Palm oil outlook to improve this year

This is written by my colleague Zaidi Isham Ismail.

KUALA LUMPUR: Although crude palm oil (CPO) prices have been hit hard this year; falling to a five-year low, its prospects are expected to improve due to a recovering global demand, biodiesel uptake and rising health awareness. 

Malaysian Palm Oil Council chief executive officer Tan Sri Datuk Dr Yusof Basiron said it is a natural cycle for palm oil prices to go up and down due to ever changing supply and demand situation. 

"I beg to differ with them. Although there are challenges this year, it is not confined only to palm oil. Other oils such as soybean oil and sunflower oil, their prices have also softened due to higher production anticipated this year. 

"As for Malaysian palm oil, we will see slightly better output this year and better exports. Indonesia has embarked on their biodiesel B15 program and Malaysia will implement the B7 program nationwide this year, which will see more demand for palm oil. 

"We can also expect prices to stabilise at between RM2,300 and RM2,600 a tonne. So, it is not all that gloomy," said Yusof. 

He added the drop in petroleum prices by 50 per cent has affected the prices of all commodities including palm oil. Prices of soyabean oil in America have also dropped due to excess production which has also led to the dampening of soyabean prices dragging along that of palm oil. 

"But a low CPO price will result in higher demand and it is set to rise again, of which the low soyabean and palm oil prices will also affect production and the tightening of the market will cause prices to rebound once again.” 

Yusof said the sector's performance this year will be better than previously as MPOC aggressively promote Malaysian palm oil and its related products. 

“We will go to existing markets and new ones. This is done through our various promotional series such as blending and packaging of palm oil in opaque bottles.” 

He said the council is also working hard to help the industry sell better in China, Russia, Pakistan, Central Asian countries and even the US. 

Demand for palm oil is rising everywhere in the world, of which there is a rise in population of some 80 million a year and palm oil plays a big role in supplying food to this rising world population. 

Yusof said in the US, Europe and Australia, palm oil has become handy as it is the perfect substitute for the harmful trans fat — a health threat to the global population. 

He said Malaysia, which is the world's second largest palm oil producer, is also ramping up cooperation with Indonesia at all fronts to enhance and bolster the industry such as development of the new market access for this commodity around the world. 

Malaysia and Indonesia hold bilateral meetings on palm oil, cocoa, pepper and jathropa on a yearly basis to strengthen the competitiveness of these soft commodities. 

"The current issues facing both countries that need to be addressed immediately are low prices of CPO and declining export figures — a rare situation we are experiencing now considering the fact that prices are always correlated to uptake as low prices usually stimulate a higher uptake. 

One factor that can explain this situation is a bumper harvest of soyabean, leading to a higher production of its oil, thus bringing prices of both commodities down. 

Nevertheless, Malaysia will be meet up with Indonesian stakeholders to find ways to strengthen the CPO prices and boost uptake. 

"We have a few proposals in mind and will discuss these with our Indonesian counterparts.” Yusof said. One such suggestion is to reaffirm biodiesel mandate so that the CPO stock can be reduced, thus stabilising prices. 

"Malaysia and Indonesia are beefing up bilateral cooperation from time to time. Through the respective ministries, we meet whenever possible to tighten our cooperation and maximise production for the benefit of all," he added.

SOPPOA appeals to unfreeze bank accounts

KUALA LUMPUR: Oil palm plantation companies in Sarawak which are not involved in logging have had their bank accounts frozen by the Malaysian Anti-Corruption Commission (MACC). 

Sarawak Oil Palm Plantation Owners Association (SOPPOA) appealed to MACC to unfreeze bank accounts of plantation companies not related to logging activities. 

"We welcome the government's fight against illegal logging and corruption practices associated with illegal logging in Sarawak. 

"We, however, strongly oppose the freezing of bank accounts of plantation companies which are not related to such activities," SOPPOA said in a statement yesterday. 

For the past week, more than 400 officers from MACC and various state government agencies had raided log ponds, sawmills and business premises across the state. 

MACC had also froze banks accounts of companies and individuals amounting to RM560 million. 

Incidentally, some oil palm plantation companies' bank accounts were also frozen by MACC despite them having no relations to logging activities. 

"It appears some of the plantation companies’ bank accounts were frozen by reason that they have common directorships," SOPPOA said. "This indiscriminate freezing bank accounts has caused disruptions to the oil palm operation and undue hardship."

SOPPOA members said they were deeply sadden by this turn of events as these plantation companies would face severe cash flow strain in making payments to their contractors, suppliers and paying salaries to their employees. 

"If workers are not paid, fruits will not be collected which will result in significant losses to the companies, and loss of tax revenue to the government. 

“Many oil palm smallholders are Sarawak natives and this state of affairs will seriously dampen their Gawai celebration next month," SOPPOA said. "We appeal to MACC to urgently lift the freeze of the bank accounts of oil palm plantation companies." 

SOPPOA members pledged full support to the federal and state authorities to charge and prosecute all the companies and individuals found to be involved in illegal logging operations. 

"The provisions under Malaysian Anti-Corruption Commission Act 2009 and Anti-Money Laundering and Anti-Terrorism Financing Act 2001 allowing MACC to freeze bank accounts before any charge is made should be cautiously invoked," SOPPOA said.

El Nino to lift CPO prices

KUALA LUMPUR: Palm oil prices may rise at a feverish pace should an El Nino weather pattern spur drought across Southeast Asia, drying up palm oil output across Indonesia, Malaysia and southern Thailand.

On Monday, the Australian Bureau of Meteorology announced a substantial El Nino weather phenomenon for 2015. Japan weathermen said while the thresholds were not met until now, they expect a significant event this year.

