KUALA LUMPUR: China plans to buy additional 1.9 million tonnes palm oil from Malaysia, in the next five years.
Today, Malaysia's Prime Minister Tun Dr Mahathir Mohamad met with China's Premier Li Keqiang at the Diaoyuetai (State Guest House) in China.
Dr Mahathir arrived in Beijing, last night, for a five-day working visit to China and attend the 2nd Belt and Road Forum for International Cooperation at the invitation of Chinese President Xi Jinping.
Dr Mahathir and Li witnessed the signing of a memorandum of understanding (MoU) between the Malaysian Palm Oil Council (MPOC) and the China Chamber of Commerce of Import and Export of Foodstuff, Native Products and Animal By-products (CFNA).
Malaysia's Primary Industries Ministry secretary general Datuk Dr. Tan Yew Chong represented MPOC while CFNA president Cao Derong signed on behalf of purchasers. GFNA comes under the purview of China’s Commerce Ministry.
In a statement today, Malaysia's Primary Industries Ministry said there will be periodic reporting between the two parties on the implementation of programmes and activities under the MoU via a Production Capacity and Investment Cooperation Working Group.
Under the MoU, China will buy an additional 1.9 million tonnes of palm oil from Malaysia for five years to 2023. Assuming that palm oil is sold at an average of US$600 per tonne, Malaysian exporters is set to earn an additional RM4.56 billion.
This order is in addition to the four purchase contracts signed, last month, for the export of 1.62 million tonnes of palm oil from Malaysia to China, worth US$891 million.
China, under the MoU said it will also invest at least RM2 billion in a biojet fuel plant.
China and Malaysia have agreed in the MoU to work together to encourage the use of the Renminbi for palm oil trade, pending approval from Bank Negara.
Last year, Malaysia shipped 3.07 million tonnes of palm oil and palm-based products valued at RM8.4 billion to China.