KUALA LUMPUR, Sept 12 (Bernama) -- The government has put on hold the issuance of new manufacturing licences for bio-diesel, Plantation Industries and Commodities Minister, Datuk Peter Chin Fah Kui said Tuesday.

The move was to safeguard the oil palm industry as a whole, he told reporters after officiating the Oils and Fats International Congress 2006, here.

"We have put aside some six million tonnes of crude palm oil for bio-diesel production but at the same time we have to make sure there is enough supply for increasing demand for food production," he said.

"We can increase the allocation to seven million for bio-diesel production if we want to but we won't do that. We don't want to jeopardise the other related segments in the oil palm industry," Chin said.

To date, 52 manufacturing licences have been approved, reflecting a great deal of interest in the investment of bio-diesel.

Chin said new applications for manufacturing licence have been put on hold at least till the end of this year as the Cabinet Committee on Bio-diesel is carrying a study whether to offer more licences or not.

"We have to look at various aspects of the oil palm industry. The study is expected to be completed end of this year," he said.

He warned licence holders to make sure that they fulfil all requirements under the manufacturing licences agreement, failing which the government would cancel their licences.

He said out of 52 licence holders, only four companies have started producing bio-diesel and exporting the commodity. However, no time frame has been set for them to start producing bio-diesel.

According to industry sources, 10 companies would be ready to produce bio-diesel this year and another 10 companies next year.

Asked whether the easing of fossil oil to below US$60 per barrel would affect the bio-diesel plan, Chin said: "Not at the moment."

However, he said the plan would only be affected if the crude fuel oil is reduced below US$30 per barrel.

In his speech, Chin said though Indonesia would overtake Malaysia in terms of production of palm oil in the forthcoming years, the outlook for the local palm oil industry remained robust given increasing demand for the commodity in various applications.

Currently, he said Malaysia exports about 13.4 million tonnes of palm oil to the world, accounting for 51 percent of global palm oil exports and 26 percent of the global oils and fats trade.

-- BERNAMA