Malaysia nears deal with China, India to swap palm oil
Malaysia nears deal with China, India to swap palm oil
KUALA LUMPUR (AFP): Malaysia is near agreement with India and China on a multi-billion-dollar deal to swap palmoil for railway contracts, a minister was Wednesday quoted as saying.
Primary Industries Minister Lim Keng Yaik, quoted by Business Times, said he expects the deal with India to be finalized during Indian Prime Minister Atal Behari Vajpayee's visit here from May 13.
Lim, who visited the two countries last week, also said letters of intent to swap an initial 200,000 tons of palmoil for 20 locomotives have been submitted to China.
Lim said each deal could be worth three billion ringgit (US$789.5 million) or four billion or more.
"China is certainly in a position to take up the offer," he was quoted as saying.
"Talks are in the final stages between the government and a Chinese company with regards to specifications and prices for the supply of 20 diesel locomotives."
The newspaper quoted sources as saying that each proposed barter deal was worth six billion ringgit, with Malaysia to pay in palmoil over a period of more than five years.
The sources said China would build a double-track railway between the southern states of Negri Sembilan and Johor, which would form part of a trans-Asia rail network linking Singapore to Kunming.
The Indian Railway International (Ircon) is expected to handle the rail network linking peninsular Malaysia's east and west coasts, sources said.
Malaysia, the world's largest palmoil producer, has watched with dismay as the price plunged from a high of 2,377 ringgit a ton in 1998 to around 800 ringgit now.
It has initiated other measures to prop up prices.
This includes urging power stations to burn crude palmoil as fuel to cut stockpiles and allocating 350 million ringgit for replanting to temporarily cut production.
The Business Times said Wednesday that plans to use crude oil as fuel have hit a snag as nearly 80 percent of the country's generators are powered by gas.
Only older plants which burn medium fuel oil can be mixed with palmoil.
At the close on Wednesday, benchmark third-month July futures was up 28 ringgit at 794 ringgit ($208.95) a ton. Volume was 1,795 lots.
In the physical market, May crude palm oil (CPO) for the southern region was offered at 770 ringgit a ton against bids at 765. Trade was done at 760 to 765.
May CPO (central) was offered at 765 ringgit a ton against bids at 760 and trades at 755 to 760.
June crude palm oil (CPO) for the southern and central regions was offered at 790 ringgit a ton against bids of 785. No trade was reported.