27/09/05 PETALING JAYA, (Bernama) -- The Malaysian palm oil industry needsto reorganise itself into large corporations to better control the supplychain of the commodity while enhancing its competitiveness.

Dr Vijendra N. Asopa, a professor at the Ahmedabad based Indian Instituteof Management, says the current competitiveness in the industry requiredmore than reliance on the oil alone.

The ability to transport the commodity from the plantation area to theconsumers, in the form that they want, would give the edge, he said.

"The players of the Malaysian palm oil industry have to take a jump inthat direction. Now, who can do it more efficiently?" he told Bernama atthe sideline of the ongoing International Palm Oil Congress (PIPOC) 2005,here, Tuesday.

Defined as a process aimed at fusing both internal and external systems inforward as well as backward directions, the concept of supply chainmanagement involves integrating, managing and supervising the total flowof distribution.

Asopa said Malaysia had all the features of an industry which enjoyed acomparative advantage.

However, he said, there were other intervening factors that could disruptor slow down the process of delivering the products from the source to themarket.

"The trade in my opinion will have to reorganise itself into largecorporations, capable of investing in infrastructure, capable ofcollecting, analysing and digesting information, and managing risks," hesaid.

"Oil is a very oily business. It is no more just the business of the oilbusinessmen. It is no more just the business of refining," he added.

Asopa said the industry would have to go big, as investing ininfrastructure as well as research and development (R&D), to establishtotal supply chain, would involve high cost.

This would be a quantum jump in that direction, but it had a very highpotential to pick up the essentials and develop that kind ofcompetitiveness.

Asopa said trade and transport were inextricably linked, as efficienttransport services were a prerequisite to successful trading.

The Malaysian palm oil industry depends on foreign owned vessels toexport, and as a result, freight rates, spaces, scheduling and destinationare beyond its control, he said.

He added that the palm oil industry could also soon see a wave of furtherinvestments in tankers and bulking installations to help in distributionand marketing.

"When you grow as a large corporation, you can control the entire supplychain, you can even invest into shipping. You can have tankers like theBrazilian frozen orange juice industry which has fully dedicated tankerscarrying the commodity anywhere in the world," he said.

-- BERNAMA