Uggah: Malaysia restrict CPO imports

KUALA LUMPUR: Malaysia has issued a directive to traders that crude palm oil (CPO) imports will be restricted, to bring down the current inventory of 2.49 million tonnes to two million tonnes.  

Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas said the country aims to “bring down stocks at a comfortable level of about two million tonnes... give and take 5 per cent tolerance."  

He then highlighted this CPO import restriction directive is consultative. It was made known to the Indonesian government during the bilateral meeting in Jakarta over the weekend. 

"I brought this up in the recent bilateral meeting and explained the rationale to restrict CPO imports into Malaysia. The Indonesian government understood that we are trying to manage our stocks and accept it," Uggah said at a press conference after launching the Malaysian Palm Oil Board's International Palm Oil Congress and Exhibition here yesterday. 

The minister clarified this directive to traders in Malaysia is not an outright ban, as they can appeal to his ministry in cases where long term contracts have already been committed to. 

"I wouldn't call this a CPO import ban because traders can appeal to my ministry for exceptions. I prefer calling this move as managing stocks. We want to minimise Malaysia's CPO import volume," he said. 

"If we don't do anything now, palm oil inventory could exceed three million tonnes by November. For CPO imports that involve long-term contracts, they can appeal to my ministry," he added. 

Apart from the CPO import restriction, Uggah said the government plans to raise the biodiesel mandate from B7 to B10 in efforts to spur more palm oil consumption locally. 

He, however, declined to reveal the targeted date for the B10 biodiesel introduction. The B10 mandate is a blend of 10 per cent palm methyl ester and 90 per cent petroleum diesel. 

"We will present the B10 biodiesel proposal in the upcoming Cabinet meeting and continue to engage with industry players on this matter," Uggah said. 

On the conclusion of the Trans-Pacific Partnership agreement (TPP), Uggah said, "through the TPP, our palm oil, rubber, timber and value added derivatives should not face trade barriers in these member countries. We hope to see better market access and therefore rising exports to this trading bloc," he said.

Regional palm oil group

JAKARTA: MALAYSIA and Indonesia will establish  a formal working group among palm oil producing countries called Council of Palm Oil Producing Countries (CPOPC) by the end of this month.
In a joint statement issued out of Jakarta recently, both Indonesia and Malaysia governments announced this new body will strengthen regional efforts at stabilising the price of palm oil and promote benefits of palm oil industry and its derivatives.
The Malaysian delegation was led by Plantation Industry and Commodities Minister Datuk Amar Douglas Uggah Embas and Deputy Minister in the Prime Minister's Department Datuk Razali Ibrahim. 
This bilateral meeting was also joined by Indonesia Palm Oil Association, BPDP Sawit (Indonesia Palm Oil Fund), the Malaysian Palm Oil Association, Sarawak Oil Palm Plantation Owner Associations; Malaysian Palm Oil Board; and the Malaysian Palm Oil Council
Both countries reiterated that palm oil is a strategic commodity and that the oil palm is a miracle crop.
The palm oil value chain is important for both countries in terms of employment, foreign exchange earnings and socio-economic interests of smallholders in bridging rural and urban development gap.
In playing a more meaningful role in the international trade arena, both governments have agreed to  harmonise standards of the Malaysian Sustainable Palm Oil and the Indonesian Sustainable Palm Oil.

The Malaysian Palm Oil Board (MPOB) will implement a RM100 million replanting incentive scheme beginning October 1 until December 31, this year.
Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas said the scheme targeted the replanting of 83,000ha of unproductive and old palms.
Approval for the scheme would be based on first-come-first-serve basis, with an incentive allocation of RM1,500 per hectare for an approved area of 33,000ha under Phase One.
Meanwhile, an incentive of RM1,000 per hectare would be allocated for an approved area of 50,000ha under Phase Two.
Uggah said the implementation of the incentive scheme would contribute to a reduction of crude palm oil (CPO) production by 250,000 tonnes. Hopefully, this will reduce national palm oil stocks and help stabilise palm oil prices.
Applicants for the incentive scheme are encouraged to submit their applications online via from October 1.

Palm Oil Rising on Ringgit Weakness, Mistry Says

MUMBAI: (Bloomberg) -- Palm oil may extend its bull market climb should the Malaysian currency retreat further against the dollar, according to Dorab Mistry, director at Godrej Industries Ltd.

