KUALA LUMPUR, Sat. 21 October 2001 (Business Times) — The Government willprovide insurance coverage for ships chartered by crude palm oil exportersto transport the commodity to Pakistan and the Middle East following therefusal of insurers to cover the vessels.

The move, approved by the Cabinet on Wednesday, would ensure that theexport of palm oil to these places are maintained.

The Cabinet move was prompted by insurers who either declined to providecoverage or imposed very high premiums because of the bombing ofAfghanistan.

"The move will help solve the exporters' plight of having to pay highinsurance premiums for their shipment," Primary Industries Minister DatukSeri Dr Lim Keng Yaik said today after chairing a Gerakan centralcommittee meeting.

There had been disruption of palm oil shipments after insurance companiescategorised countries such as Pakistan and those in the Middle East as warrisk areas 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.

Dr Lim said he would meet palm oil exporters and shippers on Tuesday tothrash out details of the insurance coverage.

Palm oil exports to Pakistan and the Middle East comprise 20 per cent ofthe country's palm oil export or 2.3 million tonnes annually.

Pakistan bought one million tonnes or nine per cent of last year's 11million tonne-output.

On duty hikes proposed under the Budget, Dr Lim said tobacco producers andcurers would not be affected by the increases in tobacco and cigaretteprices.

"The demand for cured tobacco leaves from cigarette companies will not beaffected at all," he said, "because our farmers are producing 60 per centof the total demand from cigarette manufacturers." On the Gerakan meeting,Dr Lim, who is also the party president, said the party would contributetowards realising the 2002 Budget's aims by directing leaders holdingposts in the Government to be actively involved in the development ofsmall and medium industries.

"We will look into problems of the SMIs and also indentify State landwhich is made available for food production to help reduce food imports."