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.