Bursa Malaysia Bull Run 2014



The New Straits Times is covering this event because parent Media Prima Group is the new partner of Bursa Malaysia's charity marathon. It takes place today in the heart of Kuala Lumpur.

Media Prima Television Network chief executive officer Ahmad Izham Omar and his chief operating officer Seelan Paul are there in their running shoes.

Among the more "sporting" representatives from publicly-listed plantation companies at this charity run are Felda Global Ventures Holding Bhd and Sime Darby Bhd.

Bursa Bull Charge tracks a 5km run following Kuala Lumpur’s Capital Market Trail, a route throughout the Central Business District that passes the headquarters of many of Malaysia’s capital market players in our community, a reminder of the sustainability of the marketplace.

The run categories include a 1.5km CEOs Run, a 5.0km Individual Run and a Corporate Relay Run.

Among the 1,300-odd enthusiastic participants from the capital market community include government agencies, regulators, brokers, listed companies, traders, remisiers, trading partners and the media. There's a special category of relay run among young executives.

Key sponsors are Maybank Investment Bank, SapuraKencana Petroleum Bhd, YTL Corp Bhd, IJM Corp Bhd, Berjaya Corp Bhd, Protasco Bhd and PESTECH Sdn Bhd.

At one point, Bursa Malaysia chief executive officer Datuk Tajuddin Atan's "running mate" is CIMB Group Holdings Bhd acting chief executive officer Tengku Datuk Zafrul Tengku Abdul Aziz.

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Tajudddin said this is part of the stock exchange’s initiatives towards building financial literacy, especially among young executives.

“This inaugural Bursa Bull Charge is a physical demonstration of marketplace inclusiveness that we have been working hard at building up and hopefully, reach out to the wider community. This is one way for Bursa Malaysia to raise awareness and remind us of our responsibility to give back and invest in local communities,” he said.

"We recognise the role of young executives as future leaders and entrepreneurs. By involving them in the Bursa Bull Charge to run alongside CEOs and captains of the industry, we hope young executives would feel inspired of the possibilities and opportunities available in the marketplace, be it a career or in building wealth”, said Tajuddin.

All proceeds raised from the Bursa Bull Charge will be channeled to charity while Bursa Malaysia and the sponsor partners will absorb all costs incurred in organising the run.

CBIP: Good order flow for Modipalm mills

Subang Jaya: CB INDUSTRIAL Product Holding Bhd (CBIP), which holds the patent for constructing Modipalm mills, said its current order book of some RM500 million will keep it busy for another 18 months.

CBIP managing director Lim Chai Beng said while low palm oil prices were slowing oil palm estate owners’ investments, orders were still coming in for mill upgrades.

“We’re getting orders, although there may be slight delays here and there. Out of the RM500 million orders to put up new mills and upgrade old ones, 70 per cent are from outside Malaysia.

“Old mills in Malaysia need to be upgraded and our Modipalm technology has been proven to minimise oil loss. This helps contribute to better oil extraction rates at the mills,” Lim said after the company’s extraordinary general meeting held here yesterday. 

CBIP shareholders approved the company’s plan to issue 1-for-1 bonus shares and free warrants.

Lim said oil palm planters have everything to gain if they upgraded their conventional mills to an automated Modipalm. Its continuous steriliser system is compact, he said, as it took up less space, fuel and labour; produced more and higher quality oil; and therefore, the overall impact is kinder to the environment.

At a Modipalm mill, there is no need for tractors and hydraulic skid-steer loaders or wire-rope winches to move the fruit-cages around. There is also no need for monorail hoists to lift the cages to the threshing machine. 

This means less machinery to maintain and, in two shifts, the Modipalm mill needs only 30 workers, or half the staff strength to operate a conventional 60-tonne mill processing 300,000 tonnes of fresh fruit bunches in a year.

“Fewer workers also means less houses to be built on the plantation. So, you see, with tremendous improvement in safety and minimal oil wastage it is worthwhile to upgrade to a Modipalm mill,” Lim said.

On CBIP’s other sources of income, executive director Mak Chee Meng said the company’s oil palm landbank in Indonesia totalled 65,000ha, of which about 10 per cent is planted up. 

In Malaysia, CBIP has a joint venture with Tradewinds Group, with its portion of investment amounting to 7,500ha.

“We’re now working hard to top up the landbank in Indonesia. We may be slow (in land acquisition) but we are sure in our investments because we go through all the legal compliance step by step,” Mak said.

Smallholders urged to apply for replanting grants

KUALA LUMPUR: Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas urged smallholders to apply for replanting grants to replace ageing oil palms with higher yielding seedlings.

Last Friday, Prime Minister Datuk Seri Najib Razak, in his 2015 Budget speech, announced that RM41 million had been allocated for smallholders to embark on new plantings and replanting of their unproductive rubber and oil palm trees.

Smallholders are those who own 40ha or less. 

When asked on the portion for the replanting of oil palms, Uggah said the allocation worked out to RM7,000 per hectare for oil palm land in Peninsular Malaysia and RM9,000 a hectare in Sabah and Sarawak. 

This subsidy is meant to raise the annual national oil yield, which has been stagnating at below four tonnes a hectare over the last two decades.

It is hoped that by 2020, the annual fresh fruit bunch yield would improve to 26.2 tonnes a hectare from 21 tonnes currently. 

In response, Malaysian Palm Oil Association chairman Roy Lim Kiam Chye urged the government to extend and top up replanting grants for all oil palm planters and not just the smallholders.

