19/4/06 (Business Times)   - MORE licences for palm oil refineries need to be issued in Sabah and Sarawak, the Palm Oil Refiners Association of Malaysia (Poram) said.

In its memorandum at the Ministry of International Trade and Industry (Miti) Dialogue 2006, Poram said there is a mismatch between refining capacity and crude palm oil (CPO) supplies.

It called for licences to be given to companies in those states that have plantations and can source at least half of their CPO from within the company or related parties.

Licences for new refineries are now frozen except for companies that produce specialised palm oil and palm oil-based products.

There has been excess refining capacity in Peninsular Malaysia since the 1980s.

Poram said there should not be total liberalisation of licensing for palm oil refineries in Sabah and Sarawak. However, the Government could encourage investments in diversified sectors such as speciality fats, oleochemicals and biodiesel.

"The Government should promote investments in further downstream sectors rather than pure refining," it said.

In 2005, a total of 66 refining licences with a total capacity of 22.1 million tonnes were approved, out of which 48 refineries are in operation with a total capacity of 17.5 million tonnes.

Other groups represented in the morning session of the Miti Dialogue 2006 included wood and wood-based, rubber and rubber-based and food and agro-based industry associations.

In her welcoming remarks, Datuk Seri Rafidah Aziz reminded manufacturers to emphasise the quality of their products if they want to remain competitive in the export market.

At the afternoon session with the chemical and petrochemical industry players later, Rafidah said Tenaga Nasional Bhd has been told to come up with a special price package for industries, which will help ease the burden faced by industries and help them remain competitive in the market.

She said in considering any increase in utility rates, the Government will take into account the impact on the cost of doing businesses and industry competitiveness.

On another matter, Rafidah said a new industrial area for downstream high value-added petrochemical products is taking shape in Terengganu.

Called Lot Q, it is located within the Petronas Petroleum Industry complex in Kertih, and targeted for both domestic and foreign investors.