17/01/2009 (Bernama), Kuala Lumpur - The Ministry of Plantation Industries and Commodities is allowing the importation of fertilizer components into Malaysia for the exchange of crude palm oil (CPO).

Its minister Datuk Peter Chin Fah Kui said his ministry had just approved some US$20 million worth of transactions with North Korea last month.

"Other than North Korea, the ministry is working on to have the same arrangement with Morocco, Jordan, Syria and Iran," he told reporters after attending a dialogue session with Malaysian Estate Owners' Association (MEOA) in Putrajaya today.

Such deals are allowed to be undertaken through Palm Oil Credit and Payment Arrangement (POCPA), which was set up in 1992 with the support of Bank Negara Malaysia.

He noted that besides getting the best price available in the world for fertilizer components to be imported to Malaysia, the aim was to "run away" from the major suppliers from Canada and Russia.

The move was made following MEOA's information that there is a two-tier global market pricing for potash fertilizers.

The association said the contract price for shipment to China and India was between US$550 and US$600 per tonne whereas that for Malaysia, Indonesia and Brazil was between US$1,000 and US$1,100 per tonne.

The minister said the negotiation process has also started with North Korea on whether Malaysia should have its own mine there or just import the materials.

He said that the same arrangement has been done with the country previously involving some US$60 million worth.

He added that besides North Korea, arrangements have also been done with Cuba and Russia for other goods.

Among the other fertilizer components that the palm oil industry needs are nitrogen, potassium and calcium.

He said with the barter trade, the ministry would also work with the Fertilizer Industry Association Of Malaysia to get the best price available in the world for components for fertilizers to be imported to Malaysia.

This will allow the users of fertilizers in Malaysia to benefit from the lower special price gained from these countries, he said.

Chin noted that the ministry would continue to work closely with Bank Negara Malaysia to see how palm oil could be bartered with certain countries who need palm oil.

"It could be also used for contracts with other countries that do not have the cash. We can set the conditions for them to supply us with the raw materials that we need.

"We have done this in an exchange with iron ore from other countries, before," said Chin.

Elsewhere, Chin said he would convey the association's appeal to the Finance Ministry for a refund of the windfall tax collected by the Customs for the period from July to September last year.

The association's members had paid some RM400 million during that period.

MEOA said the rational to get the refund was to mitigate the poor margin of profit and/or losses faced by the plantation industry in the last quarter of 2008 owing to low prices of palm products.