26/09/05 PETALING JAYA, (Bernama) -- Minister of Plantation Industries andCommodities, Datuk Peter Chin Fah Kui said the palm oil industry shouldnot depend on a pegged currency as a way to maximise profit.

He said this in view of the recent move by the government to de-peg theringgit which had to some extent affected the export of palm oil products.

It needs to keep moving up the value chain to circumvent the burden from astronger currency and explore ways to reduce the cost of production, Chinsaid at the official opening of the four-day International Palm OilCongress (PIPOC) 2005 here Monday.

The conference is organised by the Malaysian Palm Oil Board (MPOB).

Chin said the palm oil industry would be challenged to find ways tomaintain the price level of the commodity this year compared to last year.

Apart from a strong competition amongst 17 other oils and fats markets,palm oil prices are cyclical in nature, fluctuating on the strength ofprevailing supply and demand situation and market perceptions.

He said the price of palm oil for the first half of this year averagedRM1,388.50 compared to RM1,814.50 during the corresponding period lastyear.

I wish to remind the industry players not to be complacent as we aretrading in a competitive market, he added.

Chin said the industry had to maintain its competitiveness and beresilient to the adverse effect of the global economy by adoptingstrategic approaches to invest more in high value-added downstreamactivities.

Malaysian companies must be `forward thinkers', he said, citing somehome-grown plantation companies like Golden Hope Bhd and IOI Group Bhdwhich had become international players with investments overseas indownstream activities.

I hope more forward thinking plantation companies will venture abroad bysetting up processing plants for downstream activities and become moreinvolved in oils and fats business, he added.

The oil palm industry continues to contribute significantly to theMalaysian economy as well as to the global oils and fats business,recording both an impressive performance, both in terms of production andexport last year.

Chin said improved export demand, due to tight world supplies of competingvegetable oils coupled with firm palm oil price contributed to a veryimpressive export earnings of RM30.41 billion (US$8 billion) in 2004.

Export performance of all palm oil products for the first seven monthsthis year registered a growth of 16.6 percent to 10.76 million tonnescompared to the same period last year, he said.

He said the local crude palm oil production also soared to nearly 14million tonnes, accounting for half the world's production, from a mere3.8 million hectares of plantation area, compared to the world's totaloilseeds area of about 216 million hectares.

Malaysia also exported 12.5 million tonnes of palm oil last year,accounting for 58 percent of global palm oil exports and 27 percent of theglobal oils and fats trade, said Chin.

-- BERNAMA