SINGAPORE (Dow Jones)--Malaysia won't allow the clearing of forest areas for
new oil palm plantations, national news agency Bernama quoted Prime Minister
Abdullah Ahmad Badawi as saying late Tuesday.

  According to the report, Abdullah said this was to avoid accusations that
expansion of oil palm acreage was destroying forests and their ecosystems.

  "We realize there are campaigns being carried out by some non-governmental
organizations in the West to spread negative news about us as they think oil
palm plantations are a result of forest clearing which is endangering the
existence of orang utans," he said.

  Abdullah, who is also Malaysia's Finance Minister, said existing oil palm
plantations were enough to cater to current demand and there was no need for
new plantations at the moment. Malaysia currently has 4.3 million hectares of
oil palm plantations.

  "We don't have to reduce protected forests to increase production," Abdullah
said. "With more effective management of the plantations and new technologies,
production can go up by 30%," he said after chairing a meeting of the Cabinet
Committee on the competitiveness of the country's oil palm sector.

  Continued research and development will also result in value added products,
the prime minister said.

  It was, however, for investors to decide if they want to use palm oil to make
biodiesel, he said. "The high price of world crude oil will be a major
determinant on whether they produce oil palm-based fuel."

  Abdullah said he is happy with rising prices of palm oil and was not
concerned about a shortage of cooking oil in the country. "As far as we are
concerned, (palm) oil is our wealth. As for cooking oil, it is a controlled
food item."

  Malaysia is one of the biggest producers and exporters of palm oil in the
world.