28/09/05 (The Star) - IOI Corp Bhd yesterday confirmed that it was one ofthe 10 companies that submitted bids for Malaysian Palm Oil Board’s (MPOB)palm biodiesel plants in Malaysia.

Group executive director Datuk Lee Yeow Chor said IOI Corp was interestedin participating in the biodiesel project owing to the commodity’s exportpotential, especially to Europe.

Asked whether IOI Corp had secured the tender, Lee said: "We have not beeninformed yet."

Datuk Lee Yeow Chor

"I believe it will be up to MPOB, which is expected to announce thesuccessful bidders soon," he told reporters after presenting a paper onEnhancing the Competitiveness of the Malaysian Palm Oil Industry at theon-going MPOB PIPOC 2005 conference in Subang Jaya yesterday.

On Monday, MPOB director general Tan Sri Yusof Basiron said three listedcompanies had secured separate joint ventures to participate in MPOB’sthree palm biodiesel plants projects " two in Port Klang " and one inJohor Baru.

He said MPOB, which would take up 50% stakes in each of the biodieselplants, would be investing about RM60mil in total.

Lee said the competitive position of the local palm oil industry could beenhanced by seriously addressing cost and market competitiveness issuessuch as the commodity's trading discount to other major edible oils,shipments to and distribution in far destinations in the most cost-efficient and timely manner, and the development of applications, foodsafety and environmental sustainability.

"The palm oil sector has to continuously look at cost reduction orcost-control measures to ensure that palm oil always enjoys a productioncost advantage over other edible oils," he added.

Lee said IOI's palm oil yield of about 5.97 tonnes per ha generatedoperating profit of RM5,750 per tonne per ha, compared with the industry'saverage of about 4 tonnes per ha.

On shipment and distribution, he said major local palm oil exporters hadto establish a strong freight network to major markets to compete with thelikes of Cargill and ADM, which owned or chartered hundred of ships andbarges to carry soybean or soy oil.

He said palm oil refineries should be built close to faraway destinationmarkets to ensure food companies got their supply in smaller parcels,which would be fresh and of better quality.

Citing IOI, Lee said: "Our new refinery in Rotterdam was set up to servethis purpose and it is hoped that it will expand the total market size ofpalm oil usage in Europe."

Indian Institute of Management professor, Dr Vijendra N. Asopa, said theMalaysian palm oil industry needed to be reorganised into largecorporations to better control the commodity's supply chain whileenhancing its competitiveness.

"These corporations must be able to go big by investing in infrastructure,as well as research and development to establish the total supply chain,which would involve high costs.

"Palm oil is no more just the business of refining," he added.