Incidentally, the Bursa Malaysia derivatives market have started to 'heat up' with the third month benchmark crude palm oil (CPO) futures hitting a high of RM2,225 per tonne a couple of days ago. Yesterday, palm oil futures slid RM27 to close at RM2,198 per tonne.

In an interview with Business Times, Malaysian Estate Owners Association (MEOA) president Joseph Tek Choon Yee recalled there were many El Nino forecasts a year ago but somehow, it did not happen. It was like the boy who cried wolf.

In March 2014, palm oil prices reached a high of RM2,922 per tonne in anticipation of an El Nino phenomenon. 

As the threat dissipated, prices plunged to a low of RM1,943 per tonne in September before recovering to RM2,250 per tonne in December.

By mid-February 2015, Tek noted many MEOA members in Sabah began to experience bone-dry episodes at their estates.

"We recorded single or at best double digit millimetres of monthly rainfall. Coupled by last year’s dryness, lower rainfall and rain-days in many parts of Borneo, crop production is not going to be as strong," he said.

CIMB Investment Bank senior analyst Ivy Ng said lower rainfall and soil-moisture levels can hurt yields after a lag, with the effects of dry weather typically felt 10 to 12 months or 22 to 24 months later.

A moderate El Nino, combined with a strong execution of a biodiesel mandate in Indonesia, could benefit prices towards the end of 2015. In the near term, gains may be limited on seasonally high supply and reserves, she said in her notes to investors.

Explaining the impact of El Nino on plam oil trees, MEOA’s Tek, who read botany and plant breeding, said: “We will see an immediate delay in ripening of bunches and dangers of fire hazards in estates.

"A half year lag-effect will see some bunch failures and lower crop production. The second lag-effect of flower abortion will ensue a year later with even lower crop output," he said.

"And a final two-year lag effect will see drastic slash in crop harvests due to the palms sprouting more male flowers. Only female flowers can eventually form into bunches,” he added.

Asked if Malaysia is still able to harvest 20 million tonnes of oil this year, Tek said it depends on the severity of moisture stress.

He cautioned weather prospect is just one of the many factors determining price. Competing edible oils, crude mineral oil, inventory level and policies can also impact prices.

“As at end- April, Malaysia's CPO stock surpassed 2 million tonnes, following a stronger output set against weaker exports. However, there were probably delays in CPO exports in order to derive benefit from zero export tax starting next month," he said. 

"With Ramadan around the corner and Indonesia pushing ahead with its biodiesel programme, I want to believe, this time around, in the wake of an El Nino, there will be an upward push in prices.”

When pressed for a forecast, Tek replied, “Let’s hope it can trade up between RM2,300 and RM2,400 per tonne.”

Defamatory products confiscated

Photo credit to The Borneo Post.

KUCHING: Ministry of Domestic Trade, Cooperatives and Consumerism officers yesterday confiscated all floor cleaners with defamatory stickers ‘Buy oil palm free products to save orang utans’ on their labels from a supermarket chain here.

A team of three led by enforcement officer Mohd Fikri Lai Abdullah removed the product from the supermarket following clear evidence of defamatory products being displayed and sold at its shelves.

Two days ago, at a press conference, Sarawak Land Development Minister Tan Sri James Masing expressed deep disappointment over insidious tactics engaged by some foreign forces in attacking the nation’s oil palm industry's reputation in what was believed to be more of trade rivalry rather than genuine concern for environment and wildlife protection. 

“I do not expect supermarkets in Malaysia to be in cahoots with this kind of thing. I hope this supermarket chain operator will be more responsible. It is not wise to sell out the country’s interest for a quick profit,” Masing said. 

The supermarket chain operator did not immediately withdraw the products from the shelves. It only responded after the Ministry of Domestic Trade, Cooperatives and Consumerism enforcement officers stepped in. 

The Ministry of Domestic Trade, Cooperatives and Consumerism regulates issuance and revocation of hypermarket and supermarket licences. 

The supermarket chain operator was reminded that all products that spread lies about palm oil are to be removed immediately from the shelves and not to be displayed for sale. It was, once again, given a chance to comply with best practices.

“This product has just entered Sarawak, a week ago. This is one of the outlets among many spread across Sabah, Sarawak, Pulau Pinang, Johor, Kuala Lumpur and Selangor that is selling this product,” said Fikri.

According to a statement issued by the Ministry of Domestic Trade, Cooperatives and Consumerism, for now, no legal action would be taken against the supermarket operator concerned. 

Palm oil smear campaign hits Sarawak

This is written by my colleagues ADIB POVERA, GOH PEI PEI and SOPHIA IVY JO at Kuching Bureau.

KUCHING: A smear campaign, which is detrimental to the nation’s palm oil industry, has hit the state after creating a fuss in the peninsula some months ago.

Acting on a tip-off, the New Straits Times conducted checks at a local supermarket here yesterday and found a wooden floor cleaner, imported from Australia and labelled with a sticker which compelled customers to use the palm oil-free product.

The label states that customers can “save the orang utans by buying the palm oil-free cleaner.” The wood cleaner is being sold at RM15.89 for a bottle of 750ml.

It was learnt that the supermarket chain had sold the same products in the peninsula, which sparked an outrage among palm oil industry leaders in February. At that time, it was priced RM14.99 per bottle.

Palm Oil Refiners Association of Malaysia (Poram) chairman Wan Mohd Zain Wan Ismail was furious when asked to comment about the product being sold at the supermarket here.

“This is not the first time the supermarket is selling the product with the 'negative labelling' that defames the nation’s palm oil industry.

“When it happened the first time, we understood that some might be unaware of the fact that palm oil is a significant economic contributor to Malaysia that reaps US$20 billion in export per year.

“And now, the same supermarket chain is selling the same product for the second time. This is unacceptable," Zain said.

He urged the authorities to take action against the importer and retailers of the product before such smear campaigns spread more lies and incite mindless hatred towards the nation’s palm oil industry.