Palm oil touched RM2,460 per tonne tonne earlier this week, the highest since June 2014. As the ringgit dropped against the greenback, this made the world’s most popular edible oil cheaper for international buyers. 

The commodity bounced into a bull market last week amid concerns over the impact of haze on the world’s biggest producing region and a strengthening El Nino.

Benchmark crude palm oil futures will probably trade at the upper end of a RM2,100-RM2,400 a tonne range if the Malaysian currency weakens to RM4.50 to one US dollar, Mistry told the Globoil conference in Mumbai on Wednesday. 

Prices could then touch RM2,500 ringgit a tonne, he said. The ringgit is currently trading at about RM4.44 to the dollar after weakening to RM4.48 on Tuesday, the weakest since 1998.

“It is possible for CPO to go to RM2,500 per tonne just for a short time,” according to Mistry, who has traded cooking oils for more than three decades. 

His CPO price forecast assumes Brent crude will trade between US$45 and US$60 a barrel. Still, “such a level is not sustainable unless mineral oil prices rise significantly,” he said.

Production may decline in the first and second quarters of 2016 as the moisture deficit from El Nino and a low yielding period from January starts to affect crops, Mistry said. His estimate of global palm output to rise by 2.5 million tonnes between October and September 2016 takes into account damage that may be caused by El Nino.

The plunge in the ringgit, Asia’s worst-performing currency this year, combined with growing concerns over El Nino’s impact on production in Malaysia and Indonesia, helped pull palm oil out of the bear market it entered just last month, when the tropical oil hit a 6-1/2 year low of RM1,863.

Vegetable oil prices may struggle to rally if crude oil prices stay weak, Mistry said. Cheap crude makes edible oils, including palm oil, a less attractive option for biofuel feedstock. Palm oil was trading at a premium of US$80 a tonne to gas oil on Wednesday versus an average of US$32 over the past year, Bloomberg data show.

“If crude oil prices stay in the range of US$35 to US$50 per barrel, then the loss of biodiesel demand will be very difficult to make up and will cast a long shadow over vegetable oil prices," Mistry said. He reduced his estimates for biodiesel demand to a best-case position of a gain of 1 million tons, from 1.5 million tonnes forecast last month.

It’s too early to gauge how successful Indonesia will be collecting palm oil export levies to fund its biodiesel program, Mistry said.
“Indonesia does not have a good reliable track record of implementing new policy initiatives,” he said, adding that the 15 per cent mandatory blending rate appears to be “too high and against the advice of every motor manufacturer.”

Global edible oil supply is forecast to rise by 4.6 million tonnes in 2015-16, while demand may increase by 4.5 million tonnes - a balance which Mistry warns could change very quickly if there’s a “production problem in some part of the world or Indonesia suddenly performs to expectation on biodiesel.”

Imports by India, the world’s biggest edible oil buyer, will rise to 15.1 million tonnes in the October to September 2016 marketing year from 14.1 million tonnes this year, with shipments of palm seen rising to 9.6 million tonnes from 8.7 million tonnes, and soybean oil to 3.6 million tonnes from 3 million tonnes.

El Nino, which bakes parts of Southeast Asia but brings rain to South America where soy is grown, may pave the way for more plantings and bumper crops between March to May next year, Mistry said. Bigger supplies of soybeans for crushing into soy oil may lower prices of the rival edible oil.

“I regard soya oil as the most competitive and ‘must own’ oil today,” Mistry said, adding that India’s appetite for soy oil will grow stronger. “Soya oil will this year win market share from all other oils.” 

He sees soybean prices remaining below $9 a bushel, and Chicago Board of Trade soy oil futures range bound between 26-28 cents a pound. Prices may climb to 32 cents if the U.S. Environmental Protection Agency raises biodiesel mandates, he said.

Planters under fire over haze

Are peat fires uncontrollable? Experts tell OOI TEE CHING that smouldering fires can be prevented from spreading underground if the peat soil is compacted and kept moisturised in trenches filled with water.

For the past month, there has been a steady stream of news on millions of people in Southeast Asia suffering from the haze in Indonesia due to the peat fires there. 

There have also been criticisms of Indonesia's governance despite tireless efforts by its authorities to dispatch water bombing planes and cloud seeding to beat the peat fires. The ongoing El Nino phenomenon is exacerbating the problem, creating scorching conditions that fan the smouldering flames.

