MECHANISM NEEDED FOR CPKO PRICES IN LINE WITH INT`L LEVELS

KUALA LUMPUR, July 23 (Bernama) -- There is a need to establish a mechanism
to ensure crude palm kernel oil (CPKO) prices are in line with international
levels, says Malaysia Oleochemical Manufacturers Group (MOMG).

"This will establish a more even platform for the oleochemical industry to
compete internationally.

"This is especially important when 80 to 90 per cent of the oleochemical
production in Malaysia are exported," it said in a memorandum handed to
the Ministry of International Trade and Industry (MITI) at the 2009 annual
dialogue Thursday.

It proposed that a working group be set up comprising related ministries and
agencies such as the Finance Ministry, MITI, Plantation Industries and
Commodities Ministry and Malaysian Palm Oil Board (MPOB) to address the issue
and look into the mechanism.

"It is found that the local CPKO (MPOB) prices are higher than the
international (Rotterdam) prices on a net-back basis (after deducting the
logistics cost and export duties)," MOMG pointed out.

On another issue, MOMG recommended to the government to waive sales tax for
palm-based surfactants to promote local production and usage.

In order to promote utilisation and production of new generation surfactants
and conversion from glycerine to propylene glycol, MOMG proposed that RM100
million interest-free loans be given to encourage local companies to
venture into this business.

MOMG also asked the government via the government-to-government approach
to seek recognition from the European Commission (EC) on the test results
generated from a laboratory accredited by a competent authority from an European
Union (EU) member state.

MOMG said the EU is one of the major export markets of the local
oleochemical industry.

"In order to have continued market access into the EU, the industry is
required to comply with the registration requirements of the Registration,
Evaluation and Authorisation of Chemicals (REACh) regulations," it added.

"This entails a voluminous data submission for the registration dossier of
which most of the data must be derived from test results from labs accredited as
OECD GLP," it said.

MOMG also noted that SIRIM Bhd has begun to obtain OECD GLP accreditation
for its laboratory and it needs government support to enable them to
provide services to the industry at a minimal cost.

"This will greatly help Malaysian companies exporting to the EU member
states in terms of cost as OECD GLP laboratory are mainly found in EU countries,
making it more costly to conduct tests," it added.
-- BERNAMA