Cover Image

The effect of sustainability certification for export on operational profitability of Malaysian palm oil companies

Malaysia is the world’s second largest palm oil producer with 17.4 million tonnes palm oil produced in 2016. The production is for both domestic and export which contribute towards country’s income and economic growth. Despite the significant contribution to the economy, being one of the plantatio...

Full description

Saved in:
Bibliographic Details
Main Authors: Shahida Shahimi,, Hafizuddin-Syah B.A.M,, Siti Hanisah Fuad,
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2018
Online Access:http://journalarticle.ukm.my/19793/1/jeko_522-5.pdf
http://journalarticle.ukm.my/19793/
https://www.ukm.my/jem/issue/v52i2/
Tags: Add Tag
No Tags, Be the first to tag this record!
id my-ukm.journal.19793
record_format eprints
spelling my-ukm.journal.197932022-09-21T06:45:58Z http://journalarticle.ukm.my/19793/ The effect of sustainability certification for export on operational profitability of Malaysian palm oil companies Shahida Shahimi, Hafizuddin-Syah B.A.M, Siti Hanisah Fuad, Malaysia is the world’s second largest palm oil producer with 17.4 million tonnes palm oil produced in 2016. The production is for both domestic and export which contribute towards country’s income and economic growth. Despite the significant contribution to the economy, being one of the plantation sectors, Malaysian palm oil has been criticized by the western communities for causing environmental problems such as deforestation and open burning. Hence, it is important for the palm oil companies to ensure sustainable operation and production. The introduction of certified sustainable palm oil (CSPO) or sustainability certification, for instance, Roundtable on Sustainable Palm Oil (RSPO) and Malaysian Sustainable Palm Oil (MSPO), encourages the sustainable practices by the industry players. Recently, the government had announced the mandatory MSPO-certification in Malaysia by end of 2019. At present, there are only 43.6% Malaysian palm oil companies with at least one certification. The mandatory certification had raised concern among companies on additional costs of adoption which eventually will affect profitability. Moreover, sustainability certifications will only benefit the exporting companies for international market penetration. The question is how important does this certification to the exporting companies as compared to others? This study will analyse the effect of sustainability certification on operational profitability of Malaysian palm oil exporting companies. This study employs generalised least square (GLS) estimation on 17 listed palm oil companies in Bursa Malaysia from 2009 to 2015. The result shows that there is no significant difference in operating profitability due to sustainability certification between the palm oil exporting than the non-exporting companies. The findings indicate that sustainablity practice through RSPO or/and MSPO motivates Malaysian palm oil companies to produce certified palm oil for international and domestic markets, which in line with sustainable development goal (SDG) no. 12 (Ensure Sustainable Consumption and Production Patterns) by the United Nations (UN). Penerbit Universiti Kebangsaan Malaysia 2018 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/19793/1/jeko_522-5.pdf Shahida Shahimi, and Hafizuddin-Syah B.A.M, and Siti Hanisah Fuad, (2018) The effect of sustainability certification for export on operational profitability of Malaysian palm oil companies. Jurnal Ekonomi Malaysia, 52 (2). pp. 55-67. ISSN 0127-1962 https://www.ukm.my/jem/issue/v52i2/
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description Malaysia is the world’s second largest palm oil producer with 17.4 million tonnes palm oil produced in 2016. The production is for both domestic and export which contribute towards country’s income and economic growth. Despite the significant contribution to the economy, being one of the plantation sectors, Malaysian palm oil has been criticized by the western communities for causing environmental problems such as deforestation and open burning. Hence, it is important for the palm oil companies to ensure sustainable operation and production. The introduction of certified sustainable palm oil (CSPO) or sustainability certification, for instance, Roundtable on Sustainable Palm Oil (RSPO) and Malaysian Sustainable Palm Oil (MSPO), encourages the sustainable practices by the industry players. Recently, the government had announced the mandatory MSPO-certification in Malaysia by end of 2019. At present, there are only 43.6% Malaysian palm oil companies with at least one certification. The mandatory certification had raised concern among companies on additional costs of adoption which eventually will affect profitability. Moreover, sustainability certifications will only benefit the exporting companies for international market penetration. The question is how important does this certification to the exporting companies as compared to others? This study will analyse the effect of sustainability certification on operational profitability of Malaysian palm oil exporting companies. This study employs generalised least square (GLS) estimation on 17 listed palm oil companies in Bursa Malaysia from 2009 to 2015. The result shows that there is no significant difference in operating profitability due to sustainability certification between the palm oil exporting than the non-exporting companies. The findings indicate that sustainablity practice through RSPO or/and MSPO motivates Malaysian palm oil companies to produce certified palm oil for international and domestic markets, which in line with sustainable development goal (SDG) no. 12 (Ensure Sustainable Consumption and Production Patterns) by the United Nations (UN).
format Article
author Shahida Shahimi,
Hafizuddin-Syah B.A.M,
Siti Hanisah Fuad,
spellingShingle Shahida Shahimi,
Hafizuddin-Syah B.A.M,
Siti Hanisah Fuad,
The effect of sustainability certification for export on operational profitability of Malaysian palm oil companies
author_facet Shahida Shahimi,
Hafizuddin-Syah B.A.M,
Siti Hanisah Fuad,
author_sort Shahida Shahimi,
title The effect of sustainability certification for export on operational profitability of Malaysian palm oil companies
title_short The effect of sustainability certification for export on operational profitability of Malaysian palm oil companies
title_full The effect of sustainability certification for export on operational profitability of Malaysian palm oil companies
title_fullStr The effect of sustainability certification for export on operational profitability of Malaysian palm oil companies
title_full_unstemmed The effect of sustainability certification for export on operational profitability of Malaysian palm oil companies
title_sort effect of sustainability certification for export on operational profitability of malaysian palm oil companies
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2018
url http://journalarticle.ukm.my/19793/1/jeko_522-5.pdf
http://journalarticle.ukm.my/19793/
https://www.ukm.my/jem/issue/v52i2/
_version_ 1744649880848039936
score 13.211869

Similar Items