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BR Research

An interview with Datuk Seri Johari Abdul Ghani, Malaysian Minister of Plantation and Commodities

Pakistan has significant potential to become a regional hub for distributing sustainable palm oil Datuk Seri Johari...
Published February 3, 2025

Pakistan has significant potential to become a regional hub for distributing sustainable palm oil

Datuk Seri Johari Abdul Ghani is the Minister of Plantation and Commodities of Malaysia, overseeing the country’s strategic policies and initiatives in the palm oil, rubber, timber, and other key commodity sectors. He has played a pivotal role in advocating for sustainable palm oil production, promoting Malaysian commodities in global markets, and enhancing trade relationships with key partners, including Pakistan.

Before assuming his ministerial role, Datuk Seri Johari Abdul Ghani had a distinguished career in both the public and private sectors. He previously served as the Minister of Finance (2016-2018), where he was instrumental in driving fiscal policies, corporate governance reforms, and economic resilience initiatives. As a seasoned entrepreneur, he has extensive experience in corporate leadership, having held key positions in various industries, including real estate, finance, and agribusiness.

Datuk Seri Johari Abdul Ghani has been a strong advocate for environmental sustainability and responsible commodity production, ensuring that Malaysia remains a leader in the global commodities market while balancing economic growth with ecological responsibility. Under his leadership, Malaysia has intensified efforts to comply with international sustainability standards, including the Malaysian Sustainable Palm Oil (MSPO) certification, to enhance market access and consumer confidence worldwide.

With a background in accounting and finance, Datuk Seri Johari Abdul Ghani is a fellow of the Association of Chartered Certified Accountants (ACCA) and has played a key role in policy formulation that fosters economic growth, trade facilitation, and sustainable development.

Last month, the minister visited Pakistan to attend the 7th Pakistan Edible Oil Conference (PEOC) where he was also the keynote speaker. BR Research sat down with Datuk Seri Johari Abdul Ghani at the sidelines of the event, to discuss Malaysia’s evolving trade dynamics, the future of sustainable palm oil, and the country’s role in global commodity markets. Edited excerpts and a summary of his thoughts are published below:

BRR: Given Pakistan’s recent significant reliance on palm oil imports, what strategies is Malaysia implementing to enhance its market access and foster deeper relations with the country?

JAG: Malaysia’s involvement in Pakistan’s palm oil market dates back almost 30 to 40 years. At one point, we were the major supplier of palm oil to Pakistan. However, over time, Indonesia has come to dominate this market. Our strategy back then was to focus on downstream development in Malaysia, including domestic refineries and oleochemicals, while Indonesia concentrated on exporting crude palm oil (CPO).

As Indonesia continued to expand its exports, Malaysia remained committed to developing downstream industries and ensuring the sustainability of palm oil production. Today, while Indonesia produces between 48 to 50 million metric tons of palm oil annually, Malaysia produces approximately 19 million metric tons. Given Indonesia’s higher production volume, it naturally has a larger export capacity, allowing it to offer more competitive pricing to markets such as Pakistan.

However, Malaysia differentiates itself by emphasizing sustainable palm oil production, ensuring environmental responsibility, and enhancing the value of our exports through sustainability certifications. While our strategies differ, both Malaysia and Indonesia remain key suppliers to Pakistan’s market.

BRR: Palm oil already accounts for 70 percent of Pakistan’s domestic edible oil market. Given this dominance, do you believe that the perceived health risks associated with palm oil - such as its role in the production of vanaspati ghee - could impact its growth? Has Pakistan’s rapid market expansion for palm oil reached its peak, or do you foresee continued growth?

JAG: There is no scientific evidence proving that palm oil poses health risks. In fact, some of the world’s largest consumers of palm oil, such as India and China, each with a population of over 1.4 billion people, continue to import significant quantities. As the largest importer, India alone imports about 9 million metric tons, followed by China which imports around 5 million metric tons, annually.

Palm oil remains one of the most versatile edible oils globally. Our key focus is to ensure that its production follows sustainable practices. While Pakistan has been a high-growth market, I believe there is still room for further expansion. We must continue educating consumers about the benefits of palm oil and reinforce our commitment to sustainable production.

BRR: On the issue of sustainability, how is Malaysia ensuring the sustainability and traceability of palm oil exports to Pakistan, given that sustainability is not yet a primary concern in Pakistan’s domestic market?

JAG: Even though sustainability may not currently be a major priority for Pakistan’s domestic market, we believe the global industry is heading in that direction. Malaysia is proactively ensuring that our palm oil exports meet sustainability standards.

