26/08/2003 - MALAYSIA’S palm oil production this year is expected to hitan all-time high of 12.5 million tonnes, an increase of 5 per centcompared with 11.9 million tonnes last year.

Primary Industries Minister Datuk Seri Dr Lim Keng Yaik said exports ofthe commodity are expected to touch 12 million tonnes, an increase of 11.1per cent against 10.8 million tonnes before.

“Prices are also expected to be sustained at the current level of RM1,400a tonne until year-end because worldwide demand is strong and steady, hetold reporters in Kuala Lumpur yesterday.

Dr Lim had earlier officiated at a five-day International Palm OilCongress (Pipoc) 2003 themed Palm Oil The Powerhouse for Global Oils andFats Economy. The conference was attended by about 1,500 delegates from 45countries.

We should not worry about the expectations of higher production which maylead to a drop in prices as long as Malaysia is successful in increasingthe usage of palm oil and getting new markets. Demand is expected to risein tandem with production.

He also said Malaysia, the world’s largest producer of palm oil, wantscloser collaboration with the world’s second largest producer Indonesiawhich is expected to take over the top spot by 2005.

For the mutual benefit of the industry, Malaysia would like to work moreclosely with Indonesia, Dr Lim said.

He said Malaysia can help organise Indonesia’s fragmented palm oilindustry.

Both countries should cooperate and not undercut each other to compete forexisting markets. We should also look for new markets and introducing newapplications of palm oil through research and development.

Indonesia is expected to produce 9.9 million tonnes of palm oil in 2003,an increase of 7.6 per cent from 9.2 million tonnes last year. Similarly,the republic’s palm oil exports are expected to touch 6.8 million tonnes,a gain of almost 8 per cent from 6.3 million tonnes.Both countries should work together to promote and defend palm oilvis-a-vis competition from other oils and fats, said Dr Lim, referring tothe campaign against palm oil which has now shifted from beingnutritional-based to one on environment.

Besides working together to defend palm oil, both countries should work toexploit issues favourable to palm oil, like the adverse effects of transfatty acids, to the advantage of palm oil, he said. Trans fatty acids,which are obtained when oil and fats hydrogenate, are now recognised forincreasing the risk of cardiovascular diseases.

When prices are trending downwards, he added, both Malaysia and Indonesiashould increase the use of palm oil as fuel to reduce global excess supplyof the commodity.

Dr Lim, however, said there is no need to burn the commodity to generateenergy right now due to attractive prices of late.

Let us (Malaysia and Indonesia) share our technologies and legislativeexperience to produce a healthy market for palm oil and a healthyenvironment, he added.

Earlier in his speech, Dr Lim cautioned the industry not to be lulled intoa false sense of security and complacency over the high prices of palmoil.

We must be ready to take pre-emptive action at the first sign of anyunfavourable price trend, he said.

Dr Lim said the country is seriously considering introducing a legislationto mandate the blending of diesel with palm oil or palm methyl ester. Thiswould help reduce pollution in the country and stocks of palm oil, as wellas help keep prices of palm oil at acceptable levels.

He said there is potential for palm oil to become the fifth fuel or energysource for the country after gas, coal, hydro and petrol. Palm oil can beused without any modification as a fuel and can also be blended withdiesel and used in diesel engines.

He added that palm oil could also be converted into methyl ester, known asbiodiesel, and used directly in diesel engines without the need for anyblending.

Dr Lim said the Malaysian Palm Oil Board and Petroliam Nasional Bhd havepatented a process on the production of palm biodiesel and have carriedout extensive pilot plant trials on its production and use in dieselengines.