Detail

Malaysia

Oilseeds, oils and meals

Palm oil, biodiesel

01/03/2020

Production

Production & trade management, biofuel policy

From March 2020 to May 2020: Exempted – to avoid disruptions in production – the palm oil sector from a six-week nationwide lockdown enforced to halt the spread of COVID-19. Eventually, however, the Government decided to temporarily halt harvest and milling operations in large parts of Sabah state (the country’s largest palm oil-producing state), following the detection of infections among estate workers. In addition, private port jetties used by plantation companies to ship their products were temporarily closed, while vessels arriving from certain countries were not allowed to dock in the country’s ports, further hampering palm oil exports. In addition – due to a sharp drop in domestic fuel consumption and reflecting efforts to channel public resources towards sectors in need – the Government decided to suspend implementation of its recently launched B20 programme (see above).

MALAYSIA – plantation shutdowns, port measures, biodiesel policy (COVID-19 related, temporary measures): On 18 March, to avoid disruptions in palm oil production, the Federal Government agreed to exempt the palm oil sector from a six-weeks nationwide lockdown enforced to halt the spread of COVID-19. However, on 24 March, after several estate workers tested positive for the disease, Sabah, the country’s largest palm oil producing state, ordered harvest and milling operations to cease and restricted movement of staff in three out of seven districts. Eventually the ban was extended to another three districts and prolonged by two weeks, affecting a total of 100 000 workers. After 17 days, plantations and mills that were free of infections were allowed to resume operations at half capacity, provided strict health protocols were applied. Reportedly, on 19 April, a single palm oil plantation complex in Sabah was ordered to close temporarily because of violations of Covid-19 movement control orders and several fresh infections. COVID-19 related curbs also led to the temporary shutting of 16 private port jetties used by Sabah plantation companies to export their products. Although the various closures were only temporary, they led to tens of thousands of Indonesian migrant workers returning home. It was unclear how the resumption of operations would be impacted by the resulting labour shortages. On a separate note, in March, the Federal Government also announced that, for a two-week period, vessels arriving from certain countries would not be accepted at Malaysian ports – a measure said to have hampered the palm oil supply flow out of Malaysia. Furthermore, in April, the Government decided to temporarily suspend its recently launched B20 programme, which envisaged a gradual, countrywide shift to transportation diesel containing 20 percent palm oil-based biodiesel – compared to the B10 mandate in place since February 2019 (see also MPPU Mar.’20). The decision was prompted by a sharp decline in domestic fuel demand resulting from temporary movement restrictions and reflects Government efforts to channel public resources towards measures to contain the coronavirus epidemic. Reportedly, the B20 rollout will be paused in those states were the new policy was yet to be implemented and would resume once the need for COVID-19 related measures ceases.