We also see Pakistan as a potential hub for distributing sustainable palm oil in the future. Currently, we have three joint venture companies operating in Pakistan, which strengthens our business ties and ensures better market access. As sustainability concerns become more prominent worldwide, Malaysia remains committed to providing Malaysian Sustainable Palm Oil (MSPO)-certified palm oil, even when there is no immediate premium attached to it.

BRR: Are there any ongoing initiatives or partnerships with local Pakistani companies for the promotion of MSPO-certified palm oil?

JAG: Yes. Most of the palm oil that we supply to Pakistan already meets MSPO compliance standards. Even if there is no premium pricing for sustainable certification in Pakistan at the moment, we ensure that our exports comply with MSPO requirements.

BRR: With the increasing popularity of alternative plant-based edible oils, such as soybean oil, do you see this as a significant threat to palm oil exports to Pakistan in the future?

JAG: I don’t see this as a major threat. With a population of 245 million, Pakistan has enough demand for multiple edible oil sources. We acknowledge that Pakistan has started importing genetically modified (GMO) soybean oil, whereas previously only non-GMO soybean was allowed. However, palm oil and soybean oil serve different segments of the market, and there is room for both to coexist.

BRR: Regarding trade regulations under the Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA), what changes or improvements are being pursued to facilitate smoother trade?

JAG: Over the past few years, Malaysia has benefited from reductions in import duties. Currently, Malaysian palm oil imports into Pakistan enjoy a discount of 15 percent on the applicable import duty, which is relatively competitive. However, we recognize that some of the fractions face higher taxes, which is something we aim to address in future negotiations. By encouraging imports of sustainably packed products, we can contribute to environmental and economic sustainability while ensuring smoother trade relations.

BRR: Do you believe that packed and MSPO-certified products could penetrate the premium segments of the Pakistani market in the future?

JAG: Absolutely. Despite economic challenges, Pakistan has a wealthy segment of consumers who are fully aware of sustainability and premium-quality products. Even if only 1-2 percent of the population falls into this high-income category, it still represents millions of potential consumers for premium sustainable palm oil products.

BRR: Beyond edible oil, what other areas of collaboration do you foresee between Malaysia and Pakistan?

JAG: We are also exploring agricultural and halal supply chain collaborations. During the Malaysian Prime Minister’s recent visit to Pakistan, agreements were reached regarding the export of basmati rice and the supply of halal beef. My colleagues in other ministries are working on strengthening these trade ties, which will benefit both nations in the long run.

BRR: Regarding the European Union’s moratorium on palm oil expansion due to deforestation concerns, do you believe this stagnation in palm oil production could threaten growth?

JAG: Not necessarily. The EU’s deforestation-free regulation (EUDR) focuses on four key principles: i) no more deforestation; ii) increased focus on yield improvement through research and development (R&D); iii) strengthened traceability of palm oil supply chains; and iv) ensuring ethical labor and land-use practices.

Malaysia is already committed to maintaining at least 50 percent of its land under forest cover while increasing palm oil yields through R&D and replanting old trees. We believe this strategy aligns with global sustainability expectations.

BRR: Do you see a trend toward converting other croplands into palm oil plantations due to the moratorium?

JAG: No. Malaysia is firm in maintaining its 50 percent forest cover commitment. There is limited land available for further palm oil expansion, and we prioritize sustainable practices overland expansion.

BRR: Pakistan recently faced a balance of payments crisis while palm oil prices were at historic highs. Do Pakistan’s economic challenges pose a major risk to Malaysian and Indonesian palm oil exporters?

JAG: We recognize that economic cycles impact trade, but we remain committed to our partnership with Pakistan. During periods of market volatility, Malaysia has continued to support Pakistan as a reliable trading partner, even when Indonesia imposed export restrictions on palm oil. Moving forward, we believe demand for palm oil will remain stable due to its versatility and cost-effectiveness compared to soft oils.

BRR: Is there a collaborative approach between Malaysia and Indonesia to mitigate palm oil price volatility?

JAG: Yes. Both countries are aligned in stabilizing the palm oil market. Indonesia has directed 25 percent of its palm oil production into biodiesel, reducing the excess supply in global markets. Malaysia is also exploring further integration of palm oil in biofuel programs, but our approach differs due to the availability of other energy resources such as natural gas (LNG).

BRR: Do you see the potential for palm oil-based biodiesel exports to Pakistan?

JAG: Not at the moment. Unlike Indonesia, which has reached B35 biodiesel blending, Malaysia remains at B10. Given Pakistan’s current energy landscape, we do not see a significant opportunity for palm-based biodiesel exports there yet.

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