IDENTIFYING EXPORT COMPETITIVENESS OF MALAYSIA’S PROCESSED PALM OIL: USING SHIFT - SHARE TECHNIQUE

Abstract

Palm oil is a very important commodity in Malaysia and it is the fourth largest contributor to the national economy with a total export at RM 67.6 billion or 6.1% from the total export earnings in 2016. However, current total of Processed Palm Oil (PPO) exports shows declining trend in some of the Malaysia’s traditional market (e.g. China, India, and United States). Therefore, this paper aims to analyses the export competitiveness of Malaysia’s PPO in 10 major importing countries. The data used in this study is annual time series data spanning from the years of 2001 through 2016 for PPO products which is classified as 151190 in the Harmonized Tariff Nomenclature (HS Codes). The Shift-Share approach is used to identify the potential export growth in selected major importing countries for Processed Palm Oil from Malaysia to calculate the net shift. The finding shows that Vietnam has the highest percentage of positive net shift followed by Philippines, Iran and United States. Information generated from this study will be useful in understanding the Malaysian palm oil industry’s position for PPO in the global market. This study provides significant factors that influence Malaysian export competitiveness of PPO and responses from different countries and the palm oil industry players can make use the information for their business decision making.