KL gives $10m palm oil credit to Cuba

KL gives $10m palm oil credit to Cuba

KUALA LUMPUR (AFP): Malaysia will extend US$10 million in credit to Cuba to purchase its palmoil over the next 14 months, a report said on Tuesday.

The primary industries ministry signed a memorandum of understanding to provide the credit facility to a Cuban company, Empresa Cubana Importadora de Alimentos, the national Bernama news agency said.

A palm oil credit payment arrangement (POCPA) pact will be signed between the Malaysian and Cuban central banks on the terms and schedule of repayment.

This is the second deal for Cuba under the POCPA scheme which is designed to expand export markets.

Under the arrangement, the Cuban firm will provide products to selected Malaysian companies to be sold in Malaysia or other countries. The sale proceeds will be used to offset the credit.

Primary Industries Deputy Minister Anifah Aman said nine countries -- Pakistan, Algeria, Iran, Iraq, Myanmar, Bosnia- Herzegovina, Cuba, Sudan and Korea -- had signed POCPA agreements with Malaysia so far.

Out of the government's total allocation of $500 million, only $227.4 million have been used, he said, adding that the scheme had proven effective in penetrating new and difficult markets.

Anifah said the ministry was doubling its effort to attract non-traditional market,particularly South Africa and South America.

Malaysia, the world's largest palmoil producer, has been dismayed by the commodity's sagging price which plunged from a high of 2,377 ringgit (US$626) a tonne in 1998 to around 800 ringgit.

It has ordered power stations to start burning crude palmoil as fuel, implement a massive replanting scheme and diversify the use of palmoil as an energy source to cut stockpiles and boost prices.