KUALA LUMPUR - MALAYSIA'S policy of requiring all government vehicles to use 5.0 per cent biofuel has become too expensive and the eco-minded policy may have to be scaled back, a minister said on Monday.

When crude oil prices rocketed last year, Malaysia and Indonesia, which produce most of the world's palm oil, heavily promoted their version of biofuel - a mixture of diesel with five percent processed palm oil known as B5.

Plantations Minister Bernard Dompok said he was urging a shift to B3, which will contain just three per cent palm oil.

'We want to push for B3,' he told reporters at an international palm oil congress. 'I am presenting a paper to cabinet soon and hopefully this will be approved by the end of the year.'

Malaysian Palm Oil Board (MPOB) director general Mohammad Basri Wahid said that funds collected from the industry to help defray biofuel manufacturing costs was a major factor in pushing for B3.

The MPOB collected 400 million ringgit (S$164) from its members this year to defray the cost of replanting trees and for biofuel manufacture, but the allocation is expected to fall next year due to lower palm oil prices. -- AFP