production in 2007. Malaysia was the top palm oil producer up till 2006 and has since been overtaken by Indonesia. The sharp increase in Indonesian output (average annual growth in palm oil production of 5.7% in the 10 years until 2007) was mainly driven by rapidly rising mature oil palm area from its plantation. Taking into account the very large land reserves still available and suitable for oil palm cultivation, Indonesia has a much larger growth potential than Malaysia in the years ahead. Given the strong global demand and high palm oil prices, these will drive new investments into the development of new oil palm plantings.
The table below shows the world export of palm oil by Malaysia and Indonesia from 1980 to 2007. Despite the pronounced growth in Indonesian exports of palm oil ( average annual growth rate of 15.6% from 1998-2007), we expect Malaysia will remain as the primary exporter until approximately 2009 or 2010, as the stronger growth in domestic demand of the more populous Indonesia is impeding a more intense expansion of exports. However, Malaysia has lost market share to Indonesia during the past 10 years, from 68% in 1998 to 46% in 2007.
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