20 October 2001 (Business Times) - Following insurers' refusal to coverships chartered by crude palm oil exporters to transport the commodity toPakistan and the Middle East, the Government has intervened by absorbingthe ships' insurance coverage.

The move, approved by the Cabinet in its weekly meeting last Wednesday,will ensure that export of Malaysian CPO to these regions are maintained.

The Cabinet move was prompted by insurers who either declined to providecoverage or imposed very high premiums which shippers cannot affordbecause of the possibility of war breaking up following the bombing ofAfghanistan.

The move will help solve exporters' plight of having to pay high insurancepremiums for their shipment, Primary Industries Minister Datuk Seri Dr LimKeng Yaik told reporters today after chairing the Gerakan monthly centralcommittee meeting at Menara PGRM.

There had been disruptions of CPO shipment after insurance companiescategorised countries like Pakistan and in the Middle East as war riskareas and increased premiums for ships plying these routes, he said.

He described the intervention as similar to the help given to MalaysiaAirlines, which is now paying extra insurance premium.

However, Dr Lim did not say how much coverage the Government was willingto give to each shipper or whether the shippers are paying premiums to theGovernment.

Lim said he will meet CPO exporters and shippers at his ministry onTuesday to thrash out details of the insurance coverage.

CPO exports to Pakistan and the Middle East contribute 20 per cent to thecountry's palm oil export or 2.3 million tonnes annually.

Pakistan is a traditional buyer of Malaysian CPO, consuming one milliontonnes annually or nine per cent from last year's 11 million tonnesoutput.

Some 100,000 tonnes of CPO is exported to Pakistan each month by about 10ships.

On duty hikes proposed under Budget 2002, Lim said tobacco producers andcurers would not be affected by the increase in tax on tobacco andcigarette prices.

The demand for cured tobacco leaves from cigarette companies would not beaffected at all, he said, because our farmers are producing 60 per cent ofthe total demand from cigarette manufactures.

On the Gerakan meeting, Lim, who is also Gerakan president, said the partywould contribute towards realising the Government's Budget 2002 efforts bydirecting leaders holding posts in the Government to be actively involvedin the development of small and medium industries.

We will look into problems of the SMIs and also indentify state land, hesaid, which is made available for food production to help reduce foodimports besides looking into smallholders' problems.