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KUALA LUMPUR, Oct 1 (Bernama) -- The government expects that the even flowof palm oil exports to Pakistan and other consuming countries would bemaintained despite the distruption to certain shipping trades.

01 October 2001 (Business Times) - US MULTINATIONAL General ElectricInternational (GE) is expected to deliver 20 high-powered locomotivesbeginning April 2003 under a palm oil counter-trade agreement withMalaysia.Primary Industries Minister Datuk Seri Dr Lim Keng Yaik said GE willdeliver the diesel electric locomotives to Keretapi Tanah Melayu Bhd(KTMB) in about 16 months.Malaysia will pay for the purchase, which was sealed two weeks ago, with200,000 tonnes of palm oil and palm oil products valued at US$60 million(US$1 = RM3.80).“The locomotives are the first batch out of 40 locomotives being procuredby KTMB,” Dr Lim told Business Times last Friday. The remaining 20 werebought from Chinese group Dalian Xinze Piston Manufacture Co.“Dalian has yet to deliver its locomotives to KTMB due to complications onhow the China Government will allocate palm oil deliveries to fit with its1.3 million tonnes annual edible oil import quota,” said Dr Lim.Under the counter-trade agreement, Johor-based Pasir Gudang Edible OilsGroup will supply GE 200,000 tonnes of palm oil over a period of 30months. GE will handle the distribution, promotion and sales.GE president for South-East Asia Stuart L. Dean said via e-mail GE isplanning to make an official announcement on details of the deal today atthe Association of South-East Asian Nations Railway Conference in KualaLumpur.The Government has been pushing to use palm oil to pay for part of severalbillion-ringgit deals for locomotives and double-tracking rail contractswith the US, China and India.“Malaysia hopes to see its palm oil make further inroads into the US oilsand fats market. A counter-trade arrangement for the commodity will be inline with such efforts,” Dr Lim said.However, the GE counter-trade deal is separate from a RM12 billiondouble-tracking project which Malaysia is also pursuing, Dr Lim said.The double-tracking project will eventually be part of the Trans-Asiaproject linking Singapore to Kunming in China.Last May, the Government signed a memorandum of understanding withstate-run engineering and construction firm Ircon International Ltd ofIndia to double track and electrify the northern portion of PeninsularMalaysia railway lines.China Railway Engineering Corp is expected to double track the southernportion.Under this counter-trade arrangement, some 8 million tonnes of palm oilare expected to be delivered to both countries over a period of betweenfive years and six years.Malaysia is also currently looking at a counter-trade deal with Russia forthe purchase of fighter jets which is currently in the works.The model of the GE locomotives is not immediately known but sources saidit is widely believed that it is the GE Universal Series ofdiesel-electric locomotives.This model features a wide range of configurations for various gauges,axle loads and horsepower output.“The (American) locomotives can be used to ferry both passengers andcargo, and are probably between 20 per cent and 30 per cent costlier thanthose produced by India, currently used in Malaysia,” said a source.The locomotives are powered by the GE7FDL diesel engine with either directcurrent or alternating current propulsion systems.GE has a locomotive manufacturing plant in Madiun, East Java, Indonesiacalled PT GE Lokomotif Indonesia (PT GE Lokindo).The facility assembles the C20i 2000HP locomotive mainly for the Asianmarket and has delivered 24 units to both the Philippines and Indonesianrailway operators. GE’s locomotives are operated in more than 60countries.GE first started in Malaysia in 1975 with operations in sales and serviceof Power Systems products, state-of-the-art aircraft engines engineeringand electronic commerce base.

