NAIROBI – Malaysia and Indonesia are battling over the cooking oil market in Kenya, with each of the South Asian countries sending delegations to Nairobi in an attempt to expand their share.
On Thursday, July 6, Kenya’s Ministry of Trade and Investments announced that a delegation from Indonesia would this week arrive in Nairobi for discussions with President William Ruto and Cabinet Secretaries Moses Kuria (Investments, Trade and Industry) and Mithika Linturi (Agriculture).
The ministry added that Indonesia, the world’s 15th largest economy and world’s largest producer of palm oil, had offered to help Kenya to improve the production of palm and sunflower oil.
An agreement for “end-to-end development of the edible oil industry” will be signed during the meetings, the ministry said in the statement.
“The talks will be centred around supporting farmers in selected counties of Lamu, Kwale, Tana River, Taita Taveta, Homa Bay, Migori, Kisumu and Busia through an out-grower scheme as well large-scale farming,” the ministry said.
The Indonesian delegation will be led by Coordinating Minister for Maritime and Investment Affairs Luhut Binsar Pandjaitan, who coordinates seven ministries in President Joko Widodo’s government. It will be the second time in six months that Pandjaitan is visiting Kenya after talks with Ruto in January.
Pandjaitan’s visit is expected to prepare the ground for a State Visit by Indonesian President Joko Widodo in August, following a tour by Kuria in Jakarta in May this year. During that visit, Indonesia offered to import 700,000 cows from Kenya.
The delegation, the ministry said, will include government and private companies keen to invest in other sectors, including blue economy, mining, livestock, apparel and textiles, geothermal energy, petroleum, sugar and pharmaceutical.
Kenya currently imports crude palm oil worth Sh140 billion annually through five companies of Bidco, Kapa Oil, Pwani Oil, Menengai and Golden Africa, according to the Trade ministry said.
Interestingly, however, the visit was announced just a day after Malaysian Palm Oil Council held a palm oil forum in Nairobi on July 4.
The delegation attending the Malaysian Palm Oil Forum East Africa was led by the country’s Deputy Prime Minister, Fadillah Yusof, who at the meeting highlighted the importance of the Malaysia-Kenya trade relationship, saying Nairobi is a vital market for Malaysia’s palm oil in the region.
Just as Indonesia said a day later, the government of Malaysia through the Deputy Prime Minister said it is ready to facilitate its palm oil industrial players and businesspeople to set up plantations in Kenya through joint ventures in East Africa.
“Today’s event underscores the importance of Kenya as a trade partner. Kenya holds immense significance in the palm oil industry as demonstrated by statistics as the fifth largest destination for our nation’s palm oil export with a volume exceeding 763,000 tonnes in 2022,” DPM Yusof said at Kempinski Hotel in Nairobi.
The Malaysian Palm Oil Council said 95% of Kenya’s crude palm imports comes from Asia.
Kenya continues to be a major importer of Malaysia palm oil in sub-Saharan Africa, with a volume of 255,253 metric tonnes, which is 27,732 metric tonnes or 12.2% higher compared to the same period of 2022.
Kenya’s import of the palm oil also represents 26.4% of the total volume exported to the region. The increase in demand for crude palm oil, crude palm olein and cooking oil, as the main palm oil products to the sub-Saharan region, has provided a ready market for the Malaysian palm oil sellers.
According to Observatory of Economic Complexity (OEC) data, in 2021, Kenya imported $1.26 billion in palm oil, becoming the ninth largest importer of the commodity in the world.
At the same year, OEC statistics show, palm oil was the second most imported product in Kenya.
This is primarily from: Malaysia ($747 million), Indonesia ($457 million), Thailand ($35.4 million), Singapore ($16.7 million), and Philippines ($2.57 million).
The fastest growing import markets in palm oil for Kenya between 2020 and 2021 were Malaysia ($420 million), Indonesia ($141 million), and Thailand ($28.5 million).
Curiously, however, the Ministry of Trade gave the Malaysian forum a wide berth, despite Dr. Juma Mukhwana, Principal Secretary, Ministry of Investment, Trade and Industry being invited and being listed in the media invite and official programme.
And while a source indicated Principal Secretaries were summoned to State House, the practice is for another senior official to be deployed to represent the PS.
The Trade ministry didn’t make any reference to the meeting as it did with the Indonesians, despite Malaysia’s delegation being led by a Deputy Prime Minister.
This could be traced to Kuria’s earlier appearance before Senate Business Committee in late June, where he claimed that Bidco, Menengai, Kappa, Pwani, and Golden Africa enjoyed a monopoly in previous regimes at the expense of the taxpayer.
He claimed the companies were importing refined oil from Malaysia and doing minimal value addition in Kenya, while locking out other players in the industry who would be slapped with a 35% levy.
“Previously the definition of value addition which they purport to do was to import crude oil from Malaysia from one company called Wilmar in Malaysia,” CS Kuria said.
“But a big part of what they do is do some very minimal value addition, create very few jobs and then that becomes a ticket to lock out all the SMEs,” he added, further noting that Kenya and Indonesia are collaborating to plant palm trees in several counties across the country, including Kisumu, Homa Bay, Migori, Busia, Lamu, and Taita Taveta.
Malaysia ready to facilitate palm oil investors to set up in Kenya, top official says