“We cannot and must not condone anyone telling and spreading lies about the oil palm, our national economic security crop. 

"Harsh punishment must be imposed on this recalcitrant culprit and action must be taken immediately,” he said.

The NST was told that members of the Sarawak Oil Palm Plantation Owners Association would meet to deliberate the case and announce their stand this Friday.

Sarawak Land Development Minister Tan Sri Dr James Jemut Masing hit out at the supermarket here, which has been found selling a product with misleading labels and stickers discrediting the nation’s palm oil industry.

Masing warned the supermarket chain to immediately remove the offending product from its shelves or face action.

“Withdraw the product or I will ask the enforcement authorities to confiscate every unit sold at your premises,” he said during a press conference at his house here yesterday.

Masing showed the media three units of the product, which was imported from Australia. “This should not happen, especially here. It is clear that this (the product) is not a campaign to save the orang utans, but coveted smear tactics by competitors.”

He identified the competitors as Australian rapeseed producers hiding behind the green camouflage of Australian Zoos supposedly lobbying to "rescue orang utans" from oil palm planters who are wrongly blamed as "cruel and greedy". 

In reality, these false allegations aimed at oil palm planters by unscrupulous quarters is downright ruthless and sinful.

"I do not expect supermarkets in Malaysia to be in cahoots with this kind of thing. This supermarket chain should have been more responsible. It is not wise for this supermarket chain to sell out Malaysia's interest for its own selfish greed," the minister said. 

It is wrong for the cleaning product manufacturer to associate orang utans’ habitats with oil palm plantations since the Sarawak government had already set up wildlife sanctuaries for conservation.

"In Sarawak, we have one million hectares of totally protected areas and out of this 22 per cent or 218,000ha are for orang utans. In fact, in Lanjak-Entimau Wildlife Sanctuary the population of orang utans has increased to 5,000 now," he said.

“This is an act of sabotage of our palm oil industry. Palm oil exports is critical to our people and contributes some US$2.5 billion annually for Sarawak,” he said.

Sarawak Domestic Trade, Cooperatives and Consumerism Department enforcement chief Abdul Hafidz Abdul Rahim said he will deploy his team to various outlets of that supermarket chain. “We will need to verify these claims before taking action.”

It was learnt that police could probe the supermarket chain operator under Section 501 and 502 of the Penal Code for the sale of printed or engraved matters known to be defamatory, if there was a report lodged over the sale of the products.

“For now, we have yet to receive any official complaint on the sale of the product with the negative labelling,” Hafidz said.

ISP: Weak CPO prices hurting 400,000 planters

KUALA LUMPUR: Low palm oil prices are causing some 400,000 oil palm planters severe financial burden as they pay up to RM30 billion a year in taxes to the federal and state governments of Sabah and Sarawak.

Yesterday, the third month benchmark palm oil futures on the Malaysian Derivatives Exchange closed RM10 lower at RM2,173 per tonne.

"In times of low pricing, oil palm planters' disposable income are slashed. This slows down replanting and value adding activities," said Incorporated Society of Planters (ISP) director Kamal Milatu. 

"Professional bodies like us also feel the trickle down impact because small planters don't have the budget to participate in our knowledge sharing programmes," he said, adding that when palm oil prices were high, ISP could garner more than 1,000 delegates to its conferences and hold more training sessions.

Kamal was speaking to reporters yesterday after giving a preview of the International Planters Conference 2015 which slated for June 8-10 at the Putra World Trade Centre in Kuala Lumpur. Also present were ISP chairman Daud Amatzin and ISP chief executive officer Azizan Abdullah.

Apart from crude palm oil (CPO) export duty and windfall tax, Azizan said oil palm planters pay the 25 per cent corporate tax, cess amounting to RM13 per tonne of CPO, as well as a 7.5 per cent and 5 per cent sales tax in Sabah and Sarawak, respectively.

Compared with other businesses that just pay 25 per cent of corporate tax, oil palm planters are seen the most heavily taxed in the country. 

“For every RM1 planters earn, around 40 sen goes to the federal and state governments in taxes. That works out to be RM25 billion to RM30 billion a year,” Azizan said.

Daud said ISP members are saddened by bizzare lies on the Internet concerning planters' professionalism.

"Claims such as forest the size of 300 football fields are being destroyed per hour and at least 1,500 orangutans were killed by planters are not true. These allegations are defamatory and impinge on planters' professionalism," he said.

Daud reiterated that oil palm planters in generating sustained dividends for investors, balance the needs of 'People, Planet and Profits' by adhering to Malaysia's environmental and labour laws.

Malaysia's oil palm plantations span across 5.3 million hectares.

On green activists' sweeping allegation that monoculture oil palms are unable to support wildlife diversity, making the estates sterile, Daud said: "That is not true. Shrubs, ferns, fungi and herbs, monkeys, birds, wild fowls, squirrels, rats and snakes flourish in oil palm plantations."

Plants, mammals, insects, reptiles and birds have adapted to the oil palm ecosystem. Oil palms generate oxygen which the developed part of the country breathes, fulfilling many of the rainforest functions, he said.

Happy Wesak

KUALA LUMPUR: Prime Minister Datuk Seri Najib Razak in his Wesak message today said buddhism advocates harmony and selflessness.

In his Wesak message, which was posted on his Facebook page, Najib said, "Buddhism's essential teachings are in line with our philosophy of moderation which we strive to promote and practice in our daily lives in Malaysia."

For Malaysia, he added, unity in diversity must continue to be the nation's most treasured asset.

Wesak Day has always been a time of charity for Buddhist devotees - regardless how big or small their take-home pay is.

In Malaysia, Wesak is an annual national holiday since 1962.

