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Palm Oil Developments 71 (December 2019) p. 4-12 MPOB’s Role in Sustaining Quality and Environmental Competitiveness of Malaysian Oleochemical Industry Razmah Ghazali*; Noorazah Zolkarnain*; Mohd Azmil Mohd Noor*; Siti Afida Ishak*; Hajar Musa*; Fadzlina Abdullah*; Asma Liyana Shaari* and Nur Azmina Roslan* INTRODUCTION economy, to manufacturing- based economy has prospered The Malaysian palm oil industry has experienced significant growth since the Malaysian oleochemical oil palm was first introduced into the country from West Africa in the late industry in the 1980s (NSTOnline, 1870s. In 2018, crude palm oil (CPO) and palm kernel oil (PKO) production 2017). Since the beginning of the achieved 19.52 million tonnes and 2.30 million tonnes, respectively oleochemical industry in Malaysia, (Kushairi et al., 2019). Palm oil is mostly consumed as food, while nearly the participation of foreign 20% are used for non-food applications. Despite the small size of non- investors has helped to form most food applications, this is an important area of application as most palm oil of the Malaysian oleochemical products have been converted into high value-added products. companies by contributing capital and technology (including captive With the successful development of the palm oil refining industry in the market for the products), and has 1980s, Malaysian entrepreneurs naturally look for further opportunities in thus secured strong foot-holds the downstream processing of palm oil. At that time, oleochemicals offered at the source of the renewable good profitability and had good demand, hence, the industry started raw materials (Choo, 2000). In blooming with the establishment of the first oleochemical plant in Penang addition, an ample supply of PKO (MOSTA, 2014). and palm oil has led to the further development of oleochemical industry in the country (MPOC, 2012). In the past, the technology joint ventures with local companies OLEOCHEMICAL INDUSTRY available for oleochemicals due to the abundant supply of IN MALAYSIA manufacturing was limited, e.g. raw materials and low production only one supplier of technology cost. In addition, the Malaysian Malaysia is currently one of the for a specific process. This situation government has been providing world's primary oleochemical no longer exists today because support such as incentives, e.g. producers and exporters, taking the oleochemical manufacturing through the Industrial Master Plan, advantage of its productivity, which recognised the oleochemical technology is superior and efficient innovations, and competitiveness industry as the potential growth compared to the technology used in palm oil-based products. There sector of the palm oil industry. in the 1980s (Qua, 2018). were various factors contributing The Second Industrial Master Plan to the rapid development of the (1996-2005) emphasised on the The industry is now one of Malaysian oleochemical industry. increase of production and export the world’s largest oleochemicals The most significant is the multi- of high value-added oleochemicals complex with a production capacity national companies’ involvement in to further develop the Malaysian of about 2.67 million tonnes palm oil industry. (MPOB, 2019a). For Malaysia, the * Malaysian Palm Oil Board (MPOB), oleochemical industry contributes 6, Persiaran Institusi, Bandar Baru Bangi, 43000 Kajang, Selangor, Malaysia. The change in policy from the substantial additional revenue E-mail: [email protected] agriculture- and mining-based over the basic value of palm oil. In 4 MPOB’s Role in Sustaining Quality and Environmental Competitiveness of Malaysian Oleochemical Industry 2018, the export of oleochemical in 2017, the palm oil industry high revenue oleo derivatives products was 3.09 million tonnes, contributed significantly to the and occupying a larger share of worth RM19.119 billion (MPOB, Malaysian economy (Kushairi et oleochemical market. This is the 2019b). al., 2019). The industry, supported way forward for Malaysia since by government's strategic we can no longer expand oil palm China was the major export policies along with research and plantation due to land scarcity. market for the Malaysian development activities of the oleochemicals in 2018 with a Malaysian Palm Oil Board (MPOB), REACh AND GLOBAL capacity of 0.53 million tonnes, has maintained steady growth CHEMICALS accounting for 17.2% of total over the years with the exciting REGISTRATIONS oleochemical exports. This is developments in the downstream followed by the EU of 0.44 million sector. The Malaysian government Malaysia, being a net exporter of tonnes or 14.2%, USA of 0.33 has taken initiative to launch the oleochemicals, has to keep abreast million tonnes or 10.7%, and Japan economic