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The Malaysian government, through its investment arm Sawit Kinabalu Ltd, is working to boost palm oil exports to strategic markets in the Middle East, with a particular focus on Egypt this year, according to Nazlan Mohamed, the company's general manager for sustainability.
Mohamed told Al Borsa that Egypt is one of the newest additions to the company's list of export destinations, but holds significant strategic importance as a gateway for re-exports to African markets. He noted that the company plans to increase export volumes to Egypt, which is seeing notable growth in demand for Malaysian palm oil.
The Malaysian government expects palm oil exports to grow by at least 20% in 2025, with special priority given to Middle Eastern countries and Egypt, driven by rising demand from institutions and consumers as well as existing trade ties.
This push is part of a broader investment plan launched by the government through its sovereign wealth fund to strengthen the value chain of the palm oil sector, which remains one of the key pillars of the Malaysian economy, both in terms of its contribution to GDP and its role in supporting agricultural exports.
Malaysia's palm oil sector is among the largest in the world alongside Indonesia's, with Malaysia producing more than 18 million tonnes annually and exporting around 90% of its output to overseas markets. Islamic markets, particularly Arab ones, are among the preferred destinations for palm oil exports given their close ties to local cooking traditions and food industries.
Mohamed pointed out that Egypt represents a pivotal market in this plan due to its geographic location, which allows for re-exporting products to North Africa and the eastern Mediterranean, as well as its high domestic consumption of vegetable oils and heavy reliance on imports to cover more than 95% of its cooking oil needs.
In this context, the Malaysian sovereign wealth fund announced allocations of up to $150 million during 2025 to support palm oil companies entering Middle East markets, including the establishment of distribution centres, storage warehouses and refining facilities in several countries, including Egypt.
Coordination is also underway with Islamic development banks and regional financing institutions to provide credit facilities for traders and manufacturers in target markets, in a move aimed at strengthening the competitiveness of Malaysian products against alternative oils such as Ukrainian sunflower oil and soybean oil from Brazil and Argentina.
The price gap is one of the key factors working in favour of Malaysian palm oil, which is often cheaper than other oils, in addition to its stable properties at high temperatures — an important advantage given the hot climate of the Middle East.
Despite this, international reports warn that fluctuations in shipping costs and rising insurance premiums in some regions, such as the Red Sea, could add extra burdens to export costs, requiring close coordination with shipping and logistics companies. Competition from Indonesia, which has greater production capacity and offers extensive facilities to its importers, also remains an ongoing challenge for Malaysian products in the region.
Despite these challenges, preliminary estimates suggest that Malaysia's market share in Egypt and the wider Middle East could rise by between 3% and 5% in 2025, provided the plan is fully implemented alongside flexible support and financing mechanisms.
Analysts believe this move reflects Kuala Lumpur's desire to reshape its trade relationship with Islamic markets, positioning itself not merely as a commodity supplier but as a development partner leveraging shared cultural and religious ties to boost market access.
If the experience in Egypt proves successful, it is expected to serve as a model that could be applied in other countries such as Algeria, Morocco and Iraq, as part of a broader investment strategy extending through to 2030.
Source: Al Borsa