“Incentives to accelerate replanting at current low prices will ensure future competitiveness of the industry. The replanting grant is good for the smallholders but what about estate owners? They need to replant, too,” he added.

Last Friday, the government also took a pre-emptive measure to extend the crude palm oil (CPO) export duty exemption until December.

“Although it is a good gesture from the government, it is common knowledge that at current price levels, CPO export duty is already zero. With the current global edible oils supply situation, prices are not likely to rise significantly to trigger the duty factor,” he said. 

Lim added that the exemption had levelled the playing field for Peninsular Malaysia exporters against those in Sabah and Sarawak. “If we look deeper, zero export duty has somewhat dented the advantage of producers in Sabah and Sarawak as they no longer enjoy the 30 per cent discount on duty.”

Maybank Investment Bank senior analyst Ong Chee Ting concurred with MPOA, saying Malaysia’s palm oil exports can be freely exported during these high production months until the end of the year. “It aims to quickly flush out incoming supplies to help a more sustained CPO price recovery next year.”

On price forecast, Ong said CPO had lost its price competitiveness due to the recent slump in crude oil price and narrowed price discount to competing soyabean oil.

CPO price, therefore, needed to trade lower at RM2,000 per tonne to stimulate demand and flush out incoming supplies during these peak production months, Ong said.

“We think CPO prices will be under near-term price pressure to stimulate demand. We expect CPO prices to continue trading sideways at between RM1,900 and RM2,200 per tonne until early December. Hopefully, it closes the year above RM2,400 per tonne,” he added.

‘FGV ending pursuit of NBPOL’

This is written by my colleague Zaidi Isham Ismail.

KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV) will not pursue the acquisition of New Britain Palm Oil Ltd (NBPOL) after Sime Darby Bhd’s fresh RM5.63 billion offer for the planter.


A reliable source said FGV will not counter offer as it will be too expensive. “No, they will not continue to bid for NBPOL as it’s too pricey,” the source told Business Times. 

After Sime Darby pulled out of the deal, FGV took the opportunity to bid for NBPOL but now that Sime Darby has made an about-turn, FGV will not push for it any more.

Sime Darby launched a general offer to buy all shares in NBPOL for £7.15 (or RM37.52) each last Thursday, less than two weeks after it had turned down the chance to buy Kulim (Malaysia) Bhd’s 48.97 per cent stake in the London-listed NBPOL.

Sime Darby’s offer is a 30 per cent premium over Kulim’s previous offer of £5.50 a share to increase its stake in NBPOL.

“This acquisition is conditional upon Sime Darby obtaining 51 per cent voting rights in NBPOL,” said Sime Darby president and group chief executive Tan Sri Bakke Salleh last week.

NBPOL owns about 80,000ha of oil palm plantations, more than 7,700ha of sugarcane land and a further 9,300ha of grazing pasture in Papua New Guinea. It also owns 12 mills and two refineries — one in Port Moresby and the other in Liverpool, the United Kingdom.

Pricey offer for NBPOL justified

KUALA LUMPUR: SIME Darby Bhd may be paying a lot for New Britain Palm Oil Ltd (NBPOL), but this is justified by the latter’s valuable assets, analysts said.

Affin Hwang Capital calculated that Sime Darby's general offer price of RM5.6 billion for all NBPOL shares works out to be an enterprise value per planted hectare of RM84,200 for the Papua New Guinea-based planter.

Although this looks high when compared with Felda Global Ventures Holding Bhd’s proposed acquisition of Asia Plantations’ estates in Sarawak, Affin Hwang said NBPOL has a better oil palm age profile, higher fruit yield and plantable reserves of 22,000ha.

The research house is positive on Sime Darby for seeking board and management control in NBPOL, and had upgraded its rating on the conglomerate. It thinks Sime Darby’s shares can rise to RM9.31.


MIDF Research, too, is positive on Sime Darby buying NBPOL despite the £7.15 (or RM23) offer price representing a 85 per cent premium over NBPOL’s last closing price on Wednesday.

“NBPOL is one of the best performing palm oil companies in the world with consistent fresh fruit bunch yield of more than 23 tonnes per hectare,” it said yesterday.

While it valued Sime Darby’s shares at RM9.70, MIDF Research has kept a “neutral” stance on its overall performance due to the risks of other businesses not performing well. 

Sime Darby's net gearing is seen to be manageable. “We believe Sime Darby is able to increase its borrowings without jeopardising its credit risk,” said MIDF Research.

Hong Leong Investment Bank (HLIB), meanwhile, has recommended a “hold” call and maintained Sime Darby’s target share price at RM9.75. It noted that the high price tag of £7.15 per NBPOL share is justified, given the scarcity of sizeable brownfield plantation landbank. “NBPOL estates are seen to be a good platform for Sime Darby to expand into PNG’s palm oil industry,” it added.

HLIB said the acquisition would only raise Sime Darby’s net gearing from 0.22 times to 0.44 times. “Earnings-wise, we estimate that the acquisition will add 2.5 per cent to Sime Darby’s forecast earnings in the next financial year.”

AmResearch Sdn Bhd has maintained a “buy” call on Sime Darby while valuing the conglomerate’s shares at RM10.58. It viewed Sime Darby’s offer as “pricey” at 22 times of next year’s forecast earnings but admitted that this price tag had to be attractive enough to obtain a controlling stake of at least 51 per cent in NBPOL.