04 October 2001 (Business Times) - KUMPULAN Guthrie Bhd may have toreconsider the structure of a planned international Islamic bond issue toaccommodate global investors’ softening appetite for risk, bond runnersand industry observers say.Guthrie is likely to delay the US-dollar denominated bond issue to nextyear due to weaker sentiment, traders and dealers said.The arrangers, ABN Amro, may also change the size and tenor of the issue,they said. The discount considered earlier for the Islamic bonds, too, mayhave to be adjusted.Proceeds from the bonds will be used to refinance the group’s borrowings,taken to buy 203,000ha of oil palm plantations in Indonesia with estatescovering Kalimantan, Sumatra and Sulawesi.Traders said it will not be easy for Guthrie to go ahead with plans forthe debt papers. Many companies in Asia — such as Nomura ResearchInstitute Ltd of Japan, mining giant BHP Billiton and Philippine LongDistance Telephone Co — have cancelled share and bond sales after aterrorist attack destroyed the World Trade Centre in New York and part ofthe Pentagon on September 11 and sent world financial markets spirallingdown.“I believe the arrangers have been planning the bond issue over the lastfew months, so the timing could not have been worse as nobody expected theterrorist attacks,” a treasury dealer said.Last year, Guthrie bought 25 oil palm operating companies in Holdiko PalmPlantations — now known as Minamas Plantation — through the IndonesianBank Restructuring Agency.Market talk is that Guthrie is looking at an initial issue of US$150million (US$1 = RM3.80) to gauge investors’ response, with other trancheslooking at over US$250 million.As it is an Islamic debt paper, traders and dealers expect the bonds to betargeted at Islamic investors in West Asia.Financial advisers for the debt paper, ABN Amro, told Business Times thatthe bank will have to look at the changing market conditions in the wakeof the September 11 attacks in the US.Officials said the proposed bond issue has not been confirmed. Bank Islamis the structural adviser for the debt papers.Guthrie is believed to have asked local rating agency Malaysia Rating CorpBhd to rate the credit quality of the conglomerate. A rating by aninternational rating agency is expected to follow for the US-dollardenominated bond issue.According to analysts and traders, Guthrie’s preference for internationalbonds could be a move to take advantage of low US interest rates, as wellas to tap the Islamic West Asia financial market.The US Federal Reserve cut its short-term interest rate again on Tuesday,bringing it to 2.5 per cent, the lowest since 1962.This has indirectly helped to enhance Malaysian sovereign bond yields overUS Treasury trade bills.However, a bank treasury head said the cost of the bonds will depend ontheir credit rating. He said a local ringgit bond issue might be cheaperas Guthrie’s would benefit from a better local rating due its familiarstanding.Meanwhile, analysts covering the plantation concern said the recentsluggishness in palm oil exports is likely to dampen future earnings whileinterest expenses on borrowings for the purchase of Indonesian companieswill depress profits for the year ending December 31 2001.They said Guthrie could post disappointing results again in the thirdquarter due to weak crude palm oil (CPO) prices and high operating costs.Guthrie posted a pre-tax loss of RM24.64 million for the second quarterended June 30 2001 compared to a pre-tax profit of RM17.45 million in thecorresponding period last year.Analysts believe that the losses could be due to higher replantingexpenditure.According to them, the contribution from the acquired Indonesianplantation is expected to materialise only in the next financial year atan operating profit of more than RM120 million based on an average CPOprice of RM1,150 a tonne.The contribution takes into account production of between 20 and 30 percent of the capacity of mature trees in the Indonesian plantations, and isexpected to increase steadily from 2003 onwards.

BANGALORE, Sept. 27 (Business Line) - The Karnataka Government hasannounced a subsidy of 25 per cent on certified seeds for small andmarginal farmers to help them boost agricultural production.The announcement comes in the wake of failure of the kharif crops, whichagainst the target of 74.5 lakh tonnes of foodgrains, is likely to reachonly 48.53 lakh tonnes.Announcing the subsidy here on Thursday, the Minister for Agriculture, MrT.B. Jayachandra, told mediapersons that it would be given for five crops- jowar, bengalgram, wheat, safflower, and sunflower. The Karnataka SeedCorporation would be procuring the seeds and distributing them through itsoutlets and 'raithara mitra' centres. He said Rs 1.43 crore had beenreleased as part of the subsidy.Mr Jayachandra said the deputy commissioners of the districts had beendirected to start procurement of farm produce at a price not lower thanthe minimum support price. The Minister announced that the minimum supportprice has been increased for commodities, and a notification has beenissued on Thursday.The Minister said rains in the last two weeks had helped commence sowingfor rabi crops in the northern districts. Crops sown late in the southerndistricts were recovering, he added. In the last two weeks, 20 taluks hadexperienced excess rainfall, 92 taluks had normal rainfall, and the resthad scanty rainfall.

