Palm oil refining industry has become one of the most important industries in Malaysia since 1960s. In the second quarter of 2018, total production and total exports of Malaysian palm oil products recorded low-single digit drop, despite an encouraging recovery in production in 2017. It is worrying to note the declining trend of utilisation rate of these refineries over the years signifying the loss of market share of these refineries in the global market. This study aims to focus on determining the structure of the industry using six concentration indicators namely Herfindahl-Hirschman index (HHI), concentration ratio (CR), entropy index (EI), relative entropy (RE), Hannah and Kay index (HKI), and the Gini coefficient (GINI). The results obtained indicate that the industry is an oligopoly with apparent shift from a highly indexed oligopoly to a lower indexed oligopoly during the studied period. The results further affirmed the concern raised in this study that the domestic palm oil refining industry has lost its market share and position in the international market.
This paper empirically examines the relationship between excess capacity and probability of entry into Malaysian palm oil refining industry using time series data. Capacity and production, two components crucial to the study of excess capacity, were included in the estimation model. The analysis was conducted specifically in the Malaysian palm oil refining industry and the sample covered the period from 1976 to 2011. Logit model was employed in this analysis, where the results exhibited that excess capacity does not significantly influence probability of entry into the palm oil refining industry in Malaysia.
With the growing demand of palm biodiesel worldwide, the government has recently announced the implementation of palm biodiesel programme effective July 2014. The implementation will boost the palm biodiesel industry and heighten the demand for palm biodiesel in the domestic market as well as in the international market. This paper thus examines the relationship between the use of strategic investment in excess capacity and the industry entry condition, using logit model. This study covered study period from year 2006 to 2013. The results from this study will further help policymakers to develop policy that is parallel with the condition of the industry.
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