17/8/06 (Business Times) - ENCOURAGED by the current boom in palm oil, HSBC Bank Malaysia Bhd, the leading financial services provider for palm oil-related businesses in the country, aims to boost financing for the sector further.

HSBC Bank group general manager, deputy chairman and chief executive officer Datuk Zarir J. Cama said the bank currently commands a quarter of financing related to Malaysia's palm oil exports.

"In 2002, a total of 8 per cent of palm oil export financing went through HSBC counters. We aim to handle 27 per cent in the near future," Zarir told Business Times in Kuala Lumpur yesterday.

Malaysia produced some 15 million tonnes of palm oil last year. About 90 per cent of that, valued at RM30 billion, was exported to over 140 countries.

He said the bank will give renewed focus on financing companies which plan to build biodiesel plants and produce palm oil-based health and medicine products.

"Of course the bank will continue to provide loans to companies which want to purchase plantations, buy or upgrade machinery, beef up processing methods, logistics, vessels and other equipment," he said.

Zarir said palm oil has a future worldwide due to its growing importance as a biodiesel as well as a food ingredient.

He said Malaysia's palm oil infrastructure is also solid with enormous global demand built over the years with yield increasing annually.

"It is timely for the bank to go in a bigger way because there is plenty of scope to move up the value chain such as biodiesel, carbon credits and sustainability," said Zarir.

He said palm oil prices have bolstered due to firm prices now at over RM1,600 a tonne and the demand in China, India, East Asia and Europe is intensifying.

"Biodiesel has a future but it is also faced with an interesting dilemma. It is a delicate matter and countries must think about it," said Zarir.

He said HSBC is no stranger to the palm oil business as it has been in the industry for many years, but decided to move in a bigger way three to four years ago.