Over the last three decades, the Malaysian palm oil industry has grown to become a very important agriculture-based industry. Currently, there are more than 2.6 million hectares under oil palm and 290 palm oil mills to produce crude palm oil and palm kernel for further processing by refineries, palm kernel crushers and oleochemical companies. In 1997, Malaysia produced about 9.03 million tonnes of crude palm oil and 1.1 million tonnes of crude palm kernel oil. Processed palm oil and palm kernel oil have becorne one of the country’s major export revenue earner in recent years. Malaysian palm oil accounted for about 52% of the world palm oil output and 9% of world output of 17 major oils and fats. In the same year, the oil palm sector generated RM13 billion export earnings for the country. Besides crude palm and kernel oils, palm oil mills also generate large volumes of solid by-products and liquid effluent as shown inTable 1. All the by-products require a sound and efficient management system in utilisation, treatment and disposal. Otherwise, they will have a negative environmental impact. Due to the increasing public awareness on environmental conservation and the deteriorating air and river water quality, the oil palm industry faces the challenge of balancing environmental care with economic viability and human welfare. There is an urgent need to finda way to preserve the environment of our country while keeping her economy healthy. While profit is the primary objective, the oil palm industry also realises that the environmental regulations are here to stay. Thus, the industry is fully aware that the pollution now must be cleaned up later, and that it is often cheaper to prevent waste at source rather than treat and dispose off later. Growing awareness of the need to prevent pollution has required the palm oil producers to re-examine their plant operations. A process solution that meets the cost and performance requirements and minimises environmental impact is the preferred choice.