KUALA LUMPUR, Feb 20 (Bernama) -- Amidst growing competition whichthreatens Malaysia's position as the world's No. 1 exporter of palm oil,Plantation Industries and Commodities Minister Datuk Peter Chin says thefuture of the country's commodities trade depends on developing downstreamindustries with the importing countries.

"The days are gone when we can produce palm oil merely as a raw commodityand expect others to buy, buy and buy. We have to collaborate withcountries importing our commodities to set up high value-added downstreamindustries in their countries," he said here Saturday night.

Chin said the same also applied to other commodities like rubber, cocoa,and pepper as well as timber exports.

"Importing countries no longer accept our commodities without questionlike before. The trend of the future is for us to package for them basedon what they need as each country's needs differ from the other," he toldjournalists at his ministry's Media Night.

Chin said his belief in value-added downstream industries as the only wayforward for the country's commodities was reinforced by his just-concludedvisit to Pakistan, the third largest importer of Malaysian palm oil afterChina and India.

"The whole package of commodities represents between 6 and 8 per cent ofour GDP (gross domestic product) and earns a big chunk in terms of hardcash. It is therefore very important for the well-being of our economy.

"It is our strategic industry for which we need to take a serious hardlook at. If for instance one day we are unable to sell our palm oil, weare going to face a big problem in our foreign exchange earning," Chinsaid.

But the minister said he was optimistic about the future of commoditieslike palm oil as it is a food item and a necessity.

"We now need to work with major importing countries like China, India,Pakistan and the Middle East whose growing wealth would mean they wouldbuy more from Malaysia. This is particular so for China," Chin said of theworld's most populous nation which has taken over as the biggest consumerof Malaysian palm oil from India.

"The well-being of our commodities depends on who we sell to. The moreprosperous China becomes, the more we can expect them to buy from us".

He underlined the need for commodity producers to adopt best industrypractices and boost efficiency to stay ahead of competition as commoditieslike palm oil and rubber which used to be virtually the exclusive domainof Malaysia were no longer so today.

"What we produce, others are also producing. Indonesia with its abundanceof land and cheaper labour would very soon overtake us as the main palmoil producer, so we have to strategise," he warned.

" I want to say that the competition is very real and intense. This posesa big threat to us but we must not be disheartened. We still have the edgebecause of our accumulated expertise and with our emphasis on developingdownstream industries, we can beat our competitors," he said.

-- BERNAMA