Palm oil production in Malaysia

Palm oil production is vital for the economy of Malaysia, which is the world's second- largest producer of the commodity after Indonesia.[1][2] The Malaysian Palm Oil Board (MPOB) is a government agency responsible for the promotion and development of the palm oil sector in the country. The country's palm oil industry produces about 90 million tones of lignocellulosic biomass, including empty fruit bunches, oil palm trunks, and oil palm fronds, as well as palm oil mill effluent (POME).[3] In 2010, in response to concerns about social and environmental impact of palm oil, the Malaysian Government pledged to limit palm oil plantation expansion by retaining at least half of the nation's land as forest cover.[4]


British Malaya

Palm oil trees were introduced to British Malaya by the British government in early 1870s as ornament plants from West Africa. The first commercial palm oil cultivation was done in Selangor in 1917 at Tennamaran Estate. In the early stage of development, the government focused on increasing its palm oil output by rapidly increasing the land area for the palm oil cultivation.


In the early 1960s, palm oil cultivation increased significantly under the government diversification program to reduce Malaysia's dependency on rubber and tin.[5] The FELDA land settlement schemes were introduced surrounding most of the palm oil plantation fields to eradicate poverty among the local people. In the same period, Malaysia also became the world's largest palm oil exporter. In the 1980s, the government nationalized three major palm oil companies, which were Guthrie, Golden Hope and Sime Darby.[6]

Palm oil plantation area in Malaysia by year (1975-2012)
YearPlantation area (million hectares)Percentage over total land area in Malaysia


As of 2016, palm oil plantation accounted for a total land use of 57,400 km2 in Malaysia.[7]

Palm oil plantation area in Malaysia by state (2016)
StatePlantation area (hectares)Percentage of total plantation areaPercentage of state area
Negeri Sembilan178,9583.1%26.8%


In 2012, the Malaysian palm oil industry employed an estimated 491,000 workers.[8]

Malaysia's Sime Darby is the largest listed palm oil company globally, based on plantation area and fresh fruit bunch production.[9] The company was created through a Malaysian government initiated merger in December 2006.[10][11] The world's second-largest oil palm plantation company, Felda Global Ventures Holdings (FGV), is also based in Malaysia.[12][13] Felda Global Ventures Holdings is the world's third largest palm oil company by planted acreage,[14] controlling over 850,000 ha of land in the country, including approximately 500,000 ha that it leases and manages for smallholders.[15]

Research institutions

In the 1960s, research and development (R&D) in oil palm breeding began to expand after Malaysia's Department of Agriculture established an exchange program with West African economies and four private plantations formed the Oil Palm Genetics Laboratory.[16] The Malaysian government also established Kolej Serdang, which became the Universiti Putra Malaysia (UPM) in the 1970s to train agricultural and agroindustrial engineers and agribusiness graduates to conduct research in the field.

In 1979, with support from the Malaysian Agricultural Research and Development Institute (MARDI) and UPM, the government set up the Palm Oil Research Institute of Malaysia (PORIM),[17] a public-and-private-coordinated institution, meaning PORIM was run by representatives from government and industry[18] B.C. Sekhar was appointed founder and chairman and Yusof Basiron served as Director-General.

PORIM was merged with the Palm Oil Licensing and Registration Authority (PORLA) to form the Malaysian Palm Oil Board in 2000. MPOB scientists work in oil palm tree breeding, palm oil nutrition and potential oleochemical uses.