At Chetawan Temple in Petaling Jaya, throngs of devotees come in through the high gates to donate money and seek enlightenment from Buddha's teachings.

Some drive up in big and expensive cars while others come in motorcycles. Mostly, just walk in.

In the midst of pre-recorded sanskrit chantings (suttas) of 'the middle path' blaring out of loudspeakers, devotees silently give thanks and pray for peace in the presence of orange-robed monks.

They light up oil lamps (fuelled by palm cooking oil) as a symbolic gesture of seeking enlightenment to overcome the darkness of ignorance.

PEMANDU drives plantation value adding

KUALA LUMPUR: The palm oil and rubber sectors met the bulk of their 2014 targets despite falling commodity prices, the Prime Minister Performance and Delivery Unit's (PEMANDU) Economic Transformation Report said.

In a sustained move to control supply and improve productivity, the government continues to lead replanting schemes. From 2011 to 2014, small farmers and independent smallholders replanted and tap into new plantings amounting to 79,737 hectares.

To date, 30 cooperatives have been established for smallholders to get bulk discounts in buying fertiliser and receive better selling prices for their fruits. Agro Bank Bhd is extending overdraft facilities to these cooperatives to help fund their working capital.

The government has set a national fresh fruit bunches (FFB) yield target of 26.2 tonnes per hectare by 2020.

As the adoption of motorised cutter CANTAS™ faced hurdles in gaining market acceptance, the government introduced an international competition on Oil Palm Mechanisation to source for new, bold ideas in loose fruit collection, harvesting, crop care and FFB evacuation.

There are plans to compress natural gas from the biogas plants to substitute petroleum natural gas. 

Public buses and taxis will soon be able to leverage on this renewable fuel. A pilot gas compression plant in Sungai Tengi, Selangor is slated to be commissioned at the end of this year.

As at December 2014, PEMANDU noted RM934.61 million investments had been committed for high value palm-based oleochemicals, food and nutraceuticals.

In Sabah, Genting Plantations and US-based specialty chemicals company Elevance Renewable Sciences Inc are putting up a 240,000-tonne metathesis bio-refinery to make olefins and other specialty chemicals.

Elevance’s low-pressure, low-temperature process uses Nobel Prize-winning innovations in metathesis catalysis that consume significantly less energy and reduce greenhouse gas emissions by 50 per cent compared to petrochemical technologies. 

A highly efficient, selective catalyst will be used to break down natural oils and recombine fragments, resulting in lower source pollution, production costs and capital expenditures compared to petrochemical refineries.

All in, Genting Plantations is pumping some RM2 billion investment in its ambitious downstreaming channels with other seasoned partners like Musim Mas and Hap Seng Consolidated Bhd in Lahad Datu.

In Johor, Sime Darby Plantation and a US-based company Verdezyne Inc is investing in a specialty chemical plant to make dodecanedioic acid (DDDA). This green chemical is used in commercial fishing nets, lubricants and moulding resins.

Eight plantation companies in Sabah — including Teck Guan Group, Bell Group, Genting Plantations, Kelas Wira Sdn Bhd and Golden Elate Sdn Bhd — which collectively generate some 400,000 tonnes of biomass, are compressing them into flammable pellets for export.

Malaysian Palm Oil Board extended RM8.06 million to Wayne State University to test the efficiency of palm oil vitamin E in treating patients with end-stage renal diseases. A futher RM3.4 million went to Ohio State University to verify whether palm oil vitamin E can slow progression of end-stage liver disease.

In Lahad Datu, FGV Lipid Venture Sdn Bhd is investing RM430.51 million to churn out phytonutrients for the pharmaceutical industry by end-2016. Over at Bintulu, Sarawak Oil Palm Bhd's RM80 million vitamin E plant has started commercial production.

The rubber sector made some achievement with government agencies Rubber Industry Smallholders Development Authority (RISDA), Sabah Rubber Industry Board and Department of Agriculture. RISDA planting 39,864 hectares in 2014. New plantings reached 11,765 hectares in the eastern states of Sabah and Sarawak.

Last year, Malaysia exported RM12.03 billion worth of rubber products, the bulk of it are medical gloves and condoms to more than 170 countries. 

In diversifying rubber earnings, the government is spearheading partnerships to produce epoxidised natural rubber (Ekoprena) and deproteinised natural rubber that can be used in green tyres and high performance engineering products.

This year, MRB is initiating a trial project on Prasarana Bhd’s Rapid Buses in the Klang Valley to use Ekoprena tyres. The road trial is slated to commence in the second half of the year.

Tocotrienols are friendly to your liver

You may not think much about your liver as you go through your daily routine, but you need it to be healthy to detoxify your body. Previous research suggests that palm oil-derived tocotrienols are beneficial to the liver. Now, there are more encouraging development.

Many common prescription medications to relief pain, such as acetaminophen, can be hard on your liver. Researchers point out that drug-induced liver injury accounts for more than half of all cases of acute liver failure in the U.S. 

A new study, published in Redox Biology Journal 2015, showed consumption of vitamin E tocotrienols may help protect the liver from drug-induced injury. 

Researchers found that alpha-tocotrienol was the most potent among the different types of vitamin E in terms of protecting liver cells from drug-induced injury. 

It also supported the regeneration of the remaining liver cells.

And the good news for oil palm planters is .... palm oil is nature’s richest source of vitamin E tocotrienols.

Despite this discovery, scientists highlighted both tocopherols and tocotrienols are healthful. They cited studies indicating protective roles of each vitamin E form for different health conditions. 

Therefore, one must not focus only on a specific vitamin E form (be it tocopherol or tocotrienol) and forgo the others.

Those studies included:

For neuroprotection: Alpha-tocotrienol is the most potent for potentially reducing stroke injuries. Further, European population studies suggest that people with higher levels of gamma-tocopherol, beta-tocotrienol and total tocotrienols have a significantly lower risk of cognitive impairment.

