Comparative Palm Oil Trade Performance in Indonesia, Malaysia, and the Philippines

Abstract

Purpose – As one of the most traded commodities in the world with tremendous economic significance, palm oil is an inexpensive source of oil. This paper examined and compared the palm oil trade performance of the Philippines relative to its top palm oil producing neighbors, Indonesia and Malaysia, by analyzing import-export volume trends of the said food commodity, consumption and production trends, self-sufficiency, import dependence, and shifting patterns of comparative advantage. Design/Methodology/Approach – Secondary data covering the period from 1964 through 2018 were collected from various sources, and descriptive analysis coupled with trend analysis were employed with respect to import and export, production, and consumption performance. Other trade indicators were computed, to wit: balance of trade, self-sufficiency ratio, import dependency ratio, and normalized trade balance. Implications were drawn after the comparative analysis among the three countries was done. Findings – An increase in the volume of the palm oil supply in the Philippines is evident, and this is attributed to increasing importation. Relative to Malaysia and Indonesia, the Philippines lags behind in international trade. While Philippine palm oil industry growth has been stagnant in terms of international trade by virtue of its net importer status, Malaysia and Indonesia have overtaken the country significantly, having attained self-sufficiency in the commodity with trade surpluses, and the gap is expected to widen in the coming years. It is interesting to note that the Philippines, Malaysia, and Indonesia had identical production volumes and growth rates until the last decade of the 21st century. A steadily growing industry, palm oil is foreseen to continue being a vital industry, not only to top producing countries such as Malaysia and Indonesia but also in the Philippines, which is trying to improve its palm oil trade performance by expanding production. Research Implications – The study findings imply expansion and income opportunities not only for local oil palm producers, processors, and traders in the Philippines but also for foreign market entrants.