MALAYSIA, INDONESIA AGREE TO STRENGTHEN COMMODITY PRICES

KUALA LUMPUR, Feb 26 (Bernama) -- Malaysia and Indonesia have agreed to
work together to strengthen commodity prices in particular palm oil and rubber
prices amid the current sagging world prices.

Malaysia and Indonesia jointly account for 85 percent of global palm oil
production and 40 percent of natural rubber production.

Both countries in a joint statement released here Wednesday said they have
also agreed to take appropriate measures to ensure stable prices in particular
for palm oil.

"These measures include managing palm oil stocks and reducing supply through
replanting programmes," said the statement.

Plantation Industries and Commodities Minister Peter Chin Fah Kui and
Minister of Agriculture of the Republic of Indonesia Dr. Ir. Anton Apriyanto met
Wednesday to discuss bilateral cooperation on the matter.

The Indonesian Minister is in the city to attend the Developing-Eight
(D-8) Ministers Meeting.

For palm oil, the ministers have agreed to accelerate replanting of oil palm
trees which are above 25-years old, implementation of biofuel programme,
increasing domestic demand for crude palm oil and jointly engage major importing
countries of palm based methyl ester in addressing non-tariff barriers for the
exports of biofuel.

Malaysia has implemented the blending of five percent palm based methyl
ester with fossil diesel.

Indonesia implemented a minimum of one percent blending programme in the
public transportation sector and a minimum of 2.5 percent blending in the
industry and commercial sector. These minimum percentages will be increased to
2.5 percent in the public transportation sector and five percent in the
industrial and commercial sectors.

Both ministers also want to exchange production and stock level data on a
regular basis to facilitate stock management and promote palm oil through
engaging the related legislators of importing countries.

As for rubber, both countries will accelerate replanting of rubber trees
aimed at managing the supply of natural rubber.

"Malaysia has revised upwards the original target of replanting rubber areas
to 50,000 hectares in 2009 from 32,000 hectares. Indonesia is replanting 55,000
hectares with rubber in 2009," the statement said.

Meanwhile, both countries also agreed to control the expansion of new
planted area for rubber, encouraging the reduction of tapping frequency.

The ministers hope that these measures will reduce price volatility and
contribute towards stability of both palm oil and natural rubber prices in the
longer term.

-- BERNAMA