For oral bioavailability: Alpha-tocotrienol is the most easily absorbed by our bodies, followed by gamma-tocotrienol.

For heart health: Gamma-tocotrienol and delta-tocotrienol have been found to be equally effective at lowering cholesterol. Alpha-tocopherol has been shown to have no effect on cholesterol levels.

For liver support: A combination of tocopherols and tocotrienols has been shown to have protective effects against nonalcoholic steatohepatitis (NASH).

Stimulus for palm oil price

KUALA LUMPUR: Sime Darby Bhd, the world's biggest listed palm oil producer, expects prices to trend within RM2,350-RM2,600 per tonne this year supported by Malaysia and Indonesia's biodiesel mandates.

"Indonesia and Malaysia are forecast to use three million tonnes and 660,000 tonnes of CPO for biodiesel blending, respectively," said Sime Darby executive vice-president of group strategy and business development Alan Hamzah Sendut told reporters on the sidelines of Invest Malaysia 2015 here yesterday.

The viability of biodiesel blending without subsidies is helped by world crude oil prices rebounding from a 6-year low for the past month. Yesterday, Brent, the global benchmark for crude oil traded at US$65 per barrel on the ICE Futures Europe Exchange. 

Earlier this week, Vitol Group, the world's biggest independent oil trader reportedly said crude prices will not fall below US$50 a barrel for sustained periods. 

Rising petroleum and gas prices for the past month is fuelled by slowdown in drilling in the US and improved global fuel demand. As Asian countries process more palm oil into biofuel and blend it with fossil fuel, palm oil prices start to increasingly move in tandem with Brent oil prices.

Yesterday, the third month benchmark contract on the Bursa Malaysia Derivatives Exchange slid RM2 to close at RM2,158 per tonne. Since the start of the year, crude palm oil (CPO) prices have averaged at RM2,203 per tonne. 

Last month Sime Darby completed the purchase of New Britain Palm Oil Ltd. This adds 79,884 ha of fully planted area to Sime Darby’s existing 525,290 ha of global oil palm landscape. 

Over the medium term, NBPOL’s favourable fresh fruit bunch yield of 21.7 tonnes a hectare and oil extraction rate of 22.2 per cent will enhance the group’s overall productivity level. 

Should palm oil prices climb higher, it will bode well on Sime Darby's earnings because the plantation business contribute almost half of the group's earnings.

In line with the five-year strategy blueprint for financial year 2012 until 2016, Alan said Sime Darby will continue to expand and strengthen its position in diversified business activities such as plantation, industrial, motor, property and energy and utilities.

Since the departure of SP Setia Bhd's former president and chief executive officer Tan Sri Liew Kee Sin about a year ago, rumours of Sime Darby's property arm possibly merging with SP Setia has been rife. 

It is seen to be a logical step to fill up the huge vacuum left by Liew and his team of loyal liutenants Datuk Teow Leong Seng and Datuk Voon Tin Yow.

Commenting on this, Alan said: "It's speculative. I don't know where this rumour come from. It's best that you ask PNB."

Permodalan Nasional Bhd (PNB) is the major shareholder of both SP Setia and Sime Darby.

Jakarta's new FDI-driven economic agenda

This is written by the New Straits Times group managing editor Datuk Abdul Jalil Hamid.

JAKARTA: It used to take up to 923 days for investors to secure permits to develop power plants in Indonesia, an onerous process that could deter potential foreigners from investing in the populous nation.

But that is slowly changing under the presidency of Joko Widodo. Known popularly as Jokowi, the new Indonesian leader has proposed sweeping reforms to make the country more investor-friendly and less bureaucratic.

Under him, Jakarta has set up one-stop integrated service centres to expedite the approvals of a multitude of permits needed to build infrastructure projects.

Earlier this year, it cut the approval time to build ports from 923 days to just 256 days. The country’s Investment Coordinating Board, or Badan Koordinasi Penanaman Modal (BKPM), is proposing to further cut red tape and the number of building permits to expedite seaport development.

Accelerating infrastructure development and economic growth have been the hallmarks of Jokowi’s presidency and his Working Cabinet (Kabinet Kerja).

Jokowi, who took office just six months ago, had won praise for naming experienced technocrats, such as the Coordinating Minister for Economics Sofyan Djalil and Finance Minister Bambang Brodjonegoro, to key economic posts.

Foreign direct investments (FDIs) would be key to Jokowi’s economic agenda. 

This was the message that he, Vice-President Jusuf Kalla and Sofyan Djalil amplified when they met with a high-powered Malaysian business delegation last week.

The Kuala Lumpur Business Club (KLBC) delegates, eager to hear first-hand from the Indonesian leaders, were very impressed with what they heard or saw.

Sofyan, who spoke for 45 minutes at a working dinner with the 36-strong KLBC delegation on Friday, outlined his government’s economic agenda and extended a welcoming hand to the Malaysian investors to invest in his country.

“The engagement with the new Indonesian leadership is very important and timely. This has helped to cement the already close business and economic ties between Malaysia and Indonesia,” KLBC Advisory Council chairman Datuk Rohana Mahmood said.

KLBC President Tengku Datuk Zafrul Tengku Aziz said both countries should look at areas where it is easier to achieve - the low hanging fruits – in beefing up bilateral economic relations.

“These include streamlining and harmonising rules and regulations to the extent possible when it comes to capital markets,” he said. “This is important especially as Indonesia embarks on increasing spending on infrastructure.”

They should also look at tapping the right talent pool. “Both countries must look at how companies are not too restricted in getting the best talent for the ventures in the respective countries,” the CIMB group chief executive officer said.

