7/1/07 (AP)KUALA LUMPUR, Malaysia -- A Malaysian company is building what it says is the world's first plant to commercially produce ethanol from nipah palm trees, with the product aimed mainly for export to countries looking for alternatives to gasoline, its chairman said Saturday.

Pioneer Bio Industries Corp. Sdn. Bhd. said it is building the plant in northern Perak state to extract ethanol from the sap of the nipah tree, scientifically known as Nypa fruiticans and found in abundance in Malaysia's coastal areas.

Company chairman Badrul Shah Mohamad Noor said the company plans to build more than a dozen additional plants over the next five years. He said the technology was developed by 16 Malaysian scientists over the last five years.

Ethanol is produced as a bio-fuel in Brazil and Europe but is sourced from other raw products such as sugar cane, cassava, corn and sugar beet.

The first plant, costing 1.4 billion ringgit ($398 million; €305 million), will have a capacity to process 530 million liters (140 million gallons) of ethanol per year. It is expected to be operational at end-2008, Badrul Shah told reporters.

He said the Perak state government has awarded the company the rights to harvest nipah sap on 10,000 hectares of land, for which it has to pay 324 million ringgit (US$92.2 million; €70.6 million) a year.

"We plan to have up to 15 ethanol plants in Perak over the next five years," he said. "They will have a total capacity of 4.68 billion liters (1.22 billion gallons) a year with total investments of 14.4 billion ringgit (US$4.1 billion; €3.1 billion)."

Nipah palm trees are also found in neighboring Southeast Asian countries and the Pacific Islands.

Badrul Shah said Pioneer Bio Industries is owned by local businessmen. Their identity and the source of funding for the initial plant will be made known later, he said.

He said the company was seeking investments from within and outside the country for the future plants.

Malaysia, a net crude oil exporter, is promoting exports of bio-fuels such as palm oil and ethanol -- which are derived from renewable plant sources -- to diversify its range of exports, as importing countries struggle with high crude oil prices.

A small number of government-owned vehicles currently use bio-diesel, comprising mainly palm oil, but commercial sales have yet to start.