04 October 2001 (Business Times) - MALAYSIAN investors and businessmenhave been urged to seize investment opportunities in Egypt’s automotive,tourism, furniture and palm oil-related industries.Currently awareness of investment potential in these sectors is stillminimal and Malaysian investors can make inroads in these economicsegments by initially carrying out a detailed and comprehensive marketstudy, according to Essam Ismail, Minister Plenipotentiary and Economicand Commercial Affairs of the Egyptian Embassy in Kuala Lumpur.Egypt, with a population of 66 million and per capita income of US$1,000(US$1 = RM3.80), is a vast market of untapped potential, said Essam.“Currently the balance of trade between Malaysia and Egypt is in favour ofMalaysia.“Malaysia’s total exports to Egypt amounted to RM1 billion while importtotalled RM50 million from our country last year,” he added.The main export items from Malaysia to Egypt consist of palm oil, wood andrubber products, metals, machinery, electrical appliance and automobileswhile Egypt exports fruits and herbs, raw cotton and cotton yarn andaluminium to Malaysia.Egypt is Malaysia’s fifth largest consumer of its crude palm oil,importing over US$138.9 million last year.“By investing in Egypt in the palm oil sector, Malaysian investors areable to gain access to the 250-million Arab speaking market,” he said.Essam said there is ample opportunity for Malaysian businessmen to investin the production of automotive components such as seat belts, seats,exhaust, brakes and windscreen since the local component production isstill low at 40 per cent.“Our automotive industry was in existence long before Malaysia in 1955 butafter 46 years we only managed to produce less than half of the componentslocally,” he added.Essam said presently the two Malaysian national car producers, Proton andPerodua do not have any assembly plants in Egypt but have only appointedagents to sell their respective makes.One main factor attributing to the lag in the automotive industry Essamsaid was the long term effect on the economy due to the four wars withIsrael in 1948, 1956, 1967 and the last being in 1973 taking a heavy tollof over 1 million lives.Essam explained that the lack of information on investment opportunitiesand knowledge on the Egyptian market seem to be the main stumbling blockin the low interest shown by Malaysian investors.“We have organised several Egyptian investment seminars in several partsof Malaysia and I must say that business discussions during the meetingsbetween Egyptian and Malaysian businessmen do not normally result inconcrete follow-up measures.“In the end we see businessmen from both countries not being able to comeup with any real business relationship,” he said.Another sector which offers great potential is the tourism industry.According to tourist arrival figures of the Monthly Economic Digestpublished by the Ministry of Economy and Foreign Trade, Egypt received2.97 million visitors of which only 12,000 are from East Asia and Pacific.Essam said tourists arrivals from Malaysia last year were very minimalwith only 3,000, with students comprising one third of them.Essam added Egypt is trying to capture the large Jeddah-bound travellersmarket from Malaysia totalling some 170,000 who mainly go for the haj andumrah or business purposes.He said the Egyptian Government adopts a business-friendly approach andwelcomes foreign investment.Regulatory bodies such as the General Authority For Investment (Gafi) isresponsible to process foreign investment applications and formulate thenecessary policies governing foreign direct investments.“Our investment laws offer tax breaks of between 5 and 20 years fordifferent industries, “ Essam said.Apart from the incentives offered by Gafi, the Government has alsoinstituted all necessary legal framework to attract foreign investmentsuch as corporate tax guidelines, customs duties and regulations governingfree zones.“More importantly we encourage Muslim investors from Malaysia to formpartnerships with their Egyptian counterparts so that trade relationsbetween these two Islamic nations can be further enhanced,” Essam said.