More than 5,000 personnel, including the military and police, have been working round the clock to get residents access to medical help. Aircrafts continue to water bomb hot spots and "cloud seed" the skies to induce rain.

Air quality index readings have been as high as 1,992 in Palangkaraya, Central Kalimantan -- anything over 200 is unhealthy -- while numbers are fluctuating between unhealthy and very unhealthy in Singapore and Malaysia, depending on wind conditions.

Indonesian President Joko Widodo declared a state of emergency in Riau province, one of the worst affected areas. Yesterday, he went down to the ground with emergency workers deployed to help fight the fires in Banjarbaru, South Kalimantan, before heading to Sumatra, where he also inspected ground conditions and fire-fighting efforts in Jambi. 

The Indonesian Palm Oil Association or Gabungan Pengusaha Kelapa Sawit Indonesia (Gapki), too, had been responding positively as its member companies are mobilising fire-fighting units to help put out the flames.

But like the years before, such positive efforts often go unnoticed because the truth is not sexy when pit against damning allegations. Inevitably, those who are more skilful at spreading rumours and attracting media attention continue to influence public perception.

"Members of Gapki have been conscientiously implementing good agricultural practices. We are committed to a zero burning policy. This means no slash-and-burn to clear up land for new plantings or re-plantings," Gapki chairman Joko Supriyono reportedly told Antara News earlier this week.

Indeed, people living in the estate are also suffering and in need of medical  attention from the ongoing haze. Slash and burn assumptions thrown at estate owners do not make sense. 

"Why would companies, that have invested trillions of rupiahs, want to risk having their permits revoked just because they want to save the cost of land clearing?" Gapki's Joko questioned.

In an interview with Business Times in Kuala Lumpur, Incorporated Society of Planters chairman Daud Amatzin concurred that misunderstandings and wrongful blaming continue to recur because the communication of facts and figures on the differences between a well-managed peatland and one that is not, is still very much lacking. 

When asked to comment on the spate of media reports on peat fires in Sumatera and Kalimantan, Daud replied "there has to be more public awareness on this topic because decision makers need to be able to differentiate facts from mistaken assumptions about peat soil and peat fire."

"Oil palm planters who carry out proper peatland development and water management at their estates should be given a pat on the back for preventing the spread of peat fire. Instead, what we see is a stab in the back of planters. Such false allegations are sinful," Daud said. 

"Do you know that professional planters practising modern agriculture invest a lot of money in heavy machinery to clear the land, compact the peat soil and dig up a maze of trenches? 

"This is to compress the peat soil and keep it moist so that the oil palms can grow properly and yield to their potential. Incidentally, this process makes the soil less flammable and retards fire from spreading underground," he said.

Most of the oil palm estates in Riau are matured and bearing fruits. "So, why would planters want to set fire and destroy their oil palms?" asked Daud, adding the maze of trenches filled with water at peat area, which are transportation routes in the estates is doubling up as fire barriers, too.

When asked to comment on satellite pictures showing many hotspots across Sumatera and Kalimantan as indicative of fiery blaze within plantation concessions, Daud replied, "we must take note that in Indonesia, 20 per cent of the land bank is under the plasma scheme, of which smallholders occupy scattered enclaves within the estates." 

He noted that one must not discount the possibility that fire-causing haze could have been started by the local communities for shifting cultivation of cash crops in these enclaves.

Peatland is highly flammable in drought season, if not properly managed. Many cash-crop farmers, who cannot afford heavy machinery for land clearing, may have been unknowingly torching up peatland and set off fires which smoulder underground for weeks and months.

Daud explained that fires spread underground very easily when peat soil is dry and spongy in the forest and shifting cultivation area. On the other hand, peat that had been compressed by heavy machinery and moisturised in water-filled trenches actually prevent spread of smouldering underground fire.

"When peat fires occur, it does not recognise geographical boundaries. The fact that environmental activists and politicians are quick to blame planters without any evidence of where and how the fire originated shows these allegations are not factual," Daud said.

"As investigations on peat fires ensue, I would like to think the Indonesian authorities will uphold logical reasoning and evidence that can be verified. I would like to think justice based on integrity shall prevail over wrongful blame that could be heavily laden with ulterior motives," he added.

