17/08/05 (Financial Times ) - Discussions between the TanzaniaInvestment Centre (TIC) and a group of Malaysian investors are at anadvanced stage for the latter to start commercial farming of palm oil inKigoma, the Financial Times has learnt.

The plan is not only to cultivate palm oil trees, but also to bring inMalaysian technology to process crude oil from palm product locally, theDirector of Promotion at the TIC, Mr. Emmanuel Ole Naiko, told thisnewspaper last week.

Speaking to this newspaper in Tanga where he was attending an InvestmentPromotion Meeting for the region, Mr. Ole Naiko said that his office wasexpected to take to Kigoma region a team of Malaysian investors for themto meet with regional authorities.

He said at least 50,000 hectares have been allocated by Kigoma regionalauthorities to incoming Malaysian investors for the production of palmoil.

He said Malaysia is one of the countries with long experience of palm oilproduction and they want to bring it to Tanzania.

’’The Malaysian exploration of the palm oil sub-sector in Kigoma datesback to 2003. They have now decided to invest after realizing thepotential of the sector,’’ he said.

According to Mr. Ole Naiko, the market for both final oil and crude oilfrom palm products is huge in Tanzania and neighbouring countries.

He said Kenyan companies had once shown interest in the sector. ’’I thinkproducing crude cooking oil locally will also address the problem ofimporting it .

After all there have been allegations that imported crude oil is notreally crude. The government thus fears that there is massive tax evasionby the dealers,’’ he said.

He said sourcing raw oil locally would largely address the problem.According to Mr. Ole Naiko, the investment climate in Tanzania, especiallyat the national level, is very conducive for investors and he wasoptimistic that the local authorities upcountry would follow the exampleset by the centre. Kigoma is a well-known region for palm oil production.

It is said that even Malaysia got palm oil seeds from there (Kigoma) inthe 1970s.

However, at the global level the palm oil tree is indigenous to WestAfrica, with natural stands occurring along a 300-mile wide coastal beltranging from the Gambia to Angola.

Oil palm also extends eastward through central Africa and into easternAfrica.

The oil palm has spread throughout the tropics and is now grown in 16 ormore countries. However, the major centre of production is in South EastAsia (SEA) with Malaysia and Indonesia together accounting for around 83percent of world palm oil production in 2001.

Malaysia is presently the world’s leading exporter of palm oil having a 60percent market share and palm oil is second only to soya beans as themajor source of vegetable oil.

Oil palm production in Malaysia presently occupies around 3.7 millionhectares of which over two million are in Peninsular Malaysia and the restin the East Malaysian states of Sabah and Sarawak.

Production is divided between large estates managed by publicly listedcompanies, smaller independent estates, independent smallholders andgovernment smallholder settler schemes.

In Malaysia, the Palm Oil Research Institute of Malaysia (PORIM) was setup in 1974 and was merged in 2000 with the Palm Oil Licensing Authority(PORLA) to form the Malaysian Palm Oil Board (MPOB).

MPOB now deals with all aspects of oil palm and palm oil development andprovides regulatory, training and technical advisory services to allsectors of the industry.

The intensive research on oil palm and palm oil globally accounts for itssignificant contribution and status in the oils and fat market.

In Malaysia, the success of the oil palm is attributed to many factors,which include favourable climatic conditions, well-establishedinfrastructure, management skills and technology for oil palm cultivationand a land ownership structure, which favours estate type of agriculture.