BusinessWorld (Philippines) 10/03/2001 - The Department of Agriculture(DA) yesterday said two Malaysian firms have committed to invest P975million to develop the country's palm oil industry.In a report submitted to the Agriculture department, Agumil Philippines,Inc. and Agusan Plantation, Inc. said a total of 13,000 hectares of landwill be developed in Mindanao for palm oil plantation from 2002 to 2004.The Philippine Coconut Authority (PCA) estimates that it will cost aboutP75,000 to develop one hectare of land into palm oil plantation.In Agusan del Sur, about 2,600 hectares will be converted to palm oilplantation. At present, both companies occupy about 3,700 hectares of landas palm oil plantation. In Cotabato, about 3,600 hectares of land will bedeveloped while another 7,000 hectares of land in Bohol province will beconverted into palm oil plantation.The Mindanao region is eyed as the most suitable area to grow palm oilbecause of its moderate temperature as well as the evenly distributedrainfall.Rolando T. Dy, executive director for Food and Agribusiness of theUniversity of Asia and the Pacific, said in a statement that thegovernment should already start the full development of this industrybecause of the expected increase in the demand in the next couple ofyears."By 2010, domestic palm oil demand would require some 70,000 to 100,000hectares. Given the gestation and senile trees, plantings must start soon.Given the slow pace of doing things here, the country will start to importpalm oil in 2010," he said.He also said the development of the palm oil industry will producecompetition with the coconut industry. But he pointed out that the exportmarket will readily absorb the available supply of coconut oil if domesticusers will prefer palm oil because of economic costs.Palm oil is the world's second source of vegetable fats after soybeans.Palm oil is usually use in the manufacturing of canned fish and meatproducts. It is also used as cooking oil and margarine.Last year, the country imported about 67,000 tons of palm oil. The localproduction was only recorded at around 46,000 tons against a total demandof 113,200 tons.By 2005, the consumption is expected to increase to 180,000 tons but basedon the existing production area allocated to palm oil the country isexpected to harvest only about 53,000 tons. In 2010, the country is seento import some 189,000 tons to meet the demand of about 290,000 tons.

KOTA KINABALU, Sept 27 (Bernama) -- Sabah chief minister Datuk Chong KahKiat said the potential for downstream processing of palm oil in Sabah istremendous as the state accounts for only two percent of such activity inthe country's palm oil industry.Downstream activities in Sabah are confined to only basic refining andfrationisation, he said when launching the Malaysian Palm OilAssociation's (MPOA) Sabah branch in Sandakan todayChong also said there are no tertiary processing activities in the statecompared with the level of activities in Peninsula Malaysia in both theedible and non-edible areas."And the production of consumer products in Sabah is confined only tocooking oil," he said.Chong said there are also opportunities in producing various grades ofpalm-based margarine, shortening for butter, confectionery fats, creamers,emulsifiers, pharmaceuticals and vitamin E & B.According to estimates by IOI Edible Oil Sdn Bhd, Sabah's plantationsector is capable of producing some 10 million tonnes of biomass per yearbased on the state's current planted hectarage of one million hectares.Chong also said Sabah has overtaken Johor in terms of the largest plantedarea with oil palms at 29.64 percent of the country's total planted areaof 3.38 million hectares.Sabah's production of 3.11 million tonnes of palm oil last year accountedfor 28.69 percent of the nation's total output of 10.84 million tonnes.Chong, who is also Sabah's tourism, environment, science and technologyminister, also reminded the state's plantation industry to give toppriority to the protection and conservation of the environment in theirpursuit for development.