Sime Darby makes RM5.63 billion offer for NBPOL

KUALA LUMPUR: Sime Darby Bhd is finally able to make a RM5.63 billion offer for New Britain Palm Oil Ltd’s (NBPOL) hand in marriage, now that the Papua New Guinea (PNG) government has wholeheartedly given its blessing.

Sime Darby yesterday launched a general offer to buy all shares in NBPOL at £7.15 (or RM37.52) each. This was less than two weeks after it had turned down the chance to buy Kulim (Malaysia) Bhd’s 49 per cent stake in London-listed NBPOL.

The cash offer is a 30 per cent premium over Kulim’s previous offer of £5.50 a share to increase its stake in NBPOL.


“This acquisition is conditional upon Sime Darby obtaining 51 per cent voting rights in NBPOL,” said Sime Darby president and group chief executive Tan Sri Bakke Salleh, here, yesterday.

He explained that “right from the start, Sime Darby was not only focusing on Kulim’s block in NBPOL because ideally, we would like to end up with at least a 51 per cent stake so that we can assume both NBPOL’s management and board control."

“In the course of our negotiations with the stakeholders, we realised the key factor here is to get the support from the PNG Government. Right till the last day of our exclusivity agreement with Kulim, which fell on September 28, we still had not received any written letter of confirmation from the PNG Government.”

However, on October 1, Sime Darby finally obtained the support letter from PNG’s Prime Minister Peter O'Neill, which paved the way for it to reactivate its proposed offer for NBPOL. O’Neill emphasised that this deal must be in line with PNG’s national interest in relation to Rule 27A of the PNG Takeovers Code.

“It is not often that an opportunity such as this presents itself. The strategic fit between NBPOL and Sime Darby Plantation is the key factor that will ensure the success of this deal. We hope to complete this deal by year-end,” Bakke told reporters in a briefing.

He then dished out NBPOL’s vital statistics to support Sime Darby’s offer. Among them is ownership of about 80,000ha of oil palm plantations, more than 7,700ha of sugar cane land and a further 9,300ha of grazing pasture in PNG. NBPOL also owns 12 mills and two refineries — one in Port Moresby, PNG, the other in Liverpool, the United Kingdom.

Post-acquisition, the combined landbank of the two companies would be nearly a million hectares, he said, adding Sime Darby shareholders can look forward to around five per cent contribution to the bottom line in the next couple of years, if the merger with NBPOL is a success.

Bakke also said there are plans to delist NBPOL from the London Stock Exchange (LSE). “The stock is illiquid and its current market price is not reflective of the value of the company. In the last 12 months, the average cumulative trading volume on the LSE and the Port Moresby Stock Exchange represents less than 1 per cent of the float.

“We believe it will be good to move NBPOL’s listing from London to this part of the world, either to Bursa Malaysia or the Singapore Stock Exchange," he said. 

Last night, NBPOL’s largest shareholder, Kulim, told the stock exchange yesterday it intends to accept Sime Darby’s proposal, provided there is no higher offer. It will soon call for a shareholders’ meeting to decide on this. If the deal goes through, Kulim will gain RM2.75 billion from the disposal.

I want to hold your hand



I WANT TO HOLD YOUR HAND

Oh yeah I'll tell you something
I think you'll understand
When I say that something

I wanna hold your hand
I wanna hold your hand
I wanna hold your hand

Oh please say to me
You'll let me be your man
And please say to me
You'll let me hold your hand

Now let me hold your hand
I wanna hold your hand

And when I touch you I feel happy inside
It's such a feeling that my love
I can't hide, I can't hide, I can't hide

Yeah, you got that something
I think you'll understand
When I say that something

I wanna hold your hand
I wanna hold your hand
I wanna hold your hand

And when I touch you I feel happy inside
It's such a feeling that my love
I can't hide, I can't hide, I can't hide

Yeah you, got that something
I think you'll understand
When I feel that something

I wanna hold your hand
I wanna hold your hand
I wanna hold your hand
I wanna hold your hand


Songwriters
LENNON, JOHN WINSTON / MCCARTNEY, PAUL JAMES
-----------------------------------------------------------------------------

I was at Sime Darby Bhd's urgent press conference this morning when Tan Sri Bakke Salleh was dishing out the vital statistics of New Britain Palm Oil Ltd (NBPOL).

As I was listening in, this song came to mind. "It's such a feeling that my love ... I can't hide, I can't hide, I can't hide"

I guess Sime Darby couldn't contain its love for NBPOL when the Papua New Guinea government finally gave its blessings for this courtship to blossom.


Love affairs are seldom predictable. She loves me ... she loves me not ... she loves me ... she loves me not ... SHE LOVES ME!!!

Like all anxious parents, the government of Papua New Guinea would only agree to a hand in marriage if a suitor is ready and willing to cherish and love its daughter, NBPOL, at all times.

When so many livelihoods are at stake, it's crucial that the suitor of NBPOL is in for the long haul. That means he's committed to be Mr. Right, not someone who is unsure of his feelings and can only offer to be Mr. Right-Now.

Love is in the air. May there be many more happy unions in the oil palm industry.

'Condoms no more a dirty business'

What has condoms got to do with palm oil? Condom lubricant is still predominantly sourced from the petrochemical industry. This can change if and when oleochemical manufacturers are ready and willing to offer the prophylactics industry the right specifications for pharmaceutical lubricant at the right price.

As it is, Karex Bhd, the world's biggest condom maker, is already sourcing stretchy latex from Malaysia's plantation giants' rubber estates and that of smallholders.