“It has to be win-win formula. Both sides have to look at tomorrow and manage the noises of today. Reciprocity is important. Maybe they should even consider shareholding limit that is favourable for Malaysian and Indonesian companies and for Asean firms too,” he said.

The Sultan of Perak Sultan Nazrin Muizzudin Shah, who is the Royal Patron of KLBC, led the Malaysian delegation to call on Jokowi and Kalla at the presidential Istana Merdeka complex here.

Privately, Malaysian business leaders wished for some certainty in Indonesian investment policy. 

They noted that some Malaysian companies, which have invested heavily in Indonesia, had lost millions of dollars due to rules being changed midway.

The Malaysians appeared at home when they met Kalla, who cracked some jokes. 

Responding to a question, he said in jest that he was turning into a “professional vice-president”, having served two presidents. But he was quick to add: “A vice is a vice. The most important thing is for the country.”

On a serious note, he said Indonesia needed to create jobs, spur investments and develop infrastructure to sustain economic growth, seen at 5.7 per cent this year.

He also spoke of the emerging middle class in Indonesia. “There are 90 shopping malls in Jakarta alone.”

Palm oil exports to China in renmibi

PUTRAJAYA: Palm oil exports to China is set to enjoy more cost savings, following Bank Negara Malaysia's appointment of Bank of China in Kuala Lumpur to be the regional renminbi clearing house, said Malaysian Palm Oil Council (MPOC).

"We laud this expedient move of both governments of Malaysia and China in the setting up of the first renminbi clearing house among emerging nations in Kuala Lumpur. It will help reduce currency risk and hedging cost in palm oil trade," said MPOC chairman Datuk Seri Lee Yeow Chor.

For the past decade, China is Malaysia's biggest palm oil client buying nearly four million tonnes of this kitchen staple to feed its burgeoning population of 1.36 billion.

When palm oil is sold to China, it is quoted in US dollar. Similarly when Malaysia imports goods from China, the cargo is quoted in US dollar, too. 

With the launch of this renminbi clearing house in Kuala Lumpur, bilateral trades between Malaysia and China and regional transaction between Asean and China can increasingly be quoted in the Chinese currency. This move contributes to the internationalisation of the renminbi currency.

In 'clearing' renmibi transactions the Bank of China in Kuala Lumpur will be the intermediary between the buyer and seller to smooth banking and trading transactions, Lee told Business Times on the sidelines of the launch of Renminbi Clearing Bank in Malaysia by Prime Minister Datuk Seri Najib Razak here on Tuesday.

Currently, Bank of China in Kuala Lumpur already has almost 70 per cent of renmibi clearing because it is linked with 26 financial institutions here. This is further supported by Bank of China being an official member clearing bank of Malaysia Derivatives Exchange (MDEX).

By having a clearing house for renmibi in Kuala Lumpur, Lee explained that palm oil exporters using bank facilities in Malaysia can have direct access to onshore renmibi markets in China without having to route their transactions through a mainland lender.

 "This renminbi clearing house in Kuala Lumpur will certainly help in smoothening trade flow with China as we need not convert currencies that many times. About 20 per cent of Malaysia's palm oil shipment goes to China. There will be some cost savings," Lee said.

Malaysia and China renew currency swap deal

KUALA LUMPUR: Bank Negara Malaysia and the People’s Bank of China signed an agreement today to renew the currency swap arrangement for another three years. 

The currency swap size was maintained at RM90 billion (or RMB180 billion). This agreement was signed by Bank Negara Malaysia head Tan Sri Zeti Akhtar Aziz and her Chinese counterpart Zhou Xiaochuan in the United States.

The renewed bilateral currency swap arrangement reinforces the ongoing commitment by both central banks in promoting the use of local currencies for payment settlement, Bank Negara Malaysia said in a statement today. 

The currency swap arrangement will further reinforce the economic and financial linkages, as well as promote bilateral trade and investment flows between Malaysia and China, it said. 

The original arrangement was established in 2009 and was last renewed in 2012. --BERNAMA

Malaysia launches Renminbi Clearing Bank in KL

This is written by Ooi Tee Ching and Minderjeet Kaur.

PUTRAJAYA: Malaysia is set to promote direct trade settlement for cross border transactions in Asean with Bank Negara Malaysia appointing Bank of China in Kuala Lumpur as an offshore renminbi clearing house, said Prime Minister Datuk Seri Najib Razak.

The move, which makes cross border transactions with China more cost efficient, is set to boost the internationalisation of the renmibi. Currently, the world's most popular currency is the US dollar while the renmibi comes in a second. 

Malaysia is the second ASEAN nation to host a renminbi clearing house, after Singapore. Bank of China has been appointed the clearing house for renminbi trades in Malaysia. 

Apart from Singapore, other financial hubs hosting Renmibi Clearing Banks are Frankfurt, Paris, Luxembourg, London, Seoul and Sydney. 

Malaysia, which is China's biggest trading partner in Asean, expects the Renminbi Clearing Bank to facilitate more trades in renminbi and boost Kuala Lumpur's status as Asean's financial hub. 

Najib said Bank Negara Malaysia had appointed Bank of China in Kuala Lumpur as the renminbi clearing house here. The renminbi is now the first foreign currency to be included in the Malaysian clearing system.

In 'clearing' renmibi transactions the Bank of China in Kuala Lumpur will be the intermediary between the buyer and seller to smooth banking and trading transactions. 

By having a clearing house for renmibi in Kuala Lumpur, banks in Malaysia will have direct access to onshore renmibi markets in China without having to route their transactions through a mainland lender.

Currently, Bank of China in Kuala Lumpur already has almost 70 per cent of renmibi clearing because it is linked with 26 financial institutions here. It has also attracted financial institutions from Vietnam, Singapore and Brunei to set up renmibi clearing accounts.

