The leaders of Malaysia and Indonesia have agreed to establish a palm oil producers' council in an attempt to jointly tackle fresh challenges in the key agricultural sector.
The new entity, to be named the Council of Palm Oil Producer Countries or CPOP, will be tasked with managing inventories and coordinating production among member countries.
It is also expected to harmonize different standards in palm oil production and combat negative perceptions against the industry, said government officials from both nations over the weekend.
Details of the CPOP were released as Malaysia's Prime Minister Najib Razak paid an official visit to Indonesian President Joko Widodo on Saturday.
The agreement by Najib and Jokowi followed a joint announcement made by their respective ministers last week to establish the council.
While Malaysia and Indonesia will be the founding members of CPOP, both countries have indicated that other palm oil-producing nations are free to join the council subsequently.
Currently, both countries account for around 85% of global production.
Indonesia has extended its invitation to neighboring Thailand, currently the third-largest producer.
The CPOP was first proposed in 2006, but recent developments have given new impetus for both countries to support the major export industry.
The move comes amid swelling palm oil inventories in recent months, with Malaysia's stockpile exceeding 2.6 million mt in September, according to statistics released by the Malaysian Palm Oil Board Monday.
In the meantime, MPOB has restricted CPO imports from Indonesia since last week, as plantations and commodities minister Douglas Uggah pledged to pare back inventories to a "more manageable" level of around 2 million mt.
