Published on 26 Feb 2024

Malaysia considers setting up palm oil export hub for Africa in the Suez

Africa accounts for 16% of Malaysian palm oil exports but competition is stiff

Malaysia is in talks with Egypt to set up a palm oil export hub in the Suez Canal Economic Zone (SCZone). After a recent meeting with Egypt's ambassador to Malaysia, Minister of Plantation and Commodities Johari Abdul Ghani affirmed Malaysia's ambition to make Egypt a key part of its strategy to expand palm oil exports to Africa.

In 2022, Egypt revealed it was in talks with a Malaysian company to set up a US$30m palm oil venture in the SCZone, a 460km2 special economic area situated along the banks of the Suez Canal, which handles about 12% of global trade. This proposed project includes a packaging centre for Malaysian palm oil exports to other African countries as well as a refinery. Last year, Malaysian Deputy Prime Minister Fadillah Yusof reiterated the country's intention to expand palm oil exports into African and Middle Eastern markets by establishing export hubs in Egypt and Saudi Arabia.

Egypt, with a population of 110m and substantial food manufacturing sector, has been an attractive market for Asian palm oil. The Malaysia Palm Oil Council (MPOC) sees the North African republic’s strategic position as a major trade centre for re-export of palm oil products to north Africa and the rest of the continent. Cairo’s participation in various multilateral trade agreements – such as the Greater Arab Free Trade Agreement (GAFTA), the African Continental Free Trade Agreement (AfCFTA), the Agadir Agreement, and the Common Market for Eastern and Southern Africa (COMESA) – has enhanced its appeal as a trade hub.

The Egyptian government has expressed its intention to build new edible oil factories and it is open to collaborating with Malaysian partners on these projects. According to MPOC, the SCZone is an optimal location for launching palm oil ventures. Foreign companies operating within the zone enjoy exemptions from customs duties and sales tax on imports. The SCZone also offers 100% foreign ownership and full control over import/export activities to foreign investors. Additionally, the recent devaluation of the Egyptian pound has made products produced in Egypt competitive. 

In 2023, Africa constituted 16% of Malaysian palm oil (and related products), with Egypt as one of the largest importers at 279,841 tonnes. However, Egyptian imports of Malaysian palm oil decreased by 20.09% compared to 2022 as the market switched to sunflower oil for its competitive pricing. Malaysia accounted for only 22.3% of Egypt’s total palm oil imports, having been trumped by cheaper oil produce from Indonesia. Singapore-based Wilmar and Kuala Lumpur-based Pacific Inter-Link were responsible for more than 80% of the total palm oil shipments to Egypt in 2023.



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Egypt's exports to Malaysia hit $126.7M, joint projects in palm oil production to be established’, Egypt Today, 18 April 2022

Egypt, Malaysia in talks for $30mln palm oil production project’, Zawya, 18 December 2022

ECS: Malaysia mulls setting up palm oil production plant’, State Information Service, 18 December 2022

Malaysia wants palm oil hubs in Egypt, Saudi Arabia: deputy PM’, Nikkei Asia, 30 March 2023

What is the Red Sea crisis, and what does it mean for global trade?’, The Guardian, 03 January 2024

Egypt staying ahead: Window of opportunity for greater Malaysian palm oil exports’, Malaysian Palm Oil Council, 31 January 2023

Johari Ghani: Malaysia to work with Egypt to expand palm oil exports to Africa’, Malay Mail, 07 February 2024

Malaysian Palm Oil Exports Performance (January – December 2023)’, Malaysian Palm Oil Council, 2024

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