This is further supported by Bank of China being an official member clearing bank of Malaysia Derivatives Exchange (MDEX).

Najib said China is Malaysia's largest trade partner, while Malaysia is China's biggest trade partner within Asean.

The bilateral trade had exceeded US$100 billion last year, he said. "We have set a goal of reaching US$160 billion in bilateral trade by 2017," Najib said at the launch of Renmibi Clearing Bank in Malaysia here yesterday.

Also present were China ambassador to Malaysia Dr Huang Hui Kang, Prime Minister Special Envoy to China Tan Sri Ong Ka Ting, Bank of China Ltd president Chen Si Qing and chief executive officer Wang Hong Wei. Bank Negara was represented by deputy governor Datuk Nor Shamsiah Mohd Yunus.

Malaysian ministers present at the launch included Minister of International Trade & Industry Datuk Seri Mustapa Mohamad and Transport Minister Datuk Seri Liow Tiong Lai.

Najib said the renmibi foreign exchange now stands at RMB3.5 billion a day. "If it enters the International Monetary Fund’s special drawing rights scheme this year, it will officially become one of the world's major reserve currencies," he added. 

In 2014, Malaysia and China celebrated 40 years of diplomatic ties. This year, Najib said Chinese visitors to Malaysia would be exempted from visa fees.

"We are also looking at setting up new direct fights such as from Malacca to Guangdong. We have discussed conducting the first combined military exercise between our two countries as well as building railways, seaports and industrial parks together," he said.

Already, both governments have set up the China-Malaysia Qinzhou Industrial Park and the Malaysia-China Kuantan Industrial Park.  

"Recently, I was having dinner with President Xi Jin Ping and he told me the relationship between Malaysia and China has never been better, now being the highest level in history," he said.

April is Autism Awareness month

I was having lunch with a friend when he revealed his teenage son is autistic and he had plans to open a bakery with his son, a few years from now. 

I didn't know much about autism and my initial reaction was to ask him if he sends his son to special school.

It was then I realised I asked an insensitive question because journalists' salaries are not much to shout about. And enrolling children at schools catering for special needs is very expensive.

My friend did not fault my ignorance of his financial difficulties. I felt bad but at the same time I wanted to know more about autism. 

I started to Google this topic and came across this inspiring news feature published in the USA.

With encouraging signs of community accepting autistic people into the workforce, I hope my friend will, one day, be able to realise his enterprising bakery plans for his son's future here. 

I also hope my friend will choose to use palm oil, shortenings and specialty fats in his baking of breads, cakes and cookies with his son.

The news feature below was written by Colleen Mastony for Chicago Tribune. It was published on 29 December 2014.


Drew McDonough walks quickly past the 50-pound bags of brown sugar and the huge tubs of chocolate frosting. He takes a second to clock in at a computer, dresses in his bakery clothes (hairnet, work shirt, apron), and then speed-walks toward the stainless steel table where, five days a week, he packages cups of sticky toffee pudding.

When his boss inquires about his weekend, McDonough responds with brisk one-word answers and barely makes eye contact.

But that is fine with Jean Kroll, owner of the Sugar & Spice Extraordinary Sweet Treats commercial bakery in Evanston, who simply points her new hire toward the racks of golden brown cakes.

"We have 800," she says. "Can you start by dating the sleeves and then getting some boxes?"

For the rest of the four-hour shift on this cold December afternoon, the quiet, dark-haired 27-year-old moves so quickly he seems set on fast-forward. He boxes cakes, stacks them on a hand cart, labels them for shipment and, when he's done, carefully sweeps the floor.

McDonough has autism. The fact that he also has a job at the bakery is something that he says is probably a miracle. "I'm working 20 hours a week, which my parents are very happy about," he said. "It feels as happy as can be."

This past summer, McDonough and two other men with autism arrived at the bakery as part of a six-week unpaid internship.

But there was one important twist: As the men learned to measure sugar and package cakes, a graduate student from Northwestern University's Kellogg School of Management carefully tracked their productivity. The question is: Did it make good business sense to hire someone with a disability?

For Kroll, a 50-year-old entrepreneur who had plowed her life savings into the bakery, that was a critical question. "Small businesses hire based on economics," Kroll said. "Most of us are not big enough to hire based on a philanthropic approach."

The story of how — at the end of the internship — she offered paid positions to McDonough and two other men with autism is one of luck and goodwill. But it is also, according to Kroll, a story of a clear-eyed business decision.

"People always say, 'That's such a nice thing to do,'" said Kroll, referring to her decision to hire the men. "I say, 'Yes it is nice. But it's also a smart thing to do.'"

Two years ago, Kroll moved her commercial bakery into a 10,000-square-foot facility tucked in an industrial strip off Dempster Avenue. A few doors down was a nonprofit called Have Dreams, which provides services to people with autism.

Shortly after the move, Kroll's landlord mentioned that her new neighbors — the men and women with autism — were always looking for job training. "Maybe they could help you build boxes," the landlord suggested.

Soon after, Kroll invited a group of five men with autism to help her construct and label boxes for her chocolate chip, oatmeal raisin and signature shortbread cookies. She had no experience with people with disabilities. But when a young man put together a box and, with a huge grin, declared: "Look what I did!" Kroll was charmed.

For a year and a half, the men came every week. There was a tall, blond-haired man named Zach, who loved to talk and ask questions, and Michael, who was playful and cracked jokes, and Jimmy, who was so focused that he could label boxes as fast as any worker.

"They came every week and were smiling and enthusiastic," Kroll recalled. "My staff really warmed to them, too."

One day, an administrator at Have Dreams asked if Kroll might have other jobs for the men. Kroll's answer was firm and immediate. "No," she said. After she went home that night, she couldn't stop thinking about what she had said. "I was so angry with myself," she recalled. "They were such a great group of young people."

