27/9/2005 (Business Tim) - Malaysian oil palm companies have been asked toexpand to Indonesia as there are 100 million hectares in that countrysuitable for cultivation.

Indonesia is expected to overtake Malaysia as the world's largest producerof palm oil in 2008.

Indonesian Palm Oil Producers Association president Derom Bangun saidIndonesia has a land area of 300 million ha, of which one-third has beenallocated for oil palm cultivation.

"Out of the 100 million ha, only 5 per cent, or 5 million ha, has beenplanted with oil palm by both Indonesian and Malaysian plantationcompanies.

"So there is plenty of land in Indonesia for Malaysia's oil palmcompanies," Derom told reporters in Kuala Lumpur yesterday after a meetingof the Roundtable on Sustainable Palm Oil.

In comparison, Malaysia has an oil palm plantation area of 1.6 million ha.Among the big players in Indonesia are PT Sinar Mas, PT AstraInternational and Malaysia's very own Kumpulan Guthrie Bhd via Minamasplantations.

The other Malaysian companies with sizeable land in Indonesia include IOICorp Bhd, Golden Hope Plantations Bhd, PPB Oil Palms Bhd and Kuala LumpurKepong Bhd.

Analysts have said that Malaysia's plantation companies should expandtheir estates abroad due to limited land at home and rising cost.

"Global palm oil demand is expected to rise two million tonnes annuallydue to higher living standards and greater consumption of oils and fats,"Derom said.

He said India, for example, needs 11 million tonnes of cooking oil, ofwhich four million tonnes are imported from Malaysia and Indonesia.

On production, Derom said Malaysia is expected to churn out 14.9 milliontonnes of palm oil this year compared to Indonesia's 13.6 million tonnes.

"Indonesia's production of palm oil will equal Malaysia's between two andthree years from now," he said.

The two countries account for 80 per cent of the world's palm oil output,which also comes from Columbia, Ghana and Nigeria.