Underground water viable solution

PETALING JAYA: Indonesia could map out underground water sources below peat areas and before the drought season, they can pump up water via tube wells to moisten the soil and prevent the spread of fire. 

This is a more sustained solution than the current reactive measures of water-bombing and cloud seeding for rain, said a veteran soil scientist who has close to 50 years of experience in surveying peat areas in Malaysia and Indonesia. 

“When there is accidental peat fire, firefighters can quickly pump up underground water from aquifers and channel it via trenches to the affected area,” said Param Agricultural Soil Surveys (M) Sdn Bhd managing director Dr S. Paramananthan. 

“During the drought season, the unmanaged spongy peat becomes combustible and flammable. Fighting fire is challenging because it spreads and smoulders underground.” 

He likens the profile of unmanaged peat to the cross-section of a sponge cake. In contrast, at oil palm estates, the top layer of peat soil is dense because it would have been compressed by heavy machinery. 

“When there is soil compaction by heavy machinery, the top soil layer becomes dense. This causes water from the bottom of the peat to seep up and moisten the top soil. By doing so, oil palm planters make peat soil at their estates less flammable,” Param said.  

“I know of a few proactive plantation companies which have drilled tube wells and tapped into aquifers below. Before the drought season, they would pump up water from below to moisten the top layer of the peat soil.” 

Param noted that underground water from the tube wells tapping into aquifers deep below can be channelled to irrigate crops during drought season.  

He cautioned that if underground water was to be used as a drinking source by village folks, it would need to be treated to international drinking water standards as stipulated by Indonesian health authorities.

Haze thickens as El Nino worsens

The suffocating haze is set to prolong further by the El Nino dry spell, said to be among the strongest since records were kept in the 1950s.

More than 5,000 personnel, including military and police, have been working round the clock to get residents access to medical help. Aircrafts continue to water bomb hot spots and "cloud seed" the skies to induce rain.

Indonesian President Joko Widodo surveying the burnt land yesterday in Banjarbaru, South Kalimantan, where he also visited emergency workers deployed to help fight the fires there.PHOTO: INDONESIA STATE SECRETARY
Indonesia President Joko Widodo had declared a state of emergency in Riau province, one of the worst affected areas. 

Yesterday, the masked President went down to the ground with emergency workers deployed to help fight the fires in Banjarbaru, South Kalimantan, before heading to Sumatra, where he also inspected ground conditions and fire-fighting efforts in Jambi. 

The Indonesian Palm Oil Association or Gabungan Pengusaha Kelapa Sawit Indonesia (Gapki), too, had been responding positively as its member companies are mobilising fire-fighting units to help put out the flames.

But like the years before, such positive efforts often go unnoticed because the truth is not sexy when pit against damning allegations. Inevitably, those who are more skilful at spreading rumours and attracting media attention continue to influence public perception.

"Members of Gapki have been conscientiously implementing good agricultural practices. We are committed to zero burning policy. This means no slash-and-burn to clear up land for new plantings or re-plantings," Gapki chairman Joko Supriyono reportedly told Antara News earlier this week.

Indeed, people living in the estates are also suffering and in need of medical attention from the ongoing haze. Slash and burn assumptions randomly thrown at estate owners just does not make sense. 

"Why would companies, that have invested trillions of rupiahs, want to take the risk of having their permits revoked just because they want to save the cost of land clearing?" Gapki's Joko questioned.

The Pollutant Standards Index (PSI) in the Central Kalimantan capital of Palangkaraya shot as high as 1,992. Any PSI reading over 350 is rated as hazardous; while the range of 151 to 250 is considered unhealthy.

"The number of hot spots rose again, including fires in South Sumatra... that were previously doused but have re-emerged. 

"Border areas such as Jambi in South Sumatra - where fires occur in far-flung, hard-to-reach places - have also registered a spike in the number of hot spots," said BNPB spokesman Sutopo Purwo Nugroho during a press briefing yesterday.

Indonesia's National Disaster Management Agency or Badan Nasional Penanggulangan Bencana (BNPB) said more money is needed to deal with the crisis.

"BNPB may use up all 385 billion rupiah in government funding earmarked to deal with the fires by end-September and it will have to turn to a 2.5 trillion rupiah 'on-call fund' set aside for other types of disasters," said Sutopo.

