Malaysian palm oil producers renew expansion push into Philippines

[MANILA] Malaysian palm oil producers are seeking fresh opportunities in the Philippines, aiming to build plantations in the country's southern region, where a historic peace deal has been forged between the government and Muslim rebels.

Mindanao, home to the Philippines' largest Muslim rebel group - the Moro Islamic Liberation Front - can offer land to palm oil producers looking to expand but who face a scarcity of new growing areas at home, Malaysian Palm Oil Council Chairman Lee Yeow Chor told journalists in Manila.

"In order for Malaysian planters to expand ... they have to look outside and certainly the Philippines, especially the southern Philippines, is one of the areas to look at," said Mr Lee, who is attending a Malaysia-Philippines palm oil trade fair.

The Moro rebels agreed in March last year to disband their guerrilla force and surrender 15,000 weapons to the government in exchange for control of their economy, culture and politics.

Although work on the Bangsamoro Basic Law (BBL) that will grant autonomy to the region has halted, Philippine President Benigno Aquino last month urged Congress to pass the legislation before he steps down next year.

A number of Malaysian palm oil producers had earlier planned to expand into the Philippines, but security was an issue.

After an initial agreement between Manila and the Muslim rebels in 2012, Felda Global Ventures, one of the largest crude palm oil producers, became the first foreign palm investor to consider Mindanao, which is also rich in a minerals.

"The potential (for expansion) is there but it depends on how the governments and industry players can solve any current problems," Malaysia Palm Oil Board Chairman Wan Khair-il Anuar, who was also in Manila, told a media briefing.

While exploring expansion opportunities in the Philippines, Malaysia also aims to ship at least 500,000 tonnes of palm oil to its Southeast Asian neighbour this year, Mr Lee said.

That would be the same volume that Malaysian producers shipped to the Philippines last year, accounting for 80 percent of the latter country's imports of palm oil.

"Our role is to complement the local coconut oil industry," Mr Lee said.

The Philippines is the world's top supplier of coconut oil. Malaysia is the No 2 palm oil producer after Indonesia.

Malaysian palm oil futures hit an 11-month low on Thursday as worries about rising output and falling demand offset support from a weak currency and other vegetable oils.

REUTERS