While the big boys of Malaysia's rubber industry are the glove makers, there is a less heralded group generating expanding returns into our economy. With the right push from the government, Karex Bhd tells OOI TEE CHING condom exports can scale new heights.


GOH Miah Kiat is probably one of the few men in Malaysia whose wives merrily pack condoms into their luggages whenever they go overseas. “She wishes me fruitful return every time I go on a trip,” beamed the happily married man and father of three children.

As head honcho of the world’s biggest condom manufacturer Karex Bhd, Goh told Business Times that while the prophylactics industry is small compared with the glove manufacturers in Malaysia, there is actually better opportunities for condom makers to penetrate more markets and move up the value chain.

In the medical world, Foley catheters and surgical gloves are classified as Class 2A. When it comes to condoms, healthcare practitioners categorise them under higher safety requirement of Class 2B. This is because as a life-saving tool, condoms need to be produced in a clean environment and thoroughly tested as a safe-to-use product.

But unlike rubber gloves, more investment is needed in quality control to ensure the condoms do not leak and comply with other specifications of strength, length and visual properties. Also, every piece has to be hermetically sealed to prevent contamination.

Goh explained that a lot of investment goes into ensuring condoms comply with stringent requirements under the ISO 4074, World Health Organisation (WHO) specifications and ASTM D3492-03 standards.


In order to meet the ISO 4074 standard, each condom is subjected to 100 per cent electronic testing. There are also random samplings of the condoms to test the quality and elasticity of the rubber.

In an electrolyte water test, condoms are filled with water before they are submerged in a water tank. If there are pinholes in the condom, the machines detect them automatically. 

Then, there is the burst test where air is pumped into condoms like it is done for balloons. A condom must be able to hold a minimum 18 litres of air and record air pressure of at least one kPa before bursting.

The condom’s width uniformity is measured by laying it flat across a ruler. Condoms are sold at varying widths of between 49mm and 60mm, of which 52mm is the most popular. The ISO 4074 standard requires a minimum length of 160mm, but the WHO mandates longer condoms of a minimum 180mm for their targeted markets. Indeed, one size does not fit all.

Since condom manufacturing is an integral part of the medical device sector, such businesses are seen as hi-tech and knowledge-based.

In the last decade, Karex pumped in a lot of money, time and effort in automating as many processes along its productions lines. “Automation is key to ramping up productivity. However, further capital expenditure is required. Government incentives, such as re-introduction of reinvestment allowance, is vital,” Goh said.

As the world’s biggest condom maker by volume, Karex produces four billion annually, more than any other single manufacturer. Industry consultants estimate the global condom market is worth US$6 billion (RM19.68 billion) in 2015, or about 27 billion condoms.

Karex’s condoms make up 15 per cent of the global market. With heightened awareness of safe sex, global demand is expected to grow at eight per cent annually. 

When it comes to brand recognition, leading labels Durex (marketed by Britain’s Reckitt Benckiser Group), Trojan (owned by the United States firm Church & Dwight) and Lifestyles (by Australian giant Ansell Ltd) make up 25 per cent of the world’s condom market. 


Apart from selling on volume, like all businesses, it is far more strategic to add value so as to sell at premium pricing. 

“This is underpinned by product development. We strive to produce our condoms in an assortment of colours, texture, shapes and flavours,” he said.

Among premiumly-priced condoms are those that “glow-in-the-dark”, resembling the Star Wars lightsaber. A cheeky marketing pun suggests that in preparation for a night to remember, one gets to “rise-and-shine” and play “hide-and-seek” with his lover.

While glowing looks can be eye-catching, Goh said it is the “feel” of the condom that keeps the customers coming back. The challenge is for manufacturers to come up with thin and yet durable condoms that can withstand accidental punctures from long fingernails and body piercings.

According to the Guinness World Record, the Aoni condom is the world’s thinnest rubber measuring just at 0.036 millimetres. China’s Guangzhou Daming United Rubber Products Ltd, that makes 200 million Aoni condoms annually, snagged this “barely-there” tantalising title from Japan’s Okamoto Industries Inc’s thinnest variant of 0.038mm.

The Bill and Melinda Gates Foundation recently awarded US$100,000 in grant to the University of Manchester to develop nano composite materials for next-generation condoms. They are experimenting with a “miracle material” called graphene to make thinner and stronger condoms. 

Goh added that Karex is also in the thick of action to come up with “super-duper condoms” that are more desirable to use, which could stimulate global usage to prevent unwanted pregnancies and curb the spread of sexually transmitted diseases.

“Graphene is 1 atom thick and 200 times stronger than steel. We’ve been running several experiments on our own to see if graphene can be combined with stretchy latex to produce a new material that can be thinner, thus enhancing the natural sensation,” he said.

Karex, founded by the Goh family in Johor in 1988, started off in the rubber processing back in the 1960s. Since hitting the headlines as the world’s largest condom maker during the last few years, it continues to thrill investors by plunging into the lucrative pool of condom branding.


Last week, Karex bought a 55 per cent stake in Boston-based Global Protection Corp for US$6.6 million. 

As brand owner of the ONE condom, Global Protection Corp granted exclusive rights to Karex to expand this “fun-loving” sensation into Asia, North Africa and the Middle East. ONE condom is now the fourth most popular brand after Durex, Trojan and Lifestyles. 

