07/10/05 Chennai , (The Hindu) - MALAYSIA palm oil companies are lookingat India to invest in plantations and oleo chemical industry.

"As land availability is limited in Malaysia, our Government has asked thecompanies to look overseas for investments. We already have invested inoil palm plantations in Indonesia. We are also looking at India," said MrM.R. Chandran, former Executive Director of Malaysian Palm Oil Board.

For the Malaysian companies to consider investing in India, the existingPlantation Act should be amended, according to Mr Chandran. "It would beeconomical to invest in Indian plantations under the current Act. Oil palmtree is a water guzzler and therefore, given the Indian climaticconditions, irrigation is an important consideration. Our companies can'tbe buying and going in for oil palm plantation on small pieces of land.Our companies require large estates," he said.

Oil palm plantation should be done in a minimum 5,000 hectares. "It is abusiness-to-business idea that has been floated by us. We have asked theSolvent Extractors Association of India to urge the Indian Government torelax the rules," Mr Chandran, who was in Mumbai recently for a globaledible oil conference, told Business Line.

"Only if there is proper irrigation, we can get good yield. We are lookingat an average yield of four tonnes of oil a hectare," he said.

While Kerala is seen as an ideal State by Malaysian companies for oil palmplantation, Andhra Pradesh and North Tamil Nadu were the other places seenas having good potential. These places are seen as ones with goodpotential because oil palm are planted between 10 degrees North and 10degrees South of the equator.

"Oil palm needs a minimum 200 days of rain. In places like Kalimanthan inIndonesia, we get rainfall for 250 days. The average rainfall required isaround 1,600 mm. In Papua New Guinea, oil palm plantations get nearly3,000 mm rainfall, which helps improve the yield," he said.

While investing in India, Malaysian companies will transfer high yieldseeds from Malaysia besides helping in plantation management. Ideally,these companies would prefer to get a minimum lease of 60 years withoption for another 30 years. "But even a lease of 30 years with option toextend it by another 30 years would be good," he said.

The investment could be part of joint venture between companies in boththe nations, Mr Chandran said, adding that Malaysian firms were set toinvest in oil palm plantations in Brazil, Venezuela, Colombia, Costa Ricaand Mexico.

Malaysian companies were also looking to invest in down stream industriesin India, particularly in speciality fats and oleo chemicals sector.

"We perceive a major growth in the oleo chemicals and speciality fatssector, especially for personal care, pharmaceuticals and neutraceuticals.Our companies are looking for even joint venture or cross ventureoptions," he said.

This means, companies in India can buy stake in palm oil plantations inMalaysia, while form a join venture with its Malaysian partner at home toset up an oleo chemical company.

Mr Chandran during his visit had held exploratory talks on behalf of aMalaysian firm. However, he refused to divulge details of the company herepresented and the Indian firms with who he held talks.