06/10/05 ((The Star) - MALAYSIAN Palm Oil Association (MPOA) welcomesnews that Procter & Gamble (P&G) is investing in palm oil production toreduce its reliance on crude oil by up to 20%.

MPOPA chief executive Azizi Meor Ngah said P&G had been co-operating withthe Federal Land Development Authority (Felda) for more than 20 years inusing palm oil to manufacture some of its products.

He said “the world has been sleeping” and more palm oil should have beenused in the production of consumer goods.

A Financial Times report yesterday said that P&G was turning to oil palmand coconut plantations in Asia to produce alternative raw materials forits Tide laundry detergent and Head & Shoulders shampoo, as it made astrategic bet on the future cost of crude oil.

P&G aims to cut down on using crude oil to make surfactants, a keyingredient in detergents, within three to five years.

The report also said the shift by the world's largest consumer goodscompany was one of the clearest signs yet that a big player was takingaction to reduce its reliance on crude oil in response to forecasts ofprolonged higher prices.

Azizi foresees that with positive development in the US, there ispotential for the growing use of palm oil as a raw material."This will help the oleochemical business to expand," he said, adding thatanything that was good for oleochemicals would definitely be good for thepalm oil industry.

However, when asked how soon he expects the local industry to switch fromusing crude to palm oil, he cautioned that it would take some time.

There is a need to switch equipment using carbon oil to those compatiblewith vegetable oil.

Azizi said the use of palm oil as a raw material in manufacturing wasbeneficial to the environment and the value could not be measured inmonetary terms.

Market observers said although plantation counters were up in yesterday’strading, it was unlikely to be due to the Financial Times report, and ingeneral, the Malaysian market had not taken this as much of a lead.

At the same time, crude palm oil prices remained flat with no movement forthe day, with another analyst saying that most soap and detergent makers,such as Kao, had already used palm oil in their production.