Global Protection Corp founder Davin Wedel, who is also a popular thought leader in sexual health, highlighted ONE condom is gaining fast acceptance among young adults as it is marketed as fashionable and socially conscious. 

“Asia is going to create a lot of demand because our population is young. When we got into the condom business about 25 years ago, it was pretty much a dirty word. Today, things have changed,” said Goh.

“We want to roll out ONE condoms in Southeast Asia by the first half of 2015. We’re also looking into brand-building. Specific government tax breaks in this direction would be much welcomed,” he added.

In ramping up its capacity to six billion pieces by the end of 2015, Karex’s RM80 million eco-friendly factory is being built on a 7.3ha plot in Pontian, Johor. “We’ve designed it to save on electricity and water usage compared with conventional factories. There will be natural lighting, strategic sun-shading, good ventilation and rainwater harvesting features.

“When we combine these utility savings and convert them to the all familiar carbon calculation, it’s a staggering 9,900 tonnes of carbon dioxide avoidance into the air. That’s equivalent to the emissions of 29,000 cars in a year,” Goh said.

FGV back in for NBPOL

This is written by my colleague Zaidi Isham Ismail.

KUALA LUMPUR: FELDA Global Ventures Holdings Bhd (FGV) has initiated talks with Kulim (M) Bhd to buy the latter’s stake in London-listed New Britain Palm Oil Ltd (NBPOL), said people familiar with the matter.

FGV has emerged as the next preferred candidate for the 48.97 per cent stake, which could cost up to RM5 billion, after Sime Darby Bhd turned down the chance to acquire it. FGV had previously submitted its bid in June.


“Yes, they are in the running now that Sime Darby has pulled out. Yes, they are in talks,” a source told Business Times yesterday.

The source did not elaborate but said the FGV management has issued a gag order over the matter. When asked whether FGV is concerned about buying the stake without management control, the source said: “They have calculated the risk.”

Top FGV officials declined to comment.

Sime Darby, arguably the world’s largest oil palm planter by land size, announced on Tuesday it had opted against buying the stake but no reasons were given. 

Its 60-day exclusivity period to finalise the deal ended four days ago. If this deal was successful, it would have allowed Malaysia’s oldest conglomerate to expand its planted area by 15 per cent to 607,218ha.

Meanwhile, analysts think the inability to exert control over NBPOL is the key stumbling block for Sime Darby. They noted that it would be pointless to spend RM5 billion on the stake if management ontrol was not in Sime Darby’s hands.

“We think that the failure in taking a leading role in NBPOL despite being a major shareholder could be the major stumbling block for Sime Darby,” said Public Investment Bank Bhd in its notes to investors, yesterday.

HwangDBS Research also said the key to enhancing NBPOL’s earnings was for Sime Darby to assume full operational and management control.

CIMB Equities Research said the decision might be negative for Kulim, which would probably need to settle for a lower price for NBPOL.

AmSecurities noted that at the current price of £4.175 (RM22.14) per share, NBPOL was trading at a price-to-earnings ratio of 16 times the consensus earnings per share (EPS) for financial year 2014. “At a premium of between 30 and 50 per cent over the current price (£5.40-£6.30/share), NBPOL would be valued at between 21 and 24 times its financial year 2014 forecast EPS. 

"That is on the steep side and would have translated into a purchase price of between RM4.3 billion and RM5 billion for Sime Darby to assume full control of NBPOL.”

Sime not buying NBPOL

This is written by my colleague Cheryl Achu.

KUALA LUMPUR: Sime Darby has aborted its plan to buy Kulim (M) Bhd's 49 per cent stake in London-listed New Britain Palm Oil Ltd (NBPOL).

Sime Darby, which was chosen as the preferred bidder for the stake in July, had a 60-day exclusivity period that ended two days ago on the acquisition but decided not to go ahead with it.

Its decision has now paved the way for previous suitors, which reportedly included Felda Global Ventures Holdings Bhd (FGV) and a consortium comprising the Sultan of Johor and a Singapore-listed China entity, to put in a new bid for NBPOL.


“We have decided not to proceed further at this time on the proposed acquisition of Kulim’s stake in NBPOL,” Sime Darby said in a filing to Bursa Malaysia yesterday, without revealing the reason for the withdrawal.

Kulim, NBPOL’s single-largest shareholder, wants to sell its stake as it is unable to exert management control over the plantation group that is a source of significant employment in Papua New Guinea (PNG).

NBPOL, which is listed on the London Stock Exchange, has a market capitalisation of £750 million (RM4 billion) and is managed by a group of professional managers who own a 4.49 per cent stake via Pacific Rim Plantations Services Pte Ltd, PNG’s West New Britain provincial government has an eight per cent stake.

NBPOL, which produces palm oil exclusively in PNG and the Solomon Islands, has 77,000ha of oil palm plantation, 12 palm oil mills and one refinery each in PNG and the United Kingdom.

The group is also PNG’s largest sugar and beef producer via its more than 7,718ha of sugar cane plantations and 9,282ha of grazing pastures.

Besides Sime Darby, FGV were among the shortlisted companies for Kulim's stake, which is up for sale after Kulim failed to raise its stake from 49 per cent to 69 per cent in July 2013. Kulim first acquired interest in NBPOL in 1996.

Landing NBPOL stake would help FGV attain its 2020 targets, namely to achieve 8.7 million tonnes crude palm oil (CPO) production as well as a plantation landbank to 925,000ha.

