ONCE upon a time in the 1980s, Malaysia was the world’s largest natural rubber producer. That honour now, however, belongs to Thailand and Indonesia.

Malaysia, though, remains the world largest producer of rubber-based products such as rubber gloves and condoms.

Ironically, when companies want to buy rubber from the open market, buyers have to get price quotations from Singapore Commodity Exchange, the Tokyo Commodity Exchange and to a lesser extent, the Malaysian Rubber Board.

No doubt, this is the work of powerful consumers such as tyre producers who want to dictate prices of the commodity to their advantage as they can’t grow rubber in their home countries.

Nevertheless, Malaysia’s rubber sector still contributes immensely to the national gross domestic product.

The palm oil sector, on the other hand, is a different story.

Since its debut in Malaysia in the 1960s, the crop has made tremendous progress, providing the country with more than RM70 billion in export earnings last year alone.

Even though Malaysia is now the world’s second largest producer after Indonesia, palm oil players from all over the world have always looked and still look at Kuala Lumpur or, to be specific, the Bursa Malaysia Derivatives, as their main reference point when it comes to finding out what the current crude palm oil (CPO) prices are.

But they also have other reference points to gauge from, such as in the Netherlands, Indonesia or mercantile exchanges in the United States and Europe.

But Kuala Lumpur still trumps them all.

So it was heartening to see more than 2,000 delegates from 50 countries flock again to Kuala Lumpur for the annual palm and lauric oils conference in the capital last week.

Already in its 24th year, Kuala Lumpur is the epicentre for traders, consumers, producers, investors, bankers and others to gauge where CPO prices are headed for the rest of the year before they can place their bets, replant or make other investment strategies.

No disrespect to the rubber sector but when it comes to CPO reference price, the palm oil industry has done well and it should stay in Kuala Lumpur.

Crop data, production statistics, stockpile compilation, market research, export figures and market intelligence should be here at the heart of the crop and not in a far away land where a single oil palm tree can’t even grow.

For that reason, London-based Godrej International Ltd director Dorab Mistry is right – special mention should be given to the Malaysian Palm Oil Board, which is the world’s second best regulator and watchdog agency after the US Department of Agriculture.

It has done an excellent job in providing data and the latest statistics to global industry players.

Keep up the good work and don’t slacken or Malaysia risk losing the clout and not able to dictate the destiny of its own golden crop.

Source : Business Times