The palm oil refining in Malaysia emerged in the country’s industrial scene on a large scale only in 1974. Prior to this time, only a few factories were refining about 10% of the country’s total crude palm oil production. As such, virtually all the crude palm oil produced was exported.

The year 1974 opened a new chapter in the Malaysian palm oil industry, which saw a progressive increase in the number of refineries being set up throughout the country. In 1984, the refineries’ operations were extended to include the processing of crude palm kernel oil. As a result most of the palm kernel oil processing activities are now undertaken by palm oil refiners, reflecting the close integration within the Malaysian oils and fats industry.

Since the inception of the refining industry more than 35 years ago, the export of refined and processed palm oil today accounts for about 90% of Malaysia’s total palm oil production. The rapidly increasing palm and palm kernel oil refining and fractionation capacity consolidated Malaysia’s position not only as a leading producer, but also a major marketing force in the international trade of oils and fats.

This position has been achieved through, among other factors, the stringent observance of quality control and the capacity of local refiners to meet the high standards demanded by world markets. Much of the success of the industry is attributed to the fact that it was able to make breakthroughs into markets which were once dominated by other vegetable oils and fats.

Most refiners in Malaysia are now members of PORAM. They produce a wide range of processed palm/palm kernel oil products from fully refined products to specialty fats, cooking oils and many others which are shipped in bulk or in packed forms including flexi-tanks, ISO tanks, cartons, drums and cans.

The advent of the refining industry in Malaysia played a major role in securing new market outlets for Malaysian palm oil and palm kernel oil. Prior to this, almost all the crude palm oil and palm kernel oil produced in Malaysia were exported to industrially developed countries such as the European Union (EU), the United States of America (USA), Japan and Australia. They were
among the only countries which operated palm and palm kernel oil processing plants then. Direct Malaysian exports to other parts of the world were limited due to the absence of local processing facilities.

The growing importance and easy availability of processed palm oil products have completely changed the marketing pattern and export of Malaysia. There is a marked shift of market away from the industrialized countries to the developing countries. The traditional markets have, in recent years, increased their import of crude palm oil for the production of biofuels. However, the newer and more substantial markets which have been opened up in the past three decades like The People’s Republic of China, Pakistan, India, Bangladesh, and the Republic of Korea are taking in the main bulk of the refined, bleached and deodorized (RBD) palm oil products mainly for food uses. In the eighties, the availability of processed palm oil also provided opportunity to extend the market to include the Middle East and Africa which had previously relied predominantly on finished packed products from European suppliers.

The introduction of the trans-free labeling in the USA and subsequent banning of oils and fats product containing trans-fats in some states in the country in recent years have opened up new opportunities and renewed interest for palm oil in these markets. This is because palm oil and its fractions are known to be virtually free from trans-fatty acids and thus, a natural replacement for
hydrogenated vegetable oils and fats.

The awareness and the requirement for trans-free oils and fats will augur well for demand and acceptance of palm oil worldwide. The technological need for a solid fat can be replaced by using palm oil which is naturally a semi-solid, or the use of palm stearin, the solid fat obtained from the fractionation of palm oil. By doing so, there is no necessity to use hydrogenated fats which contain the unnatural trans-fatty acid.