"Exploring the Uncharted Waters: Malaysian Palm Oil's Silent Entry into Egypt's Market Despite Strong Demand"

By: SEE Editor-in-Chief Mohamed Wadie

Malaysian palm oil, despite being a major global commodity and a key export product to Egypt, has not yet fully "gone public" or established a dominant direct presence in the Egyptian market in terms of local production or investment. Several factors explain this situation, rooted in economic, geopolitical, trade, and strategic considerations.

Economic and Market Dynamics

Egypt is a significant importer of palm oil, consuming about 1.2 million tonnes annually, with Malaysian palm oil accounting for over half of these imports. Palm oil is essential for Egyptian consumers due to its cost-effectiveness and wide use in cooking and processed foods, especially given Egypt’s low consumer purchasing power amid high inflation. Despite this strong demand, Malaysian palm oil mainly enters Egypt as an imported commodity rather than through local production or public market presence.

Trade Agreements and Market Access

Currently, Malaysia and Egypt are negotiating a Free Trade Agreement (FTA) that aims to strengthen bilateral trade, with palm oil as a key pillar. Egypt already participates in several multilateral trade agreements such as GAFTA, AfCFTA, and COMESA, facilitating regional trade but also complicating direct Malaysian market entry strategies due to existing trade frameworks. These agreements offer opportunities for Malaysian palm oil to expand regionally via Egypt as a hub but do not yet translate into Malaysian palm oil companies going public or establishing major local operations in Egypt.

Geopolitical and Regional Risks

Regional geopolitical tensions, such as the conflict in Gaza and disruptions in the Red Sea, pose risks to trade flows but have not significantly deterred Malaysian palm oil exports to Egypt, which remain resilient. However, these risks may contribute to cautious investment approaches by Malaysian companies in establishing local public enterprises or manufacturing bases in Egypt.

Investment and Collaboration Opportunities

There is growing interest from Malaysian companies to invest in Egypt’s palm oil sector, leveraging Egypt’s strategic location and trade advantages like customs exemptions under AfCFTA. Discussions have involved Malaysian firms exploring joint ventures, technology transfer, and establishing refining or manufacturing facilities in Egypt to serve both local and regional markets. The Egyptian government supports such moves, offering investment incentives and aiming to develop Egypt as a regional hub for palm oil processing and re-export. However, these initiatives are still in exploratory or early stages, which explains why Malaysian palm oil has not yet "gone public" in the Egyptian market.

Strategic Industry Considerations

Malaysia’s palm oil industry is focused on sustainability, certification (MSPO), and compliance with international environmental standards to maintain global market access. The Malaysian Palm Oil Council (MPOC) actively promotes Malaysian palm oil in Egypt through forums and regional offices, aiming to build trust and long-term partnerships rather than immediate public market entry. The industry strategy includes expanding into new markets in Africa and the Middle East while maintaining quality and sustainability credentials.

Malaysian palm oil does not yet "go public" in the Egyptian market primarily because

- The current trade relationship is heavily import-based rather than investment-based, with Malaysian palm oil entering Egypt mainly as a commodity.

- Ongoing negotiations for a Free Trade Agreement and investment discussions indicate future potential but have not yet resulted in Malaysian companies establishing public entities or manufacturing bases in Egypt.

- Geopolitical risks and regional instability encourage cautious investment.

- Malaysia’s strategic focus remains on sustainability, certification, and market diversification, with Egypt serving as a key import market and potential regional hub rather than a site for Malaysian public listings or local production.

- Egypt’s participation in multiple regional trade agreements creates a complex trade environment that Malaysian companies are navigating carefully.

In conclusion, while Malaysian palm oil is a crucial import for Egypt and bilateral cooperation is deepening, the absence of Malaysian palm oil "going public" in Egypt reflects a strategic, economic, and geopolitical balancing act. The future may see greater Malaysian investment and local presence as trade agreements mature and market conditions stabilize, but for now, the relationship centers on trade and strategic partnership rather than public market entry.

SeeNews Editor-in-Chief Mohamed Wadie during a visit to a palm oil farm in Malaysia

Mr. Mohamed Wadie, Editor-in-Chief of Sada ElBalad English website (SEE)