03 October 2001 (Business Times)

02 October 2001 (Business Times) - PRIMARY Industries Ministry isattempting to squeeze palm oil into 20 per cent of the payment in Malaysia’s proposed purchase of between 10 and 16 Russian fighter jets.Its minister Datuk Seri Dr Lim Keng Yaik said he will make recommendationsto the Cabinet, Defence Ministry and Finance Ministry that at least 20 percent of the total value of the purchase be paid in the commodity.“I hope that part of the total contract estimated at between US$350million (US$1 = RM3.80) and US$560 million to be paid partly in palm oil,”he told Business Times in Kuala Lumpur last week.It is understood that the Government is eyeing the Sukhoi Su-30MKmulti-role long-range twin-seater fighter bomber which is priced at anestimated US$35 million a piece.The Royal Malaysian Air Force is currently evaluating two multi-rolecombat aircraft, Boeing Military and Missile Systems’ F/A-18E/F strikefighters dubbed the “Super Hornets” and the Sukhoi Su-30.The Sukhoi is expected to participate at the October 6-14 LangkawiInternational Maritime and Aerospace Exhibition.The plan was first mooted in 1997 but had to be shelved due to the Asianregional currency crisis and talks of the deal being revived resurfacedlast month.This is the second arms deal which is believed to cost at least US$35million each.Malaysia had bought 18 MiG-29 Fulcrum fighter jets in 1994 for a total ofUS$600 billion (then RM1.56 billion) under an offset programme which took24 months to negotiate.It involved a cash payment of US$450 million of which, US$95 million wasin palm oil and palm oil products and supply of other Malaysian productsworth US$55 million.The palm oil was to be delivered to Russia over a period of five years,which incidentally ends this year.Malaysia, as part of its efforts to promote the commodity, has enteredinto several billion-ringgit counter trade arrangements with severalcountries notably India, China and the US which include palm oil fordouble-tracking works and locomotives.It is also understood that negotiations were to have been carried out inRussia last month during an agreement to extend Russia a US$50 millioncredit to buy about 200,000 tonnes of Malaysian palm oil.The two countries were to have formalised the pact during a visit by PrimeMinister Datuk Seri Dr Mahathir Mohamad to Russia but the trip wascancelled following the terrorist attacks in the US on September 11.“We hope to conclude the counter-trade as soon as possible and Malaysiahas already invited Russia to come which may take place some time nextyear,” Dr Lim said.Malaysia was exporting 350,000 tonnes to 400,000 tonnes of palm oil a yearto the former Soviet Union before its collapse, of which 80 per cent wasconsumed by Russia. Since 1993, Russia has been buying 40,000 tonnes to60,000 tonnes a year.

03 October 2001 (Business Times) - PALM oil bulkers may face a criticalshortage in storage capacity if exports remain slow in the coming monthswhile production stays high, industry sources say.Malaysian crude palm oil (CPO) exports for September is estimated to havedropped by between 25 per cent and 30 per cent to about 620,000 tonnesfrom 879,717 tonnes in August.The Malaysian Palm Oil Board (MPOB) is expected to announce the officialexport, production and stockpile figures for the month on October 12.CPO stock stood at 878,316 tonnes in August and analysts and traders saidit may rise a whopping 48 per cent to over 1.3 million tonnes.The fall in exports has been attributed mainly to disruptions indeliveries to Pakistan caused by shipping lines’ reluctance to ply theroute, as well as higher freight rates and a newly imposed war-risksurcharge.Freight rates from Malaysia to Pakistan were raised US$1 to between US$23(US$1 = RM3.80) and US$24 per tonne last week.Shipowners are also believed to be imposing a war-risk insurance surchargeof up to US$10 per tonne.“CPO stock has been steadily rising. If the export situation does notimprove soon, bearing in mind of the continued high production levels, wewill be faced with a critical stock level,” said a CPO bulker executivewho spoke on condition of anonymity.Another industry executive was however more optimistic, saying thatprovided there is no all-out war in West Asia trade should stabilise quitesoon.“There has been some negative impact on the palm oil sector, but mainlybecause some shipments to Pakistan have been put on hold.“Pakistan is not self-sufficient in edible oil, they will still have toimport CPO from countries like Malaysia,” he said.In fact, traders said Pakistan have made fresh inquiries to buy palm oilfrom Malaysia and Indonesia, despite the higher freight cost, on concernsover possible military attacks by US against neighbouring Afghanistan.Demand for palm oil is also expected to receive a boost from Indianconsumers ahead of Deepavali in November.India is the largest importer of Malaysian CPO, buying some 2.03 milliontonnes last year and 2.38 million tonnes in 1999.Consensus forecast by traders and analysts put production of CPO at anall-time high of over 11 million tonnes for 2001, compared to a projected10.8 million tonnes earlier.The clouded outlook for the palm oil market is also reflected in thenarrower margins faced by trading companies.Manager Zaharin Hamzah told Business Times that his company, for one, hasstopped trading in CPO futures temporarily on account of the weak pricesand fluctuating demand.