KUALA LUMPUR, Feb 23 (Bernama) -- The change in marketing climate in the Middle East and Africa with the proliferation of free trade agreements, has caused palm oil-based Alami Vegetable Oil Products Sdn Bhd to set up its branch in the two regions.

Chief executive officer Mohd Radwan Alami said the company had been witnessing a slow down in its exports to certain destinations in the Middle East following FTAs which provide advantages to companies located within the said region.

This put companies like Alami at a disadvantage in terms of tariff but adamant not to lose out to its competitors, the company took the necessary steps to base its operations in the region and was granted a licence in May last year.

It can now operate in the industrial area of Yanbu in Saudi Arabia.

Mohd Radwan said the company was losing out a lot of business to Dubai-based producers which imported their oil from Malaysia and Indonesia and then supplied it to these markets at duty free or minimal tariff.

"Before the agreement (FTA), importers had no problems. They pay duties and collect the cargoes. After the agreement, they have the benefit to pay less. Why then buy it from me?," he told Bernama in an interview.

Alami has started building a bulk storage facility and warehouse at the Port of Yanbu as well as a fractionation plant to produce cooking oil with a capacity of 300 tonnes a day. All will be operational in December this year.

In the meantime, Africa is also coming up strongly in plantation and the African Union is enjoying low tariff on the products.

Alami opted for Sudan and has been granted incentives for setting up a bulk terminal at the Port of Sudan which will be completed in May as well as a palm oil processing plant of 300 tonnes per day capacity, to be operational in August.

"Also, there is this agreement between Saudi Arabia and North African countries where Saudi products go (there) at zero to 8.0 percent custom duties. We are going to lose out in these North African markets unless we move to start the operations," he said.

Mohd Radwan, however, declined to reveal the amount of investments in both its Saudi Arabia and Sudan operations, except to say they were substantial.

Meanwhile, Alami which exports its products to 42 countries, has a RM35 million processing facility in Banting with a total annual capacity of 26,000 tonnes, of which its fractionation plant runs at 620 tonnes per day and fat processing plant at 320-340 tonne per day.

It exports RBD palm olein (cooking oil), vegetable ghee, shortening, margarine, cocoa butter substitute, ice-cream, dough, creamy coating and specialty fat.

The company exports all its products through brandnames such as Tina, Mr Chef, Flora, Alfata Miad, Malco, Golden Spoons, Golden Sheep, Prince and Dolphin.

Last July, introduced its cooking fat, Golden Spoons, to China with encouraging response.

With its kind of climate, palm oil is used in China for industrial purposes rather than cooking as it would solidify as a cooking oil, Mohd Radwan said. As such, the company introduced cooking fat which is not totally foreign in the country, he said.

Alami has offices in Xian and Beijing and is negotiating to open up a fat processing plant in the latter.

-- BERNAMA