07 August 2001 (Business Times) - SUSTAINING the surge in interest amongpalm oil importers will be a challenge that the Malaysian Palm OilPromotion Council must continue to address for the long-term viability ofthe commodity, said council chief executive officer Datuk Haron Siraj.

"It will depend on creating the right quality and reliability (and use ofpalm oil)," he said.

During the first six months of this year there was a surge in importorders from several countries, including Bangladesh and Vietnam.

This was mainly attributed to the low crude palm oil prices, freight andfamiliarity (with the product). "Low prices and discounts may be our addedadvantage but we cannot always depend on that," he said after launchingthe Palm Oil Trade Awareness Programme for 25 participants from Africa,Central Asia and Eastern Europe region in Petaling Jaya yesterday.

The programme, which ends on Aug 10, includes a visit to UnitedPlantations Bhd in Teluk Intan, Malaysia Derivative Exchange Bhd and FeldaBulkers in Port Klang.

Bangladesh imported 170,000 tonnes of the edible oil last year, of which95,000 tonnes came from Malaysia. During the first five months of theyear, it imported 98,000 tonnes. The council also launched a ruralpromotion programme there to increase consumer awareness of palm oil.

Vietnam imported 122,459 tonnes in the first six months of this year,compared with 59,000 tonnes during the corresponding period last year.

It was also reported that CPO exports during the first six months grew by30 per cent over the same period last year to 5.3 million tonnes.

Haron said the council had also identified Russia as one of the potentialexport markets. In 2000, the country consumed 2.04 million tonnes of oilsand fats.

Of this, palm oil constituted six per cent.

With CPO prices expected to be sustained above the RM1,000 a tonne levelthrough next year, the industry has to strategise to sustain the long termviability of the industry. Palm oil prices reached a record high of aboutRM2,500 a tonne in 1998 but subsequently, expanding global supply exerteda downward pressure on the commodity and its price declined to aboutRM1,000 a tonne in July last year and then to less than RM1,000.

CPO stocks have dropped to 1.03 million tonnes in June from 1.19 millionin the previous month.

The Oil Palm Replanting Incentive Scheme 2001 has registered 170,000hectares for the replanting of old and uneconomic plantings.

Malaysians, said Haron, can also continue to offer assistance to othercountries in the areas of consultancy and technology.

However, estate management, including equity participation in estates,will take a while in view of what had happened in Indonesia and LatinAmerica.

The council is also planning to set up "beach-heads" instrategically-located countries to facilitate the export of palm oil.

From Egypt, North African countries can be tapped while Pakistan and Irancan also help to make inroads into potential palm oil markets.

On the Asean Free Trade Area which comes into effect in 2003, Haron saidMalaysia stood to benefit as it had numerous advantages over its Aseanneighbours.

Haron said opportunties would be plentiful for Malaysia and competitionwould probably be seen in downstream activities.