14/01/2008 (Reuters), Kuala Lumpur - Malaysia is likely to introduce palm oil-blended diesel in the local market this year to save the domestic biofuel industry, which has been hit by soaring feedstock prices, a top industry official said on Monday.

Malaysia, the world's second-largest palm producer, may initially launch a 2-percent blend of palm biodiesel with regular diesel, Sabri Ahmad, chairman of the Malaysian Palm Oil Board, told the Reuters Global Agriculture and Biofuel Summit from Kuala Lumpur.

"We are looking at 2008 in terms of slowly implementing a 2-percent blend at least," he said. "We must implement because neighboring countries like Thailand and Indonesia have made it mandatory."

Palm oil, which soared by more than 50 percent last year, has extended gains to new highs in recent weeks, thanks to a cocktail of booming demand from the food sector in Asia, lower output in Malaysia and surging global crude and vegetable oil markets.