The Malaysian government established the National Biofuel Policy in 2006, which led to the implementation of the B5 mandate in some regions of the country. The B5 mandate requires that all diesel sold in these regions of Malaysia contain 5% palm oil biodiesel. This mandate is expected to be expanded nationwide in 2014, with plans to increase the minimum palm oil biodiesel content to 10%.[19] The biodiesel sector in Malaysia has struggled to become profitable, due in part to the high cost of crude palm oil, which led to a dip in biodiesel production in the late 2000s. In 2012, there were 20 biodiesel plants in Malaysia, of which 2 were operational by early 2013.[19][20] According to an advisor to the Roundtable on Sustainable Palm Oil, biodiesel production in Malaysia is expected to double in 2013.[21][22]

Labour practices

According to the United States Department of Labor Bureau of International Labor Affairs' List of Goods Produced by Child Labor or Forced Labor, Malaysia's palm oil industry includes both child labour and forced labour practices.[23]

See also


  1. Pakiam, Ranjeetha (16 September 2013). "Malaysia Keeps Palm Oil Export Tax Unchanged to Spur Shipments". Bloomberg News. Retrieved 22 September 2013.
  2. McClanahan, Paige (September 11, 2013). "Can Indonesia increase palm oil output without destroying its forest?". The Guardian.
  3. Ibrahim, Osman & Usman 2007, p. 464.
  4. Morales, Alex (18 November 2010). "Malaysia Has Little Room for Expanding Palm-Oil Production, Minister Says". Bloomberg. Retrieved 22 September 2013.
  5. Basiron, Yusof (2013). "Malaysian Supply and Demand of Palm Oil: Challenges and Opportunities until 2020". Malaysian Palm Oil Council.
  6. "Palm Oil Industry in Malaysia" (PDF). World Bank. 24 June 2009. Retrieved 30 March 2018.
  7. Kushairi Din, Ahmad (17 January 2017). "Malaysian Oil Palm Industry Performance 2016 and Prospects for 2017" (PDF). Malaysian Palm Oil Board. Retrieved 30 March 2018.
  8. "MALAYSIA: Stagnating Palm Oil Yields Impede Growth". USDA Foreign Agricultural Service. 11 December 2012. Retrieved 29 January 2013.
  9. Satish K.B (11 January 2013). "Fitch rates Malaysia's Sime Darby 'A';outlook stable". Reuters. Retrieved 5 February 2013.
  10. "SYNERGY DRIVE FORMS MERGER INTEGRATION COMMITTEE" (PDF) (Press release). Sime Darby. 27 December 2006. Retrieved 5 February 2013.
  11. "Synergy renamed Sime Darby". The Star. 29 November 2007. Retrieved 5 February 2013.
  12. Grant, Jeremy (27 June 2012). "Felda IPO key to Malaysia's ambitions". Financial Times. Retrieved 5 February 2013.
  13. Chin, Joseph (28 June 2012). "Felda Global world's 2nd largest IPO this year, opens at RM5.39". The Star. Retrieved 5 February 2013.
  14. "Felda Global Ventures' RM10bil IPO 2nd biggest in world this year after Facebook". The Star Online. Retrieved 27 February 2013.
  15. Zaidi Isham Ismail. "RM342m gain for FGV from stake sale". Business Times. Archived from the original on 23 March 2013. Retrieved 14 April 2013.
  16. Hartley, C. W. S. (1988). The Oil Palm, 3rd edn. Longman Scientific and Technical, Harlow, U.K.
  17. Development of Palm Oil and Related Products in Malaysia and Indonesia Rajah Rasiah & Azmi Shahrin, Universiti Malaya, 2006
  18. Sharing Innovating Experiences 5/Agriculture and Rural Development in the South, Chapter 1-Oil Palm R&D Malaysia United Nations Office For South-South Cooperation
  19. 1 2 Adnan, Hanim (23 February 2013). "B10 mandate to address biodiesel woes?". The Star Online. Retrieved 25 February 2013.
  20. Malaysia Biofuels Annual 2012 (PDF) (Report). 3 August 2012. Retrieved 25 February 2013.
  21. Mohindru, Sameer (30 October 2012). "Malaysia Biodiesel Output to More Than Double in 2013 -Executive". Palm Oil HQ. Retrieved 25 February 2013.
  22. "Malaysia - RSPO sees 2013 biodiesel output at up to 200,000 tonnes". 5 November 2012. Retrieved 4 March 2013.
  23. List of Goods Produced by Child Labor or Forced Labor. U.S. Department of Labor's (2014).
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