10/10/95 IPOH, (Bernama) -- Malaysia should have a clearer biodieselpolicy to encourage more usage and production of palm oil biodiesel as analternative energy, says pharmaceutical company Hovid Bhd's managingdirector David Ho.

He said that a clearer policy would enable the industry to determine itsdirection and create more local biodiesel producers, which would in turnensure the success of the government's effort in promoting the usage ofbiodiesel.

"The biodiesel policy must differ from the petroleum policy that we havenow. The policy should for instance contain the price, whether or not itis competitive, whether or not it should be the producers who should sellit or whether Shell, Petronas or other petroleum companies," he toldBernama in an interview, here Monday.

Ho said that Hovid's 51 percent-owned company Carotech Bhd, had commencedproducing biodiesel in 1995, however the methyl ester, the oil-palm baseddiesel, was only for the export markets due to the good price there.

Carotech, which initially only exported one tonne of biodiesel to Europefor use by companies involved in cosmetics, textiles, pharmaceuticals andplastics, among others, has now increased production to 45 tonnes per day,he said.

He said that recently Carotech has commenced exporting the product tomajor biodiesel companies in Europe.

Carotech, set up in 1992 specialises in the extraction of tocotrienol(found in most vitamin E) and is the leading and largest producer oftocotrienol. It later moved on to biodiesel and plans to invest more thanRM100 million in research and development to produce more commerciallyviable biodiesel products.

Ho said that there were opportunities for Malaysia to utilise biodiesel inthe country and also to become world-market producer as Malaysia is theworld's leading producer of palm oil.

"The government must be clear in what they want to promote. If the policyis not clear, I think most of the producers do not want to sell(biodiesal) in the country. How about sales and profits. The risk is sohigh," he said.

Ho said that the government should also hold dialogue sessions withpetroleum producers and those involved in the biodiesel industry to findout in detail about the industry before formulating the policy.

He said that if the government considered giving incentives to partieswanting to produce biodiesel, more would want to participate, which wouldin turn create a healthy competition.

Ho also said that Malaysia could follow the concept in Europe for examplewhere individuals using biodiesel were exempted from taxes or givenrebates.

He said that for the moment it looked as if only oil palm plantersbenefited from the government's promotion to use palm oil for biodieseland not so much biodiesel entrepreneurs who used crude palm oil to producethe biodiesel.

Asked why there was increasing demand for biodiesel, Ho said it wasbecause the fuel was cleaner as it did not emit toxin, did not containsulphur and has lesser carbon monoxide.

"Biodiesel does not contain petroleum but it can be blended at any levelwith petroleum. For vehicles using diesel engines, they can use biodieselwith little or no modificatios," he said.

In addition, using biodiesel could reduce environmental pollution bybetween 75 and 90 percent and provide better engine lubrication comparedto petroleum diesel, he said.

-- BERNAMA