Several others then entered the fray, including two plantation groups from Indonesia, Singapore’s Wilmar International Ltd and plantation giants IOI Corp Bhd and Kuala Lumpur Kepong Bhd.

Yesterday, Sime Darby share price fell three sen to close at RM9.15 on Bursa Malaysia.

FGV: Msia may extend duty free palm oil exports

MUMBAI (Reuters): MALAYSIA, the world’s second-biggest palm oil producer, could extend duty free exports until the end of this year if prices of the tropical oil remain at current levels, a leading palm oil producer.

Malaysia has allowed duty free exports of crude palm oil for this month and next. A further extension in duty-free exports would help it reduce stockpiles but also put pressure on rival top producer Indonesia to consider similar measures.

Indonesia has allowed duty free exports for October in response to the Malaysian duty structure.


“If prices remain at the current level, then Malaysia could allow duty free exports in November and December,” said Felda Global Ventures Holdings Bhd (FGV) chief executive officer Mohd Emir Mavani Abdullah told Reuters yesterday.

Both Malaysia and Indonesia set export taxes on a monthly basis. In August, Malaysia’s export duty for crude palm oil was five per cent, while Indonesia has set its September rate at 9 per cent compared with 10.5 per cent in August.

Malaysian palm oil futures settled at RM2,177 per tonne last Friday, after hitting a 5-year low at RM1,914 on September 2.

Palm oil has fallen a quarter since its March peak of RM2,916. The duty free exports have been helping in bringing down stockpiles in Malaysia, Mohd Emir said.

FGV is planning to enter India, the world’s biggest importer of palm oil, by setting up a port-based refinery with a local partner, said Mohd Emir, who was in Mumbai for a Globoil India conference. “We are examining a couple of proposals now.”

India’s palm oil imports in the 2014/15 marketing year starting in November are forecast to surge to nine million tonnes, compared with 2.6 million tonnes in 2005/06.

Meanwhile, editor of the Hamburg-based newsletter Oil World Thomas Mielke said palm oil price could rise as much as 10 per cent to US$750 per tonne in January-March 2015 because of dry weather.

"Oil palm growing areas are suffering from dryness in Indonesia and Malaysia. If there is continuation of dryness in October, then the oil palms will be stressed. This could reduce the number of fruit bunches in the coming months. 

"I think vegetable oil prices have bottomed out ... the growth in palm oil production would most probably be just 2 million tonnes ... the lowest in 5 years, in 2014/15," Mielke said. "Crude palm oil could rise up to the range of US$730 - US$750 per tonne, in the first quarter of 2015 from US$680 per tonne now," he added.

Ruling the roost in estates

This is written by my colleague at New Sunday Times.

Owls have been associated with wisdom and bad luck. But some oil palm plantations have been providing lodging for these predatory birds to act as rodent catchers since the 1980s, writes SUZANNA PILLAY.

AS far as sustainable farming goes, some practices are something to hoot about. For 30 years, Sime Darby (SD) Plantation has successfully run a Barn Owl programme in its estates.

“Today, there are owls in our estates in Malaysia, except for Sarawak, as well as some of our operations in Indonesia. The number of owls are estimated at around 21,000 birds in Peninsular Malaysia alone. 

"Work is in progress for us to bring the owls to our estates in Sarawak, and later in Liberia,” said SD’s head of research and development Dr Mohamed Nazeeb Ali Thambi on a visit to its oil palm estates on Carey Island and Jomalina refinery.

SD Plantation first started to consider the viability of barn owls as a sustainable and environmentally friendly method of pest control on its oil palm plantations in the early 1980s, when commercial-scale trials proved their effectiveness in the biological control of rats.

According to Nazeeb, commercial-scale implementation at SD’s oil palm plantations commenced in 1987.

“There was no purchase, or training of the owls. All we did was to set up nesting boxes for them and the population naturally increased. They occupied the nest boxes erected at the estates and will continue to do so as long as there are rats available as a food source.”

Biannual census is conducted to ascertain the population of barn owls in the estates, he added. The ratio of owls per estate is worked out based on the occupancy rate per box and the territorial range of the owls.

“Usually, there will be a pair of adult owls occupying a box for every 10 hectares of an estate. There are two breeding seasons — July to October, and November to February. The eggs hatch after 32 days. The chicks will remain in their nests until they can feed on their own after about eight to nine weeks, when they fly out of their nests and live on their own as adults.”

He said with the use of barn owls, the oil palm plantations are able to reduce rat control costs by 30 to 40 per cent. A barn owl eats an average of one rat per day. A family that comprises two adults and two baby birds could consume 1,200 rats per year.”

It has been estimated that rats consume up to six per cent of crop production each year. In severe cases, the losses can be higher.

“To maintain the prey-predator equilibrium and keep the damage caused by rats below the economic threshold, we still need some chemical intervention, albeit, in a much smaller quantity compared with when barn owls are not used.”

Aside from rats, Nazeeb said leaf-eating insects, like bagworms, nettle caterpillars, rhinoceros beetles and termites, also cause damage at oil palm estates.

Oil palm planters grow the beneficial turnera subulata to give
shelter to bigger insects that feed on bagworms, nettle
caterpillars, rhinoceros beetles and termites.
“Encouraging the presence of more beneficial predatory insects, parasitoids and entomo-fungi help eliminate leaf defoliating insects in oil palm estates, while cultivating beneficial plants and flowers that provide shelter and supplementary food like nectar will encourage the population of predators and parasites.”