transformation plan with the new development on of 0.24 million tonnes or 7.9% in 2010 with the aim of turning regulations. In many countries (MPOB, 2019b). Malaysia into a high-income across the globe, chemical country by 2020. Under the Palm substances are required to be Principally, oleochemicals are Oil National Key Economic Area registered by manufacturers products obtained from the (NKEA), a total of eight Entry Point and importers. In the EU, all splitting of oils and fats, i.e. fatty Projects (EPPs) were introduced imported or manufactured chemical acids and glycerol (Kushairi et al., (ETP, 2011). EPP 6, which covers substances above a quantity of 2018). Besides fatty acids and a scope of developing high-value 1 t yr-1 are subjected to registration glycerol, oleochemicals also consist oleo derivatives and bio-based under the Registration, Evaluation, of derivatives from further chemical chemicals, will steer the production Authorisation and Restriction of or biological modification of fatty of value-added oleo derivatives Chemicals (REACh) regulation. acids’ carboxylic acid group, and from basic oleochemicals. This Similar registration requirements other compounds obtained from will also contribute to the growth and regulations also exist for the reactions of these derivatives. of the downstream market while other markets. In countries such Oleochemicals are often classified insulating the upstream segment as Canada, the United States, into basic oleochemicals such as from volatile commodity price Australia, Russia, Switzerland, fatty acids, fatty methyl esters, fatty shocks, as there is a worldwide Korea and China, notification is alcohols, fatty amines and glycerol, move from non-renewable fossil- also mandatory for new chemicals and their derivatives are attained based chemicals to renewable introduced in the market. from chemical modifications of resources-based chemicals. these basic oleochemicals (Metzger, The introduction of EU REACh, 2009; Yeong et al., 2012). Through The world has now witnessed a new European Community these various chemical reactions, the rise of green consumerism Regulation which commenced on thousands of products of different where the impulse to ‘go green’ 1 June 2007, dictates manufacturers properties could be derived and is clearly gaining momentum and importers to document applied to different fields such (Katie Young, 2018). In addition the safe production and use of as detergents, cosmetics and to population growth, increased their chemical substances by personal care, textile, plastics, environmental awareness and addressing both human health pharmaceuticals, etc. (Salmiah demand for eco-friendly products and environmental risks. REACh et al., 1998; Zulina et al., 2006; are also driving the development aims to protect human health and MPOB, 2010; Yeong et al., 2010; of today’s product. Nowadays, the the environment through earlier Hazimah et al., 2011; Rosnah et al., strategic direction of the industry is identification of the basic properties 2015; Zulina et al., 2017a; Zulina et to further develop downstream by of chemical substances. Basically, al., 2017b). adding value to basic oleochemicals, there is insufficient information focussing on market and technology about the substances on the market DRIVERS FOR driven R&D, maintaining the high that pose a threat to human health OLEOCHEMICAL quality of products and increasing and the environment. Therefore, DOWNSTREAM ACTIVITIES manufacturing capacities and this is one of the main objectives export. It is expected more high- for commencement of the REACh With over 5.85 million hectares value oleochemical plants will come regulation to fill these information of oil palm planted area recorded into existence by 2020, producing gaps and enable industry to gain 5 Palm Oil Developments 71 easy access on hazards and risks has documentary evidence of REACh Regulation. The regulation of the substances. Subsequently, this. was introduced in 2013 with the the industry can identify and first registration deadline ended in implement the risk management The second registration 2015. It is a staggered process over measures to protect humans and deadline for 100-1000 t yr-1 10 years until 2023. the environment (EC, 2016). phase-in chemicals manufactured/ imported ended on 31 May 2013, In countries such as US, The first deadline for phase- while the final phase of ≤100 t yr-1 Canada, Switzerland and Russia, in substances, manufactured or chemicals manufactured/imported new chemical substances must imported ≥1000 t yr-1, was 2010, was on 31 May 2018. be notified in accordance with where the Malaysian oleochemical the respective country’s act or companies registered their products Substances that are not in any regulation, while Australia requires with the European