Chemicals Advance Materials – Oleochemicals

The Malaysian oleochemicals industry has been established since the late 1970s. Basic and derivative oleochemicals are subsequently used as inputs in a plethora of products, including detergents, shampoos, soaps, cosmetics, pharmaceutical products and food additives.

Today, the industry is moving towards supplying palm-based chemicals as intermediates for other industries such as polymer and rubber-based products which is an alternative to petroleum based chemicals. Basic oleochemical products produced in Malaysia are fatty acids, fatty alcohol methyl ester and glycerine.

Malaysia is promoting the production of palm-based biodiesel, whereby production of palm methyl ester is used to blend with petroleum diesel to produce blended biodiesel. Based on studies conducted by the Malaysian Palm Oil Board (MPOB), the use of palm-based biodiesel is proven to generate greenhouse gas (GHG) savings and contribute to better air quality.

In January 2020, the government started a B20 biodiesel programme in Langkawi and Labuan to increase the uptake of biodiesel. This programme is also available in Sarawak and eventually it will be implemented nationwide.

The aim is to encourage more production of speciality/derivative oleochemicals in the country as well as to increase the productivity of basic oleochemicals by innovation and adoption of new technologies. Speciality/derivative oleochemicals in key end-user applications/products are also given a priority as the increasing demand for niche markets is expected to drive the growth of the industry.

Opportunities abound in oleochemicals for prospective investors, as industry players come together and foster effective linkages between upstream, midstream and downstream activities. Investors can consider collaborating with the public sector to identify and develop oleochemical products that are in high demand. Investors can also consider helping to finance the adoption of disruptive technology among oleochemical companies in their efforts to transition their production capabilities from basic oleochemicals to specialty oleochemicals or derivatives. Together with relevant stakeholders, MIDA has undertaken an exercise on product identification for the ecosystem’s whole value chain, in order to fill in any missing gaps and encourage industry players to produce products that would cater to high-value niche markets.