Malaysia’s palm oil sector to benefit from UK’s CPTPP entry

Malaysia’s successful bid to get the UK to cut its palm oil tariffs from its current rate of up to 12% to nil immediately on entering the pact would drive up exports to the UK, SPI Asset Management managing partner Stephen Innes was quoted as saying in the 19 July report.

Bilateral trade between the two countries exceeded US$7.3bn (RM33.4bn) in 2022 with the UK recording a trade surplus of around US$786M (RM3.5bn), The Star wrote.

The Malaysian Palm Oil Board (MPOB) expects palm oil exports to increase by 3.7% to 16.3M tonnes this year due to continuous demand from importing countries, according to the report.

“The UK is not self-sufficient in food production; it imports 48% of the total food consumed and the proportion is rising. Therefore, as a food-trading nation, the UK relies on imports,” Innes said.

Malaysian national news agency Bernama quoted Dr Mohd Afzanizam Abdul Rashid, Bank Muamalat Malaysia chief economist and social finance head, as saying the CPTPP should help to promote two-way trade and investment as the cost of doing business would be more cost-effective following the UK’s admission into the pact.

“The CPTPP offers greater exposure to the global economy and it could potentially involve China as it is also in the process to be part of the pact,” Mohd Afzanizam added.

The UK was the first European nation to join the CPTPP since its creation in 2018, the report said. The pact comprises fellow G7 members Canada and Japan, the UK’s long-standing allies Australia and New Zealand, alongside Brunei, Chile, Malaysia, Mexico, Peru, Singapore and Vietnam.

“However, it is questionable how much this will benefit its economic growth. The UK is a big services economy, and that sector could have some export benefits. Still, I think it aligns better with the UK shoring up supply chains, which could lead to some domestic import cost benefits,” Innes added.

Tags: palm oil, tariffs, Malaysian Palm Oil Board, CPTPP, Comprehensive and Progressive Agreement for Trans-Pacific Partnership, exports, UK, MPOB, Malaysia