Malaysia palm oil may outdo oil and gas

Malaysia palm oil may outdo oil and gas

KUALA LUMPUR (Reuters): Malaysia, the world's largest palm oil exporter, expects record earnings from the commodity this year, possibly surpassing even crude oil and gas, its top money spinners.

Driven by rising global demand for edible oils and strong prices due to a weak currency, palm oil contributed 12.8 billion ringgit (US$3.4 billion) in export earnings in 1997, Primary Industries Minister Lim Keng Yaik said at a news conference.

He said the value could climb to between 16 billion and 18 ringgit in 1998, judging from sales of palm oil futures through the first quarter of the year and projections by government and industry.

"If the ringgit strengthens, we may see last year's value of about 12 billion ringgit being maintained, but still I don't see this happening as most of our palm oil is sold in futures and we have already sold up to August," Lim told reporters.

"Conservatively, I would put earnings from palm oil export for this year at 16 billion ringgit but some plantations are forecasting as high as 18 billion," he said.

Lim said the projection was higher than last year's export earnings for crude and gas, which totaled 16.6 billion ringgit.

The minister said he could not give a projection for crude and gas, which comes under the control of Prime Minister Mahathir Mohamad's office. But he said in 1995, when palm oil exports were at their highest value of 12.9 billion ringgit, they outperformed crude and gas exports by 600,000 ringgit.

"There's a good possibility of palm oil surpassing oil and gas again this year, we'll be keeping our fingers crossed," he said.

Lim said commodities seemed to be the only saving grace for Malaysia's weakened economy and the government was doing all it could to boost the sector.

He said commodities, including crude and gas, accounted for 53.5 billion ringgit or nearly a quarter of the total export earnings of 221.4 billion for last year.

Lim said 38,000 foreign workers, who had become redundant in other sectors of the economy, were being moved into plantations to strengthen an existing labor force of 400,000.

"They will surely boost our agricultural harvest for this year. The way we look at it, commodity exports are probably the best bet we have for long-term recovery of the economy and the ringgit," he said.