12/7/2005   KUALA LUMPUR (Agence France-Presse) - Malaysia said Tuesday it has approved nine licences to build bio-diesel plants here, including to foreign investors, as demand for alternative fuel rises amid skyrocketing oil prices.

Singaporean and Italian companies among others have applied for licenses to build the projects, Plantation Industries and Commodities Minister Peter Chin Fah Kui was quoted as saying by the Bernama news agency.

Malaysia earlier this year announced it would itself build three biodiesel plants, each with annual capacity of 60,000 tonnes of biodiesel, at a cost of 120 million ringgit (32 million dollars).

The plants would produce bio-diesel for export to the world market and to help reduce dependence on fossil fuel.

Strong demand for biodiesel from European nations as well as Colombia, India, South Korea and Turkey was fuelling the growth of the industry, as more countries sought to reduce their reliance on oil, Chin said.

Global demand for biodiesel is expected to touch 10.5 million tonnes in the next few years and Malaysia has the potential to capture 10 percent of the market, he said, adding Germany alone has an annual demand of two million tonnes.

Malaysia has already begun preparations to change from diesel to bio-fuels by 2008, including drafting a bio-fuel act that would make it mandatory to make the switch.

Chin has said that the move to bio-fuel -- a mixture of diesel with five percent processed palm oil -- would help to reduce fuel costs to the country with the price of crude oil remaining high.

Malaysia is the world's largest producer of crude palm oil. Output soared to nearly 14 million tonnes last year, half the world's production.

It exported 12.5 million tonnes of the oil last year, worth some 8.0 billion dollars, accounting for 58 percent of global palm oil exports and 27 percent of the global oils and fats trade.