Market Potentials for Malaysian Palm Oil Products in Turkey

Malaysian palm oil (MPO) exports to turkey increased dramatically since the implementation of the Malaysia-Turkey Free Trade agreement (MTFTA) in 2015. A year before the FTA, Malaysia only managed to supply less than 80,000 MT of palm oil a year or 13% of the total palm oil imported by the country. Last year, even during the pandemic and drop in the economic activities in Turkey, Malaysia maintained its high volume of export at 615,000 MT to make 41.2% of CAGR from 2014 through 2020. Under the MTFTA, Malaysian palm oil products export to Turkey has the advantage of having a lower import tax for most products at 9.4% less than other exporting countries. The palm oil products that largely enjoyed this advantage include processed palm oil and palm kernel oil under HS Code 1511 and 1513.

Source: MPOB
Malaysian Palm Oil Products Export to Turkey

Table 1: MPO Products Exports trend

2014 2015 2016 2017 2018 2019 2020
FINISHED PRODUCTS 12,624 17,795 19,468 17,822 48,967 49,566 48,104
OLEOCHEMICAL 49,827 78,394 70,645 60,580 86,306 111,079 104,206
PALM KERNEL CAKE 26,323 20,042 27,501 0 141,685 126,343 0
PALM KERNEL OIL 15,623 41,362 65,804 77,719 64,321 92,490 88,425
PALM OIL 77,682 398,729 657,001 679,667 631,887 709,262 615,872
OTHER PRODUCTS 210 0 29 0 0 71 0
Grand Total 182,289 556,322 840,447 835,788 973,165 1,088,812 856,607

Source: MPOB

Overall, most Malaysian palm oil products exported to Turkey haveshown an improvement in exports over the years, with 182,000 MT in 2014 to nearly 860,000 MT in 2020, to gain the CAGR of 30%. These represent the revenue of MYR 490 million in 2014 to MYR 2.66 billion in 2020. The fluctuation of palm kernel cake exports was mainly due to higher import and local production of soybean and sunflower meal products. The meal and palm kernel cake are primarily used for animal feed in the country.

Looking at the encouraging export trend of Malaysian palm oil products into this country, Malaysian palm oil players should take this opportunity to get involved directly with the buyers. It is an excellent time to establish the network and partnership with the local players, gain knowledge of the local requirements, enhance the supply services and logistic arrangements, and penetrate further to capture the niche market. The current increasing demand for particular palm oil-based products should create an eye-opener for the Malaysian palm oil players to participate and establish in the market.

The following table shows the top products in each category that contributed high tonnage and value to the Malaysian palm oil export in 2020.

Table 2: Turkey – MPO Products Export Volume and Value 2020

MPO Products 2020 MT MT % RM Mil RM %
FINISHED PRODUCTS 48,104 100% 200 100%
SHORTENING 9,531 20% 27 14%
SOAP CHIPS / SOAP / SOAP FLAKES / SOAP STOCK 35,953 75% 162 81%
Finished Product Others 2,619 5% 11 5%
PALM KERNEL OIL 88,425 100% 318 100%
HRBD PALM KERNEL OIL 11,075 13% 41 13%
RBD KERNEL OLEIN 28,427 32% 97 30%
RBD PALM KERNEL OIL 30,617 35% 107 34%
Palm Kernel Oil Others 18,306 20% 73 23%
PALM OIL 615,872 100% 1,782 100%
RBD PALM OIL 117,755 19% 335 19%
RBD PALM OLEIN 328,269 53% 929 52%
RBD PALM STEARIN 136,544 22% 398 22%
Palm Oil Products for RSPO 27,415 4% 95 5%
Palm Oil Others 5,890 1% 24 1%
PALM-BASED OLEO 104,206 100% 361 100%
PURIFIED / REFINED / DISTILL GLYCERINE / GRD GLYCERINE 11,173 11% 29 8%
SOAP NOODLES / STOCK / BLEND 28,610 27% 84 23%
STEARIC ACID / STEARIC ACID FLAKES 31,925 31% 112 31%
Palm-Based Oleo Others 32,498 31% 137 38%

Source: MPOB

Finished Products which Soap products and Shortening contributed 95% of palm oil products exported to Turkey last year. Recorded merely around 10,000 MT in 2014, the items gained a good response from the local buyers, consistently increase over the years and reached the record high of 46,818 MT in 2019 and slightly reduced to 45,484 MT last year.

HRBD & RBD Palm Kernel Oil and RBD Palm Kernel oil registered the highest demand with 70,119 MT, increased more than 1,902 MT compared to the volume recorded in the previous year. Those contributed 80% of Malaysian Palm Kernel Oil products exports to turkey last year.

RBD Palm Oil, Palm Olien and Palm Stearin benefited greatly due to a lower import tax under MTFTA. But, the import and supply of the products into the market dominated by the local traders. They have the advantages in terms of ground logistic, an established network with the local buyers, and competitive credit and financial support. Exports peaked in 2019 with 702,608 MT, followed by a drop in 2020 at 17% to a lower volume of 582,568 MT. Sluggish economic activities especially tourism sectors and the HORECA sector, affected the demand for those products. Another palm oil product that has shown good potential for the Turkey market is certified palm oil.  Last year, Palm Oil Products for RSPO recorded a relatively high volume at 27,415 MT.

Glycerine, Soap Noodle and Stearic Acid were three top-ranked in the Palm-based Oleo products. The products gained the export volume at 71,708 MT, covered 69% of Palm-based Oleo’s product lines. In terms of yearly performance, the same scenario happened to the top three Palm-based Oleo, which had a record high in 2019 at 80,586 MT and dropped to 71,708 MT last year. Even though recorded lower, it was still the second-highest since these products were exported to turkey and much higher than 2014, accounting for 35,579 MT.

Opportunities and challenges ahead

Source: MPOB

Malaysian palm oil products exports to Turkey were at their peak in 2019. Last year, the economic downturn pulled the exports volume but still gained as the third-highest. With recovering the business activities around the globe and Turkey in particular, the palm oil exports to this country are expected to gain momentum again this year and in the near future. Hence, it is the most suitable time for Malaysian palm oil industry players to expand their focus horizon into Turkey.

This year, Malaysia will maintain its domination in palm oil products exports to Turkey. However, this favourable demand may only last for the next one or two years, as the other palm oil-producing countries, especially Indonesia, would try to recapture the market. In fact, Indonesia has started the negotiation under Indonesia-Turkey Comprehensive Economic Partnership Agreement (IT-CEPA), which already brought to the discussion table for years. Therefore, it is a matter of time before it is materialised.

To maintain the current Malaysian palm oil share in Turkey, Malaysian players need to be more competitive not only in terms of prices but also need to enhance their business collaboration with local players and enter the new market in the neighbouring countries.

Prepared by: Mohd. Suhaili Hambali

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