BMI View: Malaysia's agribusiness sector is experiencing challenging times as the palm oil industry - itsmost emblematic sector - is undermined by low prices and growing structural challenges. The cocoa sectoris in an even worse position, suffering a severe decline after the stellar performance of the 1990s. Themedium-term outlook for Malaysia is brighter amid strong growth prospects in the poultry sector andopportunities for value-added palm-based oleochemical exports. Malaysia will have to remain ahead of itsbiggest competitor, Indonesia, if its agribusiness sector is to stay afloat. As such, the next challenge for thecountry resides in the economic integration of ASEAN.
Palm oil production growth to 2020/21: 14.5% to 21.9mn tonnes. Malaysian palm oil production is on arecovery path following the period of severe El Niño related climate disruptions of recent years. Over thelonger term, we foresee a gradual deceleration in growth that will undermine Malaysia's share in exportmarkets, driven by labour shortages, environmental concerns and a deteriorating outlook for palm oilbasedbiofuels.