| Summary: | Under the 9th Malaysia Plan, (RMK 9,2006-2010) the agricultural sector will be the third engine of growth for the economy, after manufacturing and service sector. The agriculture sector is targeted to increase at five to six percent with significant contribution from oil palm, rubber, cocoa, timber and paper (RMK 9,2006-2010). Today, Malaysia is the largest producer and exporter of palm oil as well as the biggest exporter of oils and fats in the world. The Malaysian palm oil industry has given a significant contribution to the Malaysian economy. With the increasing demand, export earnings from palm oil help to strengthen the economy and help the government to plan the strategies to become more competitive in the world commodity markets. For that reasons, this paper analyse the determinants of export demand based on Malaysian palm oil. The framework integrates six categories of factor influencing export demand on Malaysian palm oil: price of crude palm oil, price of soybean oil, price of rapeseed oil, gross domestic product, exchange rates and world population with the period from year 1975 to the year 2004. The model extends a study by the previous researcher and fills a gap in the export demand literature by developing research by taking into account different theoretical perspective to study export demand on palm oil using an econometric analysis. The main objective of this study is to analyze the trend of fluctuation occur in every single independent variable and to determined the determinants of Malaysian export demand of palm oil as well as to calculate the elasticity of demand.
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