KUALA LUMPUR, Feb 4 (Bernama) -- The oleochemicals industry will see astable growth of between 5.0 and 6.0 percent in 2002 amidst higher demandfor products which use oleochemicals, says director-general of MalaysianPalm Oil Board (MPOB) Datuk Yusof Basiron.

He said that the oleochemicals industry develops parallel to the palm oilindustry as the demand for the latter products also depended on theworld's daily consumer needs.

"The high population growth increases the demand for edible oils.Similarly, the need for soaps, detergents and toiletries also increases.They are just like petrochemicals which has various applications," he toldBernama in an interview recently.

Among other things, oleochemicals are used to make soap, toiletries anddetergent.

Currently, Malaysia produces 1.7 million tonnes of basic oleochemicals(fatty acids, fatty esters, fatty alcohols and glycerol), representing 20percent of the world's production.

In 2001, Malaysia exported 1.2 million tonnes of oleochemicals worldwide,especially to the US, Europe, South Korea, Japan, India, China and theMiddle, East, where it is finally processed into consumer products.

Yusof said that the export market was expanding gradually by six to 10percent per annum.

He said that Malaysia, which has the largest oleochemicals industry, has avast opportunity to expand further with more investments in Research andDevelopment (R&D) and through joint ventures.

"Oleochemical is still an exciting component of the palm oil industry asyou can develop so many products with very high value added component.There are vast market demand for the different types of applications suchas solvents," he said.

Yusof said that the industry's growth could be attributed to severalfactors, including availability of raw materials, especially lauric oilsin the form of palm kernel oil apart from good infrastructure, adequatelabour supply and attractive government incentives such as pioneer statusand foreign direct investment.

Joint venture partnerships between locals and multinationals companieswere common features in the development of the industry, he said.

"This partnership allows the companies in Malaysia to be very competitivedue to the state-of-the-art technologies and vertical integration," hesaid.

Yusof said that this has ensured raw material supplies, as well as accessto capture markets and accessibility to world class R&D facilities.

In fact, he said that the growth of the industry was well ahead of demand,

Yusof also said that since Malaysia has a small population, it has to relyon neighboring countries and the world as consumers.

He said that Malaysia would be competitive if it focused more on producingcertain intermediates for the customers to formulate into finishedproducts or finding synergy with other important industries in the region.

He cited strong preference for natural based products such as cosmeticsand personal care (CPC) products and soap.

"With the growth of 10 percent for CPC and 5.0 to 19 percent for soap inthe Asia Pacific region, these sectors may give a boost in the productionof oleochemicals derivaties," he said.

Yusof added that with the advancement in the oleochemicals industry andthe abundant supply of palm oils, Malaysia could become the biggestsupplier of high quality raw material for CPC and soap noodles.

The first oleochemical company in Malaysia started in 1979, producingfatty acids and glycerol from palm kernel oils. By 1985 there were fivecompanies and by the end of 1990, the number increased to 15. Currentlythere are 17 plants. -- BERNAMA