 JUL

13 - 15 JUL

4th AgTech International Agro Expo

4th Technology & Talent Palm Oil Mill Indonesia (T-POMI)

11th International Conference (IPC)

Hotel Bidakarta Jakarta, INA

Setia City Convention Centre, Selangor, MY

Holiday Inn Bandung Pasteur, West Java, INA

MAEPS Serdang, Selangor, MY

Perda Convention Centre, Penang, MY

28 - 30 JUL Planters

Royale Chulan Kuala Lumpur, MY

12th Indonesia International Palm Oil Machinery & Processing Technology Exhibition (INAPALM Asia)

Jakarta International Expo (JIEXPO) Kemayoran, INA

6 - 7 AUG

6 - 8 AUG

10 - 12 SEP

6 - 8 OCT

Asia Palm Oil Conference (APOC) 2026 | 15th PALMEX Thailand

9th Malaysia International Agriculture Technology Exhibition (Agri Malaysia)

16th PALMEX Medan 2026

CO-OP Exhibition Centre, Surat Thani, THA

4th Sawit Indonesia Expo (SIEXPO) 2026 Pekanbaru Convention & Exhibition, Riau, INA

Santika Premiere Dyandra Hotel & Convention, Medan, INA

13 - 14 OCT

16 - 17 OCT

7 - 8 NOV

17 - 18 NOV

Oils & Fats International Congress 2026 (OFIC 2026)

3rd Unlocking Revenue & Sustainability: Palm Carbon Emission Reduction | POMA Dinner

4th AgTech International Agro Expo

5th World Palm Conference 2026 | 13th PALMEX Malaysia

Kuala Lumpur Convention Centre, KL, MY

Genting Highlands, MY

Malaysia International Trade Exhibition Centre (MITEC), KL, MY

Sabah International Convention Centre, Sabah, MY

Hall 4 & 5, Kuala Lumpur Convention Centre, MY