Crop losses caused by such insects can be very devastating, he said. He cited leaf-eating caterpillars, which are able to strip the leaves of the palm resulting in crop losses over a period of two years following an infestation.

Another common oil palm pest, rhinoceros beetles bore into the cluster of developing spears in the crown of the palm to feed on the soft tissues. They could also bore through the frond bases into the soft tissues of young, unopened leaves. The damage caused by rhinoceros beetles will result in crop losses upon maturity.

Pests like termites attack oil palm trees by damaging the meristem in the crown and feed on the living tissue in the trunk, eventually killing the tree. Using direct bio-control agents, such as viruses and fungi to infect the pests, at oil palm estates is also a must,” he said.

Rhinoceros beetles can be killed using entomopathogenic (parasitic) fungi. The fungi’s spores penetrate the beetles’ cell tissue and secrete toxins. Entomopathogenic fungi are also used to control termites, but this method is still a work in progress for commercial use.

Pheromone trapping is efficient in controlling the population of flying insects, like rhinoceros beetles, which would otherwise require fortnightly spraying of insecticides in plantations.

“Spraying is costly and labour intensive. The pheromone attracts the beetles and traps them inside a bucket, where they will eventually die. These methods were introduced in the 1960s and, suffice to say, there have been significant savings in terms of cost as well as the improvement of our yield.”

In an outbreak of pests, where natural enemy pressure is no longer sufficient, environmentally friendly insecticides will be used until the situation is under control.

“An outbreak is deemed to have occurred when damage can be seen very clearly on leaves and pest counts have gone up above the defined threshold. Normally, one or two rounds of insecticide will bring back equilibrium. The estates practice an alert and survey system to monitor pest levels so that early intervention is possible with minimal use of insecticides.”

Pandan Chiffon Cake

It has been a while since the last recipe posting in this blog. Most cakes use butter or margarine, here's one that is baked with palm cooking oil. Of all the cakes I've eaten, the chiffon cake is still my favourite. I like it that this air-whipped cake looks like a giant doughnut. 


Ingredients

  • 6 egg whites
  • 125g caster sugar
  • 6 egg yolks
  • 80g caster sugar (additional)
  • 1/2 teaspoon of vanilla essence
  • 165 ml coconut milk (the smallest can)
  • 2 tbsp palm cooking oil
  • 1 1/2 teaspoon pandan essence
  • 120g plain flour
  • 1 tsp baking powder
  • a pinch of salt
Instructions
  1. Heat the oven up to 160 degrees Celcius.
  2. In a large mixing bowl, whisk the egg whites until foamy. Slowly add in the (125g) sugar until you get stiff peaks.
  3. You should be able to hold the whisked egg whites over your head without it falling out.
  4. In a separate bowl, whisk the egg yolks, sugar (80g) and vanilla essence until it forms a pale and creamy mixture. It should triple in size.
  5. In a small bowl, mix the coconut milk, palm cooking oil and pandan essence.
  6. Add this to the egg yolk mixture, whilst whisking at a slower speed. 
  7. Once it is thoroughly mixed through, sift in the flour, baking powder, a pinch of salt and gently fold through.
  8. Add one third of the egg whites to the now green mixture. Beat it to loosen up the batter.
  9. Add the remaining egg white and fold gently into the mixture, taking care to not overwork it.
  10. Pour the batter into a doughnut-shaped cake tin. Bake for around 45-50 minutes.

Msia PM: Rich nations should do more

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

NEW YORK: Prime Minister Datuk Seri Najib Razak told the UN Climate Summit, yesterday, that Malaysia is committed to cut carbon emissions but said rich nations should also keep to their promises.

He said at the one-day summit ahead of the annual meeting of the UN General Assembly that Malaysia was on track to cut the emissions intensity of the gross domestic product by 40 per cent, in six years, as promised.

He said the pledge made at the 2009 Copenhagen UN climate change conference was made on the understanding that parties would honour their commitments to assist developing nations in financing and technology transfer.


"That target we set in Copenhagen was conditional on finance and technology transfer from Annex I (developed) countries.

"Yet neither condition was met. We did not receive the assistance we were promised under Article 4.7 of the Convention," he said.

"Our Copenhagen pledge was made in good faith; on the understanding that parties would fully honour their commitments to assist developing nations.

“Yet Malaysia continued to cut its emissions intensity of its economy by more than 33 per cent, for the sake of our people – and our planet.

“This time must be different. This time, all countries should commit to an ambitious deal to reduce emissions. And they must follow-up that commitment with consistent action,” he said.

Najib said, since 2009, Malaysia had implemented new national policies on climate change and green technology.

“We (also) passed a Renewable Energy Act establishing a feed-in-tariff for renewables. We made adaptation and mitigation central to our water resource management. And we gazetted new forest reserves, reaffirming our commitment to a pledge we made at the 1992 Rio Earth Summit,” he said.

He said Malaysia had also taken steps towards a cleaner future besides having a more balanced energy mix.

“But this progress came at a cost. In allocating finite national resources, we have had to make painful decisions. We had to choose between adaptation and mitigation.

”Malaysia has spent nearly US$2.6 billion in the last decade adapting to more frequent floods. This is money we could have invested in green industries, or used to slow climate change,” he said.

Najib said Malaysia would continue to act on climate change by having new policies to promote energy efficient vehicles, a new corporate greenhouse gas reporting programme, a building sector energy efficiency project and a low carbon city framework.

