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ASIA MEDIA GROUP Berhad
Annual Report 2016
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INDUSTRY OUTLOOK AND FUTURE PROSPECTS OF OUR GROUP (CONT’D)
III. Overview and outlook of the palm oil industry (cont’d)
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Economic growth
The global economy has continually witnessed positive growth trends in recent decades,
with the exception of the periods of economic slowdown in 1997/98 and 2008/09. In line
with global economic growth, there continues to be strong demand and higher prices for
energy, primary commodities and food. The growth in per capita income worldwide has led
to a shift in dietary intake, which has moved away from staple products such as cereals,
roots and tubers and pulses towards livestock, vegetable oils, fruits and vegetables.
In 2014, the average world urbanisation rate, which is used here as an indicator for wealth,
was estimated to be approximately 54%. The forecast average world urbanisation rate in
2050 is 66%, an increase of approximately 12 percentage points from 2014.
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Wide range of applications of palm oil and its derivatives
The versatility and fat content in palm oil which extends shelf life, shortens cooking time,
and contributes to texture as well as flavor makes it a popular base ingredient that is utilised
in a wide range of food and non-food applications. Palm oil can be used for a multitude of
food applications, including the production of cooking oil, margarine, bakery shortening and
confectionery fats, as well as non-food applications such as soaps, detergents, toiletries
and cosmetics.
The application of palm oil in the production of polyols has also recently been discovered.
Polyols is used to make polyurethane, a plastic material with multiple applications in various
industries such as building and construction, automotive, furniture and electrical and
electronics. Additionally, palm oil is also used as a feedstock in the generation of renewable
energy such as biofuels (biodiesel) and biomass, which are increasingly gaining popularity
as they are renewable and widely available, with environmentally friendly processing
techniques which do not emit large amounts of greenhouse gases.
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Strong government support to strengthen the palm oil industry
As the second largest producer of CPO and crude palm kernel oil globally, Malaysia’s
palm oil industry has great economic potential and reach globally, contributing to fulfilling
the growing global demand for palm oil and its derivatives as well as employing a large
number of workers in plantations locally. Malaysia’s competitiveness in the palm oil industry
is evident as the country has a long history of experience and strong market leadership in
terms of productivity and research and development.
Management Discussion and Analysis
(continued)