19 March, 2003 - HIGH insurance cost and freight charges arising from aUS-Iraq war are expected to affect Malaysia’s palm oil prices.Primary Industries Minister Datuk Seri Dr Lim Keng Yaik said that if warbreaks out, ships plying West Asia will experience an increase in cost dueto higher insurance and freight charges.“When war breaks out, what do you think will happen? If prices go up,people will not buy because it is too expensive and if people don’t buy,what do you think will happen to prices?” he asked.Dr Lim was speaking to reporters in Kuala Lumpur after launching the14thannual Palm and Lauric Oils Conference and Exhibition: Price Outlook2003/2004 in Kuala Lumpur yesterday.US President George W. Bush has given Iraqi President Saddam Hussein anultimatum to leave Iraq in 48 hours or face war.Last year, one-fifth of Malaysia’s palm oil exports totalling 10.8 milliontonnes went to West Asian countries, including Jordan, Syria and Egypt.During the war in Afghanistan last year, freight charges were known tohave increased to as high as 30 per cent.“To a certain extent, shipments to Europe via the Suez Canal may also beaffected due to its close proximity to the region,” Dr Lim said.In his speech, Dr Lim said the improvement in prices to about RM1,600currently was also contributed by measures undertaken by the Government.“The introduction of a replanting incentive of RM1,000 per hectare tookaway 173,000ha, which deprived the market of 618,000 tonnes.”The minister called on the industry to strive to produce at least eighttonnes of oil per hectare, with an oil extraction rate of 25 per cent.Malaysia is the world’s biggest producer of palm oil and accounts for morethan half of global output.The country produced 11.9 million tonnes last year, of which 10.8 milliontonnes worth RM19.6 billion were exported to 140 countries.