Palm oil shortage fears force KL to act

Malaysia has frozen the issuing of licenses to manufacture bio-diesel over fears that keen interest in the business will see a shortage of crude palm oil for other products.

Tuesday, July 04, 2006

Malaysia has frozen the issuing of licenses to manufacture bio-diesel over fears that keen interest in the business will see a shortage of crude palm oil for other products.
Plantation Industries and Commodities Minister Peter Chin said a Cabinet committee on the palm oil industry's competitiveness had made the decision in order to sift through applications.

The decision was made so "all those applications that we have now are processed in an orderly manner, in line with the government's policy on competitiveness in the palm oil industry," Chin said.

The government received 98 applications up to June 27 for licenses to manufacture bio-diesel.

"The overwhelming response ... has given rise to concern on the sufficient supply of crude palm oil as raw material for bio-diesel production against that for other related industries, particularly for the food and oleo- chemicals sector," a statement from Chin's ministry said.

The government will "temporarily cease issuing new manufacturing licenses for bio-diesel production, pending the completion of a comprehensive review of the palm-based downstream industries."

Chin said the government is currently looking at everything related to the various needs for crude palm oil.

"We will look at all the various requirements of the palm oil industry - the push and the pull," Chin said. "We are looking at the competitiveness and the general direction of the palm oil industry vis a vis bio-diesel requirements."

Malaysia is the world's largest producer of crude palm oil.

"In any industry, there must be a realistic level," said Yusof Basiron, chief executive officer of the Malaysian Palm Oil Council. "There must be a balance between CPO for food and for fuel."

Spurring on the attention is a decision by the Malaysian government to change from diesel to bio-fuels by 2008. AGENCE FRANCE-PRESSE

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