Around that time, Kroll had begun negotiations with a client whose line of baked goods would require labor-intensive packaging. The work could have been automated, but Kroll didn't have the US$80,000 she estimated it would cost to buy the equipment. She thought of the men from Have Dreams and picked up the phone. "I think I might have a job for the guys," she said.

Over the following weeks, Kroll and a team from Have Dreams came up with a plan to establish a job training program at the bakery and eventually landed a US$125,000 grant from the Chicago-based Coleman Foundation. The money came with a unique prerequisite: It required Have Dreams to hire a Master of Business Administration student to collect data on the men's productivity.

"What we saw was the opportunity to build a business case," said Clark McCain, senior program officer at the Coleman Foundation. "That's a language that other business owners will be able to understand." If the bakery program succeeded, the data could be used to persuade other business to hire people with disabilities.

The six-week training program targeted high-functioning people with autism who had completed high school or college but who had trouble keeping a job. The goal was to teach not only job skills but also softer skills such as initiative, independence and communication that are often the key to employment.

On June 24, three men arrived at the bakery, where the air is heavy with the scent of baking chocolate, and where racks of ginger cakes spin in industrial-sized convection ovens.

One man was so nervous his hands shook. A second arrived late. The third, when the work began, moved as slow as molasses. "I remember thinking, 'Oh my God, now what?'" Kroll recalled.

In those first weeks, the men's presence was undeniably disruptive. With two job coaches, the Northwestern student and Kroll in tow, they created what Kroll recalled as a "small circle of chaos" that moved around the bakery.

The 10 other employees were, at first, confused about the men's role. They wanted to know: Why were the men there? And what, exactly, was autism? Kroll reassured her staff as best she could and set about training her new interns.

The first week, the men worked alone, learning how to measure sugar and package cakes. By the third week, they attempted to work as a team — a challenge for many with autism. Slowly, the men grew more comfortable. The job coaches stepped away and allowed each man to take a turn as team leader.

"We set the bar low for some of the productivity tests, and we were getting low results," Kroll recalled. "So I said, 'I am going to raise the bar really high.' And they met that goal. So I raised the bar again, and they met it again."

One afternoon, Kroll turned to her production manager and said: "Did you notice the guys processed 500 cakes today?" The manager — who had been slow to buy in to the effort — gave a small smile and a nod of approval.

By the end of the six weeks, the metrics that tracked the men's productivity for portioning sugar, labeling boxes and dating the cakes showed that they could work about 80 percent as quickly as a typical bakery worker.

For Kroll, that was a break-even point that meant it would make sense to hire them for an entry-level, minimum-wage position and allow more experienced, higher-paid workers to focus on more complex tasks.

When an official from the Coleman Foundation came for a visit in August, Drew McDonough — whose hands used to shake — proudly gave a tour of the bakery. Then McDonough joined the other men on a small assembly line.

"They worked together without a coach and did a wonderful job," recalled Kroll. "Everyone looked at each other, and we were all thinking ... ok, this works, this makes sense."

The bakery was about to enter the busy holiday baking season. "I started thinking, 'I'm going to be really busy going into the fall. I'm going to need these guys,'" Kroll said.

A few days later, she offered each of the men a Christmas-season position that would pay them US$8.25 an hour. Now, Drew McDonough spends his days amid the industrial-size kettles that gently simmer with 40-gallon batches of buttery toffee sauce.

Having a job, he said, "feels fabulous. Not just for me but for my parents as well. They were sometimes frustrated with what I was going through, with the job hunt." After graduating from Loras College in Dubuque, Iowa, with a degree in media studies in 2011, McDonough searched for a job for two years before he learned about Have Dreams.

He and the other men have done so well at the bakery that Kroll agreed to have a class of three more interns start in January 2015. McDonough will continue to work 20 hours a week and also serve as a mentor. Training the newest workers is something that McDonough admits "may be a bit of a challenge."

But that's OK with Kroll. "I'm glad he's nervous," she said. "We want to push them past their comfort zone, because we know when they're in another employment setting they're going to be pushed. We want to help them work through those stresses right now, and then be able to step up and do the job."

Kroll can't staff her bakery entirely with people with autism. And so, administrators at Have Dreams are searching for other businesses where graduates of the bakery program can work.

"We need to help business owners understand, like Jean does, that there is an economic benefit to employing this population. This is not just a feel-good story," said McCain, of the Coleman Foundation.

"Think of how many manufactures there are in Chicago who have some discreet, repetitive tasks that need to be done and that might be well-suited to the folks at Have Dreams."

As McDonough's shift comes to an end on that recent December day, he carefully affixes a toffee-colored label to each of the 67 boxes of cakes that he packaged for shipment. He grabs a broom and sweeps the bits of shortbread and the sprinkling of cocoa powder that had fallen here and there on the bakery floor.

When the clock hands point toward 4 o'clock — the end of his shift — he approaches Kroll. "This area is swept," he says. "Very good. Want to say goodbye to the other guys?" she replies. (Kroll is still trying to help him with social skills.)

McDonough walks a fast loop around the bakery with his hand up in a perfunctory wave. "See you," he says flatly to each person he passes. Then he clocks out at the computer, exchanges his apron for his jacket and strides quickly to the door. As he rushes past Kroll, he barely looks up. "Bye," he says.

"Thank you, Drew!" Kroll calls. Afterward, Kroll stands in the bakery, an apron around her waist and a pile of orders in her hand. "It was a great day. A really nice, regular day," she says.

McDonough had worked independently, taken ownership of his task and cleaned up afterward. "He has grown so much." What's more, she says, he has carried his weight and helped her business grow. As he develops more skills, she says, he'll earn wage increases, "just like everyone else."

"This is a good business decision," she says. "It just so happens that it's also a really good social decision and a good moral decision too."