24 October 2001 (BusinessTimes) - THE Government may consider subsidisinginsurance costs for shipments of palm oil to Pakistan and West Asianregion due to the increase in premiums following US strikes onAfghanistan.

Primary Industries Minister Datuk Seri Dr Lim Keng Yaik said freightsurcharge for shipments to these war-risk areas had increased between US$1(RM3.8) and US$5.

The charges, based on the types of ships and equipment used, would only bemade known to exporters 48 hours before the destination is reached —unlike previously when the charges were fixed.

"This has created a problem among exporters in determining the exact costinvolved in the shipments of palm oil to these areas. I plan to ask theGovernment to help our shippers." "There are various options we arecurrently looking into. We may even provide some sort of financialassistance to the palm oil producers and refiners to overcome the rise inshipping insurance premiums." Dr Lim said he hoped to find a solution bynext week.

The Minister was speaking to reporters after a meeting with the Palm OilRefiners and Exporters Association in Kuala Lumpur yesterday.

Demand for palm oil from Pakistan is expected to increase over the nextfew months, especially during the month of Ramadan.

He hoped such a development would be able to improve the palm oil stocklevel, currently at 1.2 to 1.3 million tonnes. Demand started to improvethe middle of this month.

"Although there has been some disruption in palm oil export movements dueto these volatile regions between Sept 11 and Oct 7, the shipments trafficsituation at the moment has gone back to normal.

"In fact, the total shipment to Pakistan, which represents 25 per cent ofMalaysia's total palm oil exports, for this month is higher than thecorresponding period last year." Pakistan is presently Malaysia's fourthlargest buyer of palm oil after India, China and the European Union. Anaverage of 100,000 tonnes of processed palm oil is shipped to Pakistanmonthly.