nur ain mohd hassan – OPIEJ https://opiej.mpob.gov.my Oil Palm Industry Economic Journal Tue, 24 Mar 2020 10:26:39 +0000 en-US hourly 1 https://wordpress.org/?v=7.0 Effect of the Granting of EU’s Generalised System of Preferences (GSP) to Indonesia on the Export Performance of Malaysian Palm-based Oleochemicals https://opiej.mpob.gov.my/effect-of-the-granting-of-eus-generalised-system-of-preferences-gsp-to-indonesia-on-the-export-performance-of-malaysian-palm-based-oleochemicals/ Tue, 24 Mar 2020 10:03:43 +0000 https://opiej.mpob.gov.my/?p=1350 Read more]]> Under Regulation (EU) 2016/330, Indonesia’s palm-based oleochemical manufacturers receive an import duty advantage under the Generalised System of Preferences (GSP) scheme for selected oleochemical products exported to EU. Malaysian producers do not enjoy the scheme as Malaysia is now classified as an upper middle-income economy. This has resulted in decreasing imports of Malaysian oleochemical products to EU, shown by a negative compound annual growth rate (CAGR) of 4.68% (-4.68%) for the period from 2010 to 2017. This development will put Malaysian oleochemical manufacturers at a disadvantage when competing in the EU market. The study therefore aims to examine the impact of the granting of EU’s GSP to Indonesia on the export performance of Malaysian palm-based oleochemicals. Employing the gravity model in this study, it was confirmed that this granting of EU’s GSP to Indonesia’s palm-based oleochemicals has caused a negative impact on the export performance of Malaysia’s palm-based oleochemicals to EU. For every 1% increase in import tax difference in EU between Malaysia and Indonesia, Malaysia’s palm-based oleochemical exports to EU will be reduced by 0.6%. With Indonesia enjoying this advantage, Malaysia will lose her competitiveness. Thus, it will be more profitable for Malaysian oleochemical manufacturers to shift their operation to Indonesia to gain the GSP advantage when exporting to EU.

Keywords: gravity model, generalised system of preferences (GSP), palm-based oleochemicals, export performance, the European Union (EU)

]]> Relationship Between Severe El Niño Phenomena and Malaysia’s Palm Oil Production – A VECM Approach https://opiej.mpob.gov.my/relationship-between-severe-el-nino-phenomena-and-malaysias-palm-oil-production-a-vecm-approach/ Wed, 29 Aug 2018 00:35:47 +0000 https://opiej.mpob.gov.my/?p=410 Read more]]> The palm oil sector has faced various challenges throughout the past decade. Climate variability is one of the major challenges to the Malaysian oil palm industry. In order to achieve higher production, oil palm needs an average maximum temperature of 29oC-33oC and an average minimum temperature of 22oC-24oC. Variability in climate leading to the development of El Niño and La Niña events, thus, affects the production of palm oil. This study focuses only on the prolonged dry and hot weather phenomenon known as El Niño. So, the following question was considered: What is the relationship between the El Niño phenomenon and Malaysia’s palm oil production? Variations in crude palm oil (CPO) production, fresh fruit bunch (FFB) yield and Ocean Niño Index (ONI) from January 2007 to December 2016 (n= 120) were analysed, based on a multivariate co-integration approach called the Vector Error Correction Model (VECM). The study found that in a long run, FFB yield and ONI influenced total palm oil production. A significant error correction term (ECT) and negative coefficient value (-0.233) show that an adjustment is needed in a short-run disequilibrium towards achieving a long-run equilibrium. The higher the value, the quicker is the adjustment needed towards a long-run equilibrium. The value of ECT showed that an adjustment of 23.3% is needed each month towards achieving a long-run equilibrium. It can be concluded that in order to gain higher CPO production, a longer time is needed because it is influenced by FFB yield and ONI. Hence, the results from this study will be able to help policymakers be aware that owing to extreme weather and its implications on palm oil production. A better irrigation system or in-depth R&D on the advance technologies need to be implemented to offset the negative effects of this phenomenon.

Keywords: El Nino, CPO production, FFB yield, Ocean Nino Index (ONI), error correction term (ECT)

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