The Malaysian oil palm industry started in 1917 and grew slowly until the late 1950s when the agricultural diversification policy resulted in switch over from rubber to oil palm. From then, the industry grew rapidly, and presently, very little room remains for any significant increase in oil palm plantations in Peninsular Malaysia. As such, all future growth is expected to be in Sabah and Sarawak. At present, the total area under oil palm cultivation is about 3.5 million hectares, while total palm oil production for the year 2001 was 11.8 million tonnes. Despite the huge production, the oil consists of only a minor fraction of the total biomass produced in the plantation. The remainder consists of a huge amount of lignocellulosic materials in the form of fronds, trunks and empty fruit bunches. The year 1985 is considered as the start of a major replanting era in the oil palm industry, and from 1985 to 1995, there was a steady increase in oil palm replanting. By 1997, the replanting era reached its maximum, yielding over 27 million tonnes of biomass. As such, the oil palm industry must be prepared to take advantage of the situation and utilize the available biomass in the best possible manner.