Palm oil exporters will have to opt for local linesBusiness Times - 14 February 2001LOCAL palm oil exporters, scheduled to meet Transport Ministry officialstoday to address their problem of securing bulk tankers, have to opt forlocal lines' services even though their foreign counterparts offer cheaperrates.

Industry sources said local shipping lines are more reliable than theforeign ones as it is easier to predict their availability.

"It is not feasible for the palm oil industry to depend on foreign ships.

There is an element of unpredictability," a source told Business Times inKuala Lumpur yesterday.

He said the utilisation of local ship operators' services also entitledthe palm oil exporters to a double tax relief from the Government.

Therefore, using local ships is the best alternative.

Foreign-owned ships wanting to operate in Malaysia are required to applyfor a domes-tic shipping licence.

This usually takes some time at the processing and approval stages.

"The relevant authorities do not come under a single umbrella body.

Otherwise, the application and issuance of permits would be much faster.

In the case of domestic licences for foreign-owned ships, they have to gothrough the Trans-port Ministry.

"For the local refiners to export, they have to apply for a permit fromthe International Trade and Industry Ministry and for the recent exportapproval of one million tonnes of duty-free crude palm oil, the relevantparties had to get approval from the Finance Ministry.

"All this running around reflects poorly on the industry and the countryas a whole," the source said.

Foreign-owned tankers including Stolt Nielsen, Seachem, Ofdjell andNederkoorn go through a number of local shipping brokers and agentsexporting almost everything from palm oil to dry cargo, bulk cargo andchemicals.

The meeting at the Transport Ministry today will be attended by officialsfrom the Malaysia International Shipping Corp (MISC), Malaysian ShipownersAssociation, Malaysian Palm Oil Board, Palm Oil Refiners Association ofMalaysia and the Malaysian Palm Oil Association (MPOA).

The palm oil industry, already battered with low prices and stiffcompetition from Indonesia, is seeking the Government's help to come upwith some form of directive due to inconsistent allocation of bulktankers.

It is widely believed that MISC, being part of national oil corporationPetronas, gives priority to the shipping of crude oil, liquefied naturalgas, petro-chemicals and other related products.

Added to this, a more lucrative rate is in store for the shipping of crudeoil and related products at US$60 (US$1 = RM3.80) per tonne compared topalm oil at US$40 per tonne.

MPOA had said that the industry currently has a huge shipment backlog ofbetween 200,000 to 300,000 tonnes of palm oil from Sabah and Sarawak andthe Peninsula as well as overseas destinations such as India, Pakistan andthe European Union.

Apart from the MISC, there are smaller shipping companies such asFelda-owned Sutrajaya Shipping Sdn Bhd and Aurora Tankers whose servicesare utilised by the palm oil exporters.

Of the lot, the exporters prefer MISC because of its large fleet.