KL to expand offshore palmoil investments

KL to expand offshore palmoil investments

KUALA LUMPUR (Reuter): Malaysia, in a bid to sustain its multi-billion ringgit palmoil industry, will expand overseas investments, Primary Industries Minister Lim Keng Yaik said.

In an interview with the Business Times daily, Lim said the government will adopt a three-pronged approach for the development of the industry.

It will help invest in offshore palm oil plantations, relocate more palmoil plants in consumer nations and push for the increased use of high-yielding clones.

He said Malaysia needs to invest overseas in the plantation sector to maintain favorable production capacity.

Malaysian companies Kumpulan Guthrie, Island and Peninsular and Far East Holding are already making headway in overseas plantation activities, Lim said.

Kumpulan Guthrie is developing 40,000 hectares of land in Indonesia's South Sumatra province while Far East has invested in 50,000 hectares in Indonesia's Riau province.

Island and Peninsular has invested in 25,000 hectares on West Kalimantan, on Indonesia's side of Borneo island.

"More plantation companies are expected to follow suit and offshore palm oil production is expected to continue to expand via strategic partnerships," the newspaper quoted Lim as saying.

Lim said two million hectares of new oil palm plantings must be added to the current 2.53 million hectares, both locally and overseas, to meet production targets of 8.8 million tons and 12.1 million tons by the years 2000 and 2020 respectively.

He said beyond the year 2000 there would not be any substantial expansion in plantation area.

"The increase in output beyond 2020 will come purely from production increases through improved planting materials, better agronomic practices, mechanization and improvement in mill efficiency," Lim said.

He said a number of Malaysian companies have already relocated joint-venture refineries to China, Mexico, Egypt, Vietnam and Algeria.

He said other ventures, including Pakistan, Bangladesh and South Africa are at various stages of implementation.

Lim said Malaysia is expected to maintain its position as the world's leading producer of palm oil with an expected production of 7.8 million tons, up eight percent from the previous year.

In 1994, Malaysian palm oil contributed to 53 percent of the world's total production and 64 percent of total exports.