KUANTAN, June 2 (Bernama) -- Malaysia has the potential to become the world's leading biodiesel producer with the help of the country's reputation as the world leading producer of palm oil.

Deputy Prime Minister Datuk Seri Najib Tun Razak said Malaysia provides an ideal centre for the growth of biofuel industry with a solid integrated infrastructure network and a large pool of competitive skilled workforce, apart from being the largest producer of palm oil.

"The National Biofuel Policy announced in August last year is aimed at strengthening the palm oil and biofuel sector through several strategic thrusts which include the encouragement for a wider use of biofuel for transportation and industry, support for R&D and the nurturing of existing and new biofuel plants and facilities," he said in his speech at the ground breaking ceremony of Mission Technologies Sdn Bhd Biodiesel Refinery plant here, Friday.

Also present were Minister of Plantation Industries and Commodities Datuk Peter Chin and Pahang Menteri Besar Datuk Seri Adnan Yaakob.

He said, the increase in demand for palm oil based biofuel would create new or increased demand for the oil thereby raising the prices of palm oil in the world market which would give the country's economy a boost.

Therefore, he said, government will continuously look into incentives for biofuel players establishing their operations in Malaysia to encourage the growth of the industry.

Najib said, efforts are already underway not only to engage with international biofuel players to work with Malaysia but also to get the participation of engine manufacturers and heavy industry players to accommodate the move towards biofuel.

"This includes for example, making modifications to their products for biodiesel compatibility and extending their warranties to the use of biodiesel," he said.

He also said, new job opportunities and various spin-off economic activities would arise.

"The move into biodiesel will indeed bring substantial benefits for the country in the medium term and in the long run.

"For one thing, apart from the obvious positive effects on the environment arising from the greater use of green fuels, a widespread consumer shift towards biofuels would mitigate the effects of skyrocketing petrol prices," he said.

Meanwhile at a press conference later, Najib said the government had received applications from investors keen in opening up biodiesel production facilities in the country.

The Plantation Industries and Commodities Ministry is perusing the application, he said adding that Pahang could emerge as the biodiesel production centre as it has huge areas of palm oil plantations and port facilities.

-- BERNAMA