El Nino to worsen

PETALING JAYA: As the ongoing El Nino worsens, Southeast Asian oil palm planters can expect a drop in fruit harvest and an increase in palm oil prices.

The El Nino drought across Asia Pacific is seen to worsen in the weeks ahead and Sabah's east coast is likely to experience severe dryness, said Malaysian Meteorological Department National Climate Centre director Jailan Simon.

“Historical records show the impact of a strong El Nino is normally felt by Malaysia towards the end of the year and the first quarter of the next year,” he said at a seminar organised by the Malaysian Palm Oil Council here yesterday.

"As El Nino intensifies, we will see temperatures rising above 35 degrees Celcius. 

A further temperature rise by two degrees Celcius can result in scorching heatwaves," he added.

When asked to comment on the ongoing haze that had enveloped the skies last week, the weatherman gave his assurance that sporadic inter-monsoon winds and drizzle are seen to reduce the haze effect in Peninsular Malaysia.

Also present was CIMB Investment Bank senior analyst Ivy Ng. She noted the last El Nino was in 2009/10 and it was moderate. 

"The most severe impact of El Nino is felt between December and April because the equatorial Pacific sea-surface temperatures are normally warmest at this time of the year," said Ng.

She concurred with Jailan that the current El Nino could last until the first quarter of 2016. "The lower rainfall will result in weaker palm oil yields and output on a lagged basis." 

Moreover, Ng highlighted that India, the world's largest edible oils importer, tends to buy more  palm oil whenever El Nino dries up farmland. This is because lower oilseed harvest in India will increase its dependence on palm oil imports.

She went on to say palm oil prices tend to react positively whenever the El Nino phenomenon is experienced. "In the last nine episodes since the 1980s, the average palm oil monthly price rose by between 13 and 40 per cent."  

Palm oil futures have been hovering between RM2,000 and RM2,250 per tonne for the past three weeks. Yesterday, the third month benchmark palm oil futures on Bursa Malaysia Derivatives closed RM32 higher at RM2,183 per tonne.

An agronomist at the seminar agreed with Ng that the ongoing drought will slow down palm oil growth output and thus support prices. Consultant Ganling Sdn Bhd director Ling Ah Hong noted the El Nino drought stresses the oil palm trees.

Planters can expect more bunch failures, floral abortion and gender differentiation. "So far, we're seeing parched soil in south and east Kalimantan, multiple unopened spears in palms planted across Kalimantan. Towards the south of Borneo island, we're seeing more male flowers," he said.

Ling then said palm oil prices may recover by the end of first quarter or early second quarter of 2016 when the impact of El Nino starts to bite. 

Indonesia investigates on haze-causing suspects

JAKARTA: Indonesia has ordered four companies to suspend operations for causing forest fires which have sent smoke across a swathe of Southeast Asia, an environment ministry official said on Tuesday.

“These suspensions will be in effect until the criminal proceedings undertaken by the police are finished,” said secretary general at environment ministry Bambang Hendroyono. 

Three plantation companies have had their permits frozen and one forestry company has had its license revoked, he added. 

Indonesia has strict plantation laws. Those found guilty of clearing land by burning can be fined up to 10 billion rupiah (US$700,000), and up to 10 years in jail.

President Joko Widodo declared a state of emergency in Riau province, one of the worst affected areas. 

Air quality index readings have been as high as 983 in Pekanbaru, Sumatra -- anything over 200 is unhealthy -- while numbers are fluctuating between unhealthy and very unhealthy in Singapore and Malaysia, depending on the wind.

More than 3,000 personnel, including military and police, are working to put out fires and investigate suspects involved in starting the burning. Indonesian aircraft are water bombing and "cloud seeding" by using chemicals to induce rain.

The ongoing El Nino has exacerbated the problem, creating extra dry conditions that fan the flames.

Thick smoke caused by forest fires in Sumatra and Kalimantan islands has blanketed the region for the past month.

Residents have been recommended to stay indoors and more than 2,000 schools have closed across Indonesia and Malaysia, affecting 1.5 million students and their parents.

Smoke emanates from spongy and dry peat as the fire smoulders underground. It's definitely not wise to go near or step on the peat soil as the fire smoulders beneath unless you want to be roasted alive. 