“We are now only trading spot.”On the Malaysian Derivatives Exchange yesterday, palm oil spot October andDecember futures eased RM28 each to RM862 and RM872, respectively.Traders said the fall was also attributable to possible dumping byIndonesian suppliers amid weakness in the rupiah.On the Kuala Lumpur Stock Exchange (KLSE), the plantation index eased 4.31points to 1,419.78. KL-Kepong Bhd lost 10 sen to RM5.10 and Chin TeckPlantation Bhd 12 sen to RM4.06.This was despite better overall trading sentiments which saw the benchmarkKLSE Composite Index closing 2.74 points higher at 616.74.Pakistan has consistently bought about one million tonnes or 9 per cent ofMalaysia’s palm oil exports annually.Malaysia is the world’s largest producer of the commodity. The ninemillion tonnes it exported last year raked in about US$4.2 billion

01 October 2001 (Business Times) - LOCAL plantation companies are expectedto show improved third quarter earnings this year, mainly due to thedramatic improvement in crude palm oil (CPO) prices during the period.CPO prices breached RM1,000 per tonne on July 12, after languishing atbetween RM600 and RM700 a tonne for 13 months.A Business Times poll on four research houses which monitor plantationstocks revealed that the market expects plantation companies to show animprovement in their third quarter results.“Companies such as Golden Hope Plantations Bhd, Kuala Lumpur Kepong Bhdand IOI Corp Bhd would have capitalised on the good prices by selling asfar forward as they can,” one plantation analyst pointed out.Despite these cheerful prognostications, the Kuala Lumpur Stock Exchange(KLSE) Plantation Index showed a smaller improvement during the timecompared to the KLSE Composite Index (KLCI) and the KLSE Emas Index.From June 28 to September 28 this year, the Plantation Index appreciatedby only 4.21 per cent compared to KLCI’s 4.84 per cent and the Emas Index’s 3.34 per cent.The Plantation Index last Friday closed 19.61 points up at 1427.73 whilethe KLCI increased 2.70 points to 615.34 points and the Emas Index ended1.03 points higher at 145.84.“Top performers would most probably be IOI Corp Bhd, Golden HopePlantations Bhd and Kuala Lumpur Kepong Bhd which account for a combinedweightage of 46 per cent on the Plantation Index,” said one analyst.Within the last three months, IOI was the best performing counter of the39 listed on the Plantation Index, with a price increase of some 28.37 percent, followed by PPB Oils Palms Bhd at 27.59 per cent, Kulim Malaysia at18.03 per cent and Mentakab Rubber at 15.38 per cent.“Most of these companies with the exception of Kumpulan Guthrie would havesold as far forward as possible,” he said.He added that nobody knows what kind of financial position Guthrie, whichis currently acquiring land in Indonesia, is in. The third largestplantation in the country, Guthrie suffered losses of RM24.5 million forthe first half of its financial year ending December 31 2001 compared withRM15.9 million of the same period previously due to lower palm oil prices.IOI Corp, currently in battle with Sime Darby Bhd for control over palmolein manufacturer Palmco Holdings Bhd, also saw profits for the financialyear ended June 2001 fall by 3.93 per cent to RM291.13 million from 303.03million previously.Cash-rich Golden Hope made a net profit of RM57.829 million for the finalquarter ended June 30 this year, from RM325.93 million in the previousfinancial year, translating into an earnings per share (EPS) of 5.46 sen.The consensus estimates for the group on the Multex Global Estimates wasRM86 million net profit with an EPS of 7.7 sen but despite falling shortof expectations this time round, hopes are high for its 2002 earnings witha net profit forecast of RM173.79 million and an EPS of 17.10 sen.For 2003, Golden Hope is expected to perform even better with a forecastnet profit of RM212.82 million and an EPS of 20.97 sen.The fly in the ointment is of course the terrorist attacks in the US,which has created a lot of uncertainty in the market, especially withregards to palm oil prices.One analyst remarked: “By right, events in the US should have no bearingon palm oil prices because edible oil is a necessity and not a luxury itemsuch as gold or crude oil.“People still need oil to cook, and the world’s population is still therewhich translates into demand,” said the analyst.He further said commodities are traded in US dollars, and since theringgit is pegged to it, any impact will be cushioned.“However, there is still a possibility that the world would fall into arecession which will result in weaker demand.“And concerns of palm oil shipments to Pakistan being disrupted maydepress prices further,” he said.Golden Hope ended 2 sen higher at RM3.12 last Friday with KL Kepong up 20sen to RM5.20. IOI remained unchanged at RM3.42, United Plantations gained2 sen at RM3.04, Austral gained 2 sen to close at RM2.50 and PPB Oil Palmsgained 6 sen at RM4.26.

04 October 2001 (Business Times) - MALAYSIA International Shipping Corpand Felda-owned Suterajaya Shipping Sdn Bhd, the two main local linesplying to Pakistan, are said to have experienced no disruptions in sendinggoods to the republic.Representatives of the two companies were at a special meeting arranged bythe Primary Industry Ministry with palm oil industry players in KualaLumpur yesterday.A source close to the meeting said these representatives informed thegathering that the issue of export disruptions might have been blown outof proportion by self-interested and irresponsible parties.“It is business as usual. The disruption is mainly the work ofinternational insurance companies that have declared a war zone in WestAsia and imposed war-risk premiums on September 12, right after the US wasattacked by terrorists.“This declaration has brought about confusion to some shippers which haveto take into consideration of this war-risk premium,” the source said.Some 90 per cent of Malaysia’s shipowners are insured by internationalinsurance companies while the rest are by Malaysian insurance companies.It is understood a war zone is defined as 24 degrees north of the equator.“However, Malaysia’s shippers acknowledged that an additional war-riskpremium of between 0.1 per cent and 0.4 per cent, depending on existingpolicies, must take effect.“But this premium will not be borne by the shippers but by both thebuyers, sellers and eventually the consumers of the commodity,” the sourcesaid.The source said the ports which will come under the insurance cover arethe Pakistani ports of Kassim and Karachi and the north Indian port ofKandala.“The premium is applicable 48 hours before ships enter the war zone,” saidthe source.Primary Industries Minister Datuk Seri Dr Lim Keng Yaik had called onindustry players yesterday to discuss and draw a series of measures toaddress shipment disruptions since the terrorist attacks in the US onSeptember 11.Others which participated in the meeting included the Malaysian Palm OilBoard, The Malaysian Palm Oil Promotion Council, the Malaysian Palm OilAssociation, Palm Oil Refiners Association and the Pakistan HighCommission.Dr Lim had said last week that Malaysia’s palm oil shipments to Pakistanwere disrupted due to shippers’ refusal to take unnecessary risks intransporting the commodity due to a possible US retaliation againstneighbouring Afghanistan.He had said many shippers are reluctant to go to the area until thewar-risk premium issue is sorted out prompting him to call the meeting up.An average of 100,000 tonnes of palm oil is shipped to Pakistan each monthby about 10 ships. Pakistan is Malaysia’s fourth largest buyer at aroundone million tonnes for the past several years.Malaysia is the world’s largest producer of palm oil with India as itsbiggest buyer followed by China and the European Union.The Indian Ocean and the Arabic Sea are the only accessible route by seato Pakistan, other parts of West Asia and West India.Around 90 per cent of Malaysia’s trade is via sea, and US forces havebegun to build up a presence near the oceans after the attacks on New Yorkand Washington.The US has accused Afghanistan’s ruling Taliban of harbouring the primesuspect, Saudi-born Osama bin Laden, of the terrorist attacks in the US.All shipments leaving Malaysia’s main ports for West Asia, the Red Sea andPakistan will pay a war-risk premium from Monday.The surcharge for ships leaving Port Klang to West Asia and Pakistan isUS$150 (US$1 = RM3.80) for a 20-foot container and US$300 for a 40-footcontainer.The war-risk surcharge for shipments to the Red Sea is US$100 and US$200respectively.There was no surcharge to these areas before the Septemeber 11 terroristattacks.However, imposing a war-risk premium is not new because insurancecompanies are known to have imposed such premiums before to areas such asSri Lanka, Suez Canal and Iraq.