Malaysia urges Indonesia to cooperate on palm oil to boost prices

Malaysia urges Indonesia to cooperate on palm oil to boost prices

Agence France-Presse, Kuala Lumpur

Malaysia called on Monday for Indonesian cooperation over palm oil production and marketing to help reduce stocks and keep prices at an "acceptable level".

"We should cooperate and not undercut each other to compete for existing markets," Primary Industries Minister Lim Keng Yaik told delegates to the International Palm Oil Congress 2003.

Malaysia and Indonesia are the world's two biggest palm oil producers, with Malaysia accounting for about half of global output.

"Both should be looking for new markets and to introduce new applications of palm oil through research and development," Lim said.

Malaysia was seriously considering introducing legislation to mandate the blending of diesel with palm oil or palm methyl ester to reduce stocks and keep prices up and this was one of the areas where the two countries could team up, he said.

"When prices are trending downwards, both Malaysia and Indonesia should increase the use of palm oil as a fuel to reduce global excess supply of the commodity," Lim said.

"Let us share our technologies and legislative experience to produce a healthy market for palm oil and a healthy environment."

Lim said there was potential for palm oil to become a fifth fuel or energy source for Malaysia, as it could be blended with diesel and used without any engine modifications.

Extensive tests using palm biodiesel had been conducted on buses and the results had been "positive," he said.

"Emissions from diesel engines using palm biodiesel are relatively free from sulfur dioxide and other undesirable pollutants which are emitted from petroleum diesel," he added.

Lim has warned in the past that Malaysia could lose some market share to Indonesia in five years due to its competitor's increased output and lower costs.