US consumers ultimately the ones to bear increase in palm oil prices: Johari

The Sun

4 days ago

KUALA LUMPUR: Malaysia will not be significantly impacted by the newly imposed US tariff as the country primarily export products to the US that cannot be easily sourced or substituted domestically.
Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani said the tariff hike announced on Monday – raising duties on Malaysian goods from 10% to a combined 25% – targets a range of exports, but Malaysia's unique position in the global supply chain offers some protection from the effects.
'We are not the only country affected by these measures. What I want to emphasise is that, out of our total exports valued at RM186 billion, only about RM20 billion are exported to the US.
'Within this RM20 billion, our main exports to the US include rubber products, such as rubber gloves, furniture and wood products, oleochemicals, including palm oil and cocoa.
'When it comes to palm oil specifically, there is essentially no alternative available in the US market. Soybean oil cannot be converted into the same oleochemicals that our palm oil products provide.
'If the US imposes a 25% tariff on our products, it will ultimately be American consumers who bear the additional cost,' he told reporters at Malaysia Palm Oil Council's trade networking visit with international buyers today.
Using rubber gloves as an example, Johari stated that Malaysia is not the only producer; China and Vietnam also manufacture them, and their exports face similarly high US tariffs, in some cases even higher than those imposed on Malaysia.
'This creates a highly competitive environment. The same applies to furniture; many countries produce furniture, including Malaysia.
'Ultimately, buyers make their decisions based on design and quality. If our designs are unique and appealing, there will still be demand, even if tariffs raise the final price.
'If the US imposes tariffs of 10% plus 25% or 5% plus 25%, that simply becomes part of the cost for buyers,' Johari said.
Touching on exports, Johari said that last year, 40% of Malaysia's palm oil exports were directed to North Africa, Sub-Saharan Africa and Asean markets, beyond Malaysia's traditional trading partners.
Exports to North Africa increased by 63.5% in 2024, while Sub-Saharan Africa saw a 26% year-on-year rise during the first five months of 2025.
He said that this growing reliance on Malaysian palm oil to meet edible oil requirements highlights the importance of strengthening long-term partnerships and ensuring efficient and stable supply chains.
'Each region represented here today has distinct drivers of palm oil demand. In North Africa, Egypt serves as a strategic re-export hub, supplying markets across the region. In Sub-Saharan Africa, demand is rising for industrial applications, particularly in food processing, whereas in Asean, rapid growth in refining and food manufacturing continues to drive the need for a high-quality, reliable palm oil supply.'
Johari said that by supporting the development of the downstream sector, Malaysia aims to embed its palm oil more firmly into local and regional value chains, adding economic value beyond the supply of raw materials.
'This approach not only strengthens supply chain integration, but also encourages joint ventures, technology transfer and local processing partnerships, fostering a long-term, resilient and shared industrial growth.'
At the networking session, Johari said that for many decades, Malaysia has been a top producer of palm oil in the world.
The palm oil plantation area in this country covers roughly 5.7 million hectares across Peninsular Malaysia, Sabah and Sarawak.
The commodity is an export-oriented sector for the Malaysian economy, with 15.4 million tonnes out of the 19.3 million tonnes, or 80% of the palm oil produced was exported in 2024.