KUALA LUMPUR: Sime Darby Oils International Ltd (SDO) and GuangXi Beibu Gulf International Port Group (BGP) have signed a memorandum of understanding today which will see an increase in exports of Malaysian palm oil to China, by 500,000 tonnes a year.

Under the MoU the companies will collaborate in three main areas; to leverage on the port, logistics, trade and other advantages of BGP in the Beibu Gulf Economic Region to explore establishing a shortening trading distribution centre in the Qinzhou Free Trade Zone of Guangxi Zhuang Autonomous Region; to utilise existing bonded warehouses as a refined palm oil trading and distribution center in the Qinzhou Free Trade Zone and market health products such as, tocotrienol and red oil extracted from palm oil, into the domestic market of the People's Republic of China.

Both companies intend to collaborate for a period of one year, after which an extension of the collaboration may be considered subject to mutual agreement.

SDO and BGP also intend to fully utilise the preferential policies under Guangxi Free Trade Zone for the said refined palm oil trading and distribution center.

Sime Darby Oils managing director Mohd Haris Mohd Arshad said the collaboration presents an exciting opportunity for palm oil products from the company to be sold and distributed in major consumer areas in mainland China, such as South China, Southwest China, and Northwest China through the Qinzhou Port with a combined population of about 1.4 billion.

SDO is a wholly-owned subsidiary of Sime Darby Plantation Bhd, the world's largest producer of certified sustainable palm oil.

"With the growing demand for palm oil products and the increasing trade volumes between China and Malaysia, we anticipate that this partnership will promote growth of sustainable supply chain and spur greater demand for palm oil in China," he said in a statement today.

He added that a successful collaboration with BGP would be another milestone for SDO as it builds its position as the preferred supplier of certified-sustainable, high value palm oil products for the global market.

The MoU was signed by SDO's Head of Strategy and Business Development Amir Hamzah, and BGP Group's Vice President Ma Zhengyou, and witnessed by the of BGP Group Chairman Zhou Shaobo.