Marketing Analysis

      We are living in the world of business. Business is the root of the economy activity and everything is encompassing it. Thinking about a business is like leading an adventure. However, we are going to take an adventure with palm oil. Every year we have to import huge quantity of edible oil in which more than 40% is palm oil . United Arab Emirates imports Palm Oil primarily from: Malaysia ($313M), Indonesia ($235M), Oman ($47.7M), Saudi Arabia ($16.7M), and Singapore ($1.03M). The fastest growing import markets in Palm Oil for United Arab Emirates between 2021 and 2022 were Malaysia ($193M), Oman ($17.4M), and Turkey ($654k).Despite the convenient weather support and huge potentiality to grow palm tree here. We import because we lack initiative to grow palm tree locally. 

Justification of setting up the business

     Political stability index (-2.5 weak; 2.5 strong)The latest value from 2022 is 0.7 points. For comparison, the world average in 2022 based on 193 countries is -0.07 points. See the global rankings for that indicator or use the country comparator to compare trends over time.

Political Analysis

Economical Analysis

In 2020, services accounted for 58% of overall GDP, manufacturing 10%, other industrial activity 31%, and agriculture 1%. Looking at GDP by expenditure, private consumption accounted for 39% of GDP in 2020, government consumption 14%, fixed investment 22%, and net exports 25%.

        The United Arab Emirates, often abbreviated to just the ‘UAE’, is an affluent Middle Eastern country located on the Arab Peninsula. According to the World Bank, the United Arab Emirates had one of the top 25 Gross Domestic Products per capita in 2014 [1]. This country earns most of its wealth through the export of oil and other fossil fuels, with secondary income sources appearing elsewhere in industry or tourism. In this article, we will be taking a closer look at the socioeconomic circumstances that the UAE finds itself in, with the aid of a PESTLE analysis.

Social Analysis

UAE Palm Oil Market Insights

    In 2015, the palm oil market in the UAE had a valuation of approximately USD 183.3 million. This signifies a significant demand for palm oil in the country's food and beverage industry, as well as other sectors such as cosmetics and personal care. The market size reflects the UAE's reliance on palm oil imports to meet domestic consumption needs, driven by factors such as population growth, changing dietary preferences, and the use of palm oil in various products.

Market Overview:

UAE – Malaysian Palm Oil imports

     The table above offers insights into the trends of palm oil imports by the UAE, as well as the potential and key products imported. Over the analyzed period from 2018 to 2022, the UAE’s palm oil imports exhibited a favourable upward trend. Import values consistently increased, with a significant rise from 56,530 MT in 2018 to 347,635 MT in 2022. Notably, that year’s total imports saw a substantial surge, reaching a peak of 347,635 MT. Additionally, a favourable trend was also shown in the imports of certified palm oil into the country, increasing from only 1,181 MT in 2020 to 6,186 MT in 2022.

     A significant increase was recorded for RBD PL (Refined, Bleached, and Deodorised Palm Olein) in 2022, more than tripling the figure as compared to the previous year and emerging as a key palm oil product imported by UAE. Its import volumes also displayed consistent growth, reaching a substantial value of 228,965 MT in 2022. Moreover, “Other palm oil products”, mainly packed cooking oil, also experienced significant expansion, peaking at 70,486 MT in 2022. These trends indicate an increasing demand for Malaysian palm oil products, highlighting their potential significance to the country.

Following these trends and understanding the current market potential in the UAE, Malaysian palm oil exporters should grasp this opportunity and tailor their strategies to meet the market’s specific demands. By offering high-quality, reliable, sustainable, and traceable palm oil products, they can tap into the growing demand and establish a strong presence in the UAE market.

As a major re-export hub, the UAE serves as a gateway to neighbouring countries in the Middle East, North Africa, and beyond. Apart from being ideal location for the re-export market, a strong demand in the domestic market, as mentioned above, is essential to Malaysian players for them to be established in the country by supplying palm oil products for the domestic market, on top of the further processing of the products or by transiting for the export market.

Source

     The growth of UAE’s GDP from USD253.55 billion in 2010 to an expected USD639.34 billion in 2028 signifies a thriving economy. This robust economic growth is a significant factor that supports the UAE’s position as an excellent venue for the re-export market.

   As UAE’s GDP grows, so does the disposable income of its residents. This rise in consumer spending power creates a favourable environment for the re-export market. With more disposable income, consumers are willing to explore a wider range of products and allow re-exporters to cater to consumers’ diverse tastes and preferences in the UAE. Besides this, the following are some other supporting factors that could make UAE a good re-export hub for Malaysian palm oil:

The presence of a multicultural population: The diverse mix of nationalities present in the UAE, with expatriates forming a significant portion of the population, provides a strong support system for managing and marketing products in the re-export market.

Strong Logistics Infrastructure: The UAE has heavily invested in developing world-class logistics infrastructure, including ports, airports, and transport networks. This robust infrastructure facilitates the efficient movement of goods, making the UAE an attractive hub for re-export activities.

Favourable Business Environment: The UAE offers a business-friendly environment characterised by political stability, favourable trade policies, and ease of doing business. The UAE is ranked 16 among 190 economies, with a DB (Doing Business) Score of 80.9 according to the World Bank annual ratings (2020).

Strategic Geographical Location: The UAE’s geographical location in the middle of Europe, Asia, and Africa makes it an ideal re-export hub. Its proximity to key markets enables the efficient distribution of goods to various regions.

Conclusion

     The UAE presents a compelling opportunity for Malaysian palm oil exporters to expand their presence in the global market through re-export. UAE’s strategic location, robust logistics infrastructure, favourable business environment, and growing GDP contribute to its status as a thriving re-export hub. Leveraging on its multicultural population, Malaysian palm oil producers can tap into expatriates’ diverse expertise, language skills, and market access, facilitating effective management and marketing of their products. Furthermore, highlighting Malaysia’s unique selling points, such as the MSPO certification scheme for sustainable practices, superior quality, and traceability, will enhance the appeal of Malaysian palm oil in the UAE market. By capitalising on these advantages, Malaysian palm oil exporters can seize on the opportunities presented by UAE’s re-export market, establishing strong partnerships, expanding their customer base, and contributing to the growth of the Malaysian palm oil industry in the region.