Oil palm planters enduring severe financial burden

Malaysia's social safety laws of Windfall Profit Levy and Minimum Wages are meant to make cooking oil affordable to the poor and pave the way towards a high income nation. Unfortunately, oil palm planters are suffering from these policy backfirings, writes OOI TEE CHING.



THE Minimum Wages Order 2012, which took effect from January last year, requires employers with six employees and above to pay a minimum wage of RM900 a month in Peninsular Malaysia or RM800 a month in Sabah, Sarawak and the Federal Territory of Labuan. 

As the government seeks to propel Malaysia into a high-income nation by introducing minimum wages, the blanket implementation of this figure to “basic rate” instead of “take-home pay” across all sectors had given foreign workers more money to send back to their home countries.

In an interview with Business Times, Malayan Agricultural Producers Association (Mapa) executive director Mohamad Audong said the blanket implementation of the minimum wage policy, rising bank borrowing costs and falling palm oil and rubber prices have resulted in planters being hit from all sides.

“While there is a 20 per cent increment in the basic wages, this has resulted in almost 40 per cent more money outflow from Malaysia last year. In theory, this law is supposed to help the oil palm industry become more productive. In reality, however, planters are badly hurt,” he said.

Mohamad pointed out that in 2012, foreign workers in the agriculture sector remitted around RM8 billion to their home countries. After the Minimum Wages Order 2012 was implemented last year, foreign workers sent back around RM11 billion. This year, Mapa estimates this figure to surpass RM15 billion. 



He explained that planters are facing higher production costs. This is mainly due to more expensive foreign worker recruitment fees, higher fuel and utilities, such as diesel, electricity and water.

There are also various new fees and tax hikes to be imposed by the federal and state governments. On top of that, oil palm planters also have to pay cess of RM13 per tonne to government agency Malaysian Palm Oil Board.

The bleak outlook, Mohamad said, is compounded by Bank Negara Malaysia’s raising of interest rates. This means costlier bank loans to rubber and oil palm planters. 

Since oil palm planters are price takers, their earnings are at the mercy of pricing in the world’s commodities markets. On Monday, the third month benchmark palm oil futures contract on Bursa Malaysia derivatives market added RM15 to close at RM2,099 per tonne.


“Don’t forget many of our planters borrow money from the banks and issue bonds, of which bankers and insurance companies are subscribers.”

Depending on the year of planting, Mapa calculated that palm oil production cost of these heavily-geared planters ranges between RM1,300 and RM3,000 per tonne.

“The minimum wage policy works best if commodity prices are on the uptrend, not when prices are falling,” Mohamad said.

As the government seeks to review the minimum wage ruling at the end of this year, planters appeal for a more judicious implementation of the Minimum Wages Order 2012. 

“We’re not opposing the minimum wage law. It is the way the salary is being packaged. It would be more practical if the government amends the RM800 and RM900 per month minimum figure to that of take-home pay instead of basic rate. This would streamline the Minimum Wages Order 2012 to the main thrust of existing labour laws as that interpreted by the Industrial Court for many decades,” he said.

Mapa represents close to 200 plantation companies in Peninsular Malaysia, with estates spanning across a million hectares. These oil palm planters employ some 125,000 workers in the fields, of which 80 per cent are foreigners.

In their 2015 Budget wishlist, oil palm planters are appealing for the government to streamline the minimum wage rate with existing labour laws. They also want the government to abolish the windfall profit levy and rationalise cooking oil subsidy. 

Meanwhile, Malaysian Estate Owners Association (MEOA) president Datuk Boon Weng Siew concurred that oil palm planters endure severe financial burden with the spectre of taxes and new ones to be introduced. “For every RM1 we earn, we have to pay almost 45 sen to the federal and state governments in taxes,” he said.

“Planters are not required by law to provide accommodation, schools, clinics and places of worship, but many do so as part of their corporate social responsibilities.

“When you factor into these amenities and benefits to workers, such as housing, water, electricity, medical care, transportation... it amounts to about RM450 per month per worker,” Boon added.

“Now, there is a new tax called Property Assessment Tax imposed by local authorities at between RM5 and RM100 per hectare. “This burden is increasingly painful on our members,” he said.


Apart from the minimum wage ruling of unintended higher money outflow, oil palm planters’ subsidising of cooking oil is also seeing huge wastage in the form of rampant smuggling to neighbouring countries.

Under the Cooking Oil Subsidy Scheme, palm cooking oil is capped at RM2.50 per kg.

Boon put things into perspective when he highlighted cooking oil sold in Malaysia is priced at 65 per cent discount of global market pricing.

“In other words, the same 1kg of cooking oil sold in Malaysia for RM2.50, if shipped out of the country, would fetch US$2.50 (or RM8.03). Exporters could price it three times higher in neighbouring countries,” he said, adding that the billion-ringgit subsidy that goes into cooking oil sold, here, is being funded by a windfall profit levy imposed on oil palm planters.

It has been reported that this levy is unfair because it is imposed on assumed profit and not on actual profit.

The levy is activated when palm oil exceeds RM2,500 a tonne. Planters in Sabah and Sarawak pay windfall tax when the prices cross RM3,000 per tonne.

MEOA, which represents 153 small- and medium-sized estates of more than 40ha, is appealing to the government to review the cooking oil subsidy, which benefits restaurant operators, traders, smugglers and people across the border more than the hardcore poor.

The price of palm cooking oil should be allowed to float in the open market, he suggests, and vouchers can be issued to hardcore poor households to mitigate the impact on them.