My colleagues at sister publication Berita Harian and New Straits Times Press photo department flew over and experienced first-hand "what it was like to be roasted alive" as they report live from Riau peat fires, or Ground Zero. At one point, their legs accidentally sank into the searing dry peat. It was painful and suffocating but they fulfilled their duties as journalists.

Over at managed peat of oil palm estates that had been compacted by heavy machinery and moistened by a maze of water-filled canals, there was no fire. My colleagues noticed the stark difference in the temperature and solid texture of managed peat. They feet did not sink into the soil.

As the investigations in Indonesia ensue, may logical reasoning prevail over wrongful blame that are heavily laced with ulterior motives.

Taste of Malaysia

“If Yan can cook, so can you!" Chef Martin Yan, is known the world over for his numerous TV shows and books from the start of 1982 when he shot to fame with “Yan Can Cook”. The 3,000 episode programme was shown in over 50 countries, making him one of the most popular celebrity chefs.

Chef Martin Yan, a 67 year old Hong Kong-born American is not just a celebrity chef but an established culinary scholar and is the founder of Yan Can International Cooking School in the San Francisco Bay area. 

He also owns a chain of Yan Can Restaurants.

Early this year, Chef Martin Yan was in Malaysia to film his new 26-episode travel and cooking programme “Taste of Malaysia."

During a recent media conference, Chef Martin thrilled the crowd by demonstrating his speedy chopping skills. 

He also wowed the crowd with the taste of his signature Chicken and Walnut Salad.

He used cholesterol-free palm oil to stir fry a variety of dishes. The celebrity chef told the audience that palm oil is less greasy. 

Vegetables stirfried in quick high heat retained their texture because there was less oil absorption.

Palm oil is the most popular cooking oil in the world because it is all-natural, easily digestible and halal.

The 'Taste of Malaysia' series is now being aired on ntv7, 8TV and the Asian Food Channel (AFC). The programme is available in English and Mandarin. 

It is reaching out to an estimated 2 to 3 billion viewers and covers the various cultures and traditions of Malaysia.

At each episode, Chef Martin Yan explored traditions that are emblemic of Malaysian culture. He deftly experimented with tastes and dishes that have been around for centuries.

FMM: DISF helpful to manufacturers

The Domestic Investment Strategic Fund (DISF), that is being administered by Malaysian Investment Development Authority (MIDA) is relevant to investments into the palm oil downstream businesses.

KUALA LUMPUR: The Federation of Malaysian Manufacturers (FMM) said the RM1 billion top up to the Domestic Investment Strategic Fund will encourage more manufacturers to adopt higher technology and export more value-added products. 

Prime Minister Datuk Seri Najib Razak announced the additional allocation as one of the proactive measures to strengthen the economy amidst challenging conditions globally.

Under the 10th Malaysia Plan, the Domestic Investment Strategic Fund (DISF) was launched in 2012 with RM1 billion allocation. DISF seeks to boost domestic investment, encourage research & development, provide training in new and emerging technologies, and to accelerate Malaysian industries into the global supply chain.

As at August 31 this year, Malaysian Investment Development Authority (Mida) had approved 181 investment projects for DISF grants totaling RM747.5 million. The beneficiaries are from sectors including electrical & electronics, machinery, transport, services, chemical, oil & gas and food industries.

In a statement yesterday, FMM chief executive officer Dr Yeoh Oon Tean said the DISF will help accelerate the transition of domestic manufacturers to be high value-added, high technology, knowledge-intensive and innovation-based.

Mida has targeted beneficiaries of the DISF to be from sectors such as integrated circuit design, semiconductor, medical devices, pharmaceuticals, biotechnology, aerospace, healthcare, halal, petrochemicals (specialty chemicals & chemical derivatives), advanced oleochemicals, specialised rubber, renewable energy, energy efficiency and waste management.

Yeoh also noted the exemption of import duties on another 90 tariff lines covering spare parts, consumables and research equipment is expected to support upgrading and expansion of exports among FMM members. 

On foreign workers recruitment, Yeoh reiterated manufacturers want the process be streamlined into a one-stop centre. There should be a more comprehensive immigration and foreign worker employment policy. He said FMM thinks this should be led by the Human Resources Ministry. 

"The current foreign worker levy which is fully borne by employers is having serious cost implications on our members. Generally, manufacturers are not in favour of having foreign worker levy based on the ratio to total workforce," he said.

On the 2016 Budget, set to be tabled next month in Parliament, Yeoh said FMM reiterates its appeal to the government to extend Reinvestment Allowance, strictly enforce the “Buy Made in Malaysia” policy in government procurement, and implement trade facilitation measures to help promote export competitiveness and expansion.

FMM also appealed to the authorities to hold off further increases in natural gas pricing, minimum wage rates and foreign workers levy. 

Call for Msia to review CPO export duties

KUALA LUMPUR: Malaysia should review the current crude palm oil (CPO) export duty structure following Indonesia’s introduction of new palm oil levies. 

In its notes to investors last Friday, CIMB Investment Bank said that Indonesia’s newly introduced US$50 tonne levy on CPO and US$10-US$30/tonne levy on processed palm oil have eroded Malaysian refiners’ competitiveness when the CPO price is below RM2,250 per tonne. 

This is shifting Malaysian exports towards CPO, which could reduce the value add of Malaysian palm products. 

“Refiners in Malaysia are expected to face stiffer competition from Indonesian refiners in the coming months following Indonesia’s introduction of the new palm oil levies if CPO price stays below RM2,250 per tonnes,” said CIMB Investment Bank analyst Ivy Ng. 

On July 16, Indonesia implemented a new export levy of US$10- US$50 per tonne for various palm oil products. This is on top of the recently revised export taxes that Indonesian palm oil producers are required to pay when CPO prices exceed US$750 per tonne. 

The new export levy has lowered the domestic CPO price in Indonesia by US$30-US$50 per tonne, helping to improve the processing margins of downstream processors in Indonesia. This is because refiners in Indonesia currently enjoy a margin advantage due to the differential in the export levy for refined palm products versus CPO. 

Ng explained that the export levy gap for refined, bleached and deodorised (RBD) palm oil is US$30 per tonne (CPO levy of US$50 per tonne minus RBD palm oil levy of US$20 per tonne). 

Prior to this, there was no margin advantage for Indonesian refiners as the export tax for both palm products was zero as CPO price was below US$750 since October last year. 

“The CPO levy is positive for Indonesian refiners and negative for refiners in Malaysia,” she said. 

Malaysian refiners will again be disadvantaged as they do not enjoy the same margin advantage of US$30 per tonne since the export tax for both CPO and processed palm products is currently zero. 

This is because CPO price in Malaysia is below RM2,250, the threshold price that triggers export tax in the country. 

Ng noted this is the same issue faced by Malaysian refiners when Indonesia revised its export tax on August 15 2011 to encourage downstream activities in Indonesia. 

The Malaysian government only reacted to this move a year later by cutting its CPO export tax to 4.5 per cent to 8.5 per cent and scrapping its tax free CPO quota from January 2013 to restore Malaysian refiners’ competitiveness in order to reduce stockpiles. 

The revised export tax structure in Malaysia from January 2013 mimics the Indonesian tax structure with a one to two per cent disadvantage, which is compensated by Malaysia’s better infrastructure. 

CIMB analyst highlighted that government statistics reveal that CPO’s share of total palm oil exports has increased from 16 per cent in 2010 to 28 per cent this year. This means that there are less raw materials available to local refineries. 

“Malaysia’s CPO tax structure should be reviewed. But we think the government will only react to this when there is evidence that the country is losing market share to Indonesia, leading to accumulation of palm oil inventories in Malaysia," the analyst said. 

Realistically, this will only happen if CPO price stays below RM2,250 for a prolonged period of time. 

Should Malaysia revise its export tax to take into consideration Indonesian CPO levies, it would be short-term negative for Malaysian palm oil producers as it could lead to lower domestic CPO prices. 

However, Ng think that the government is not likely to implement this in the near term as it could weaken the already low CPO price and reduce the incomes of the country’s palm oil smallholders. 

Ng noted that Malaysia’s palm oil refining margin has improved recently as the prices for refined palm products have held steady despite the sharp fall in crude oil prices. “We believe the improved margin could be partly due to the recent sharp correction of the ringgit (most processed palm products exported in US$ terms) and the current high production season.”

Brokers can offer non-cash rewards to clients

KUALA LUMPUR: Bursa Malaysia Securities Bhd has issued a guidance on rebates on commissions, allowing equities brokers to offer non-cash rewards and icentives to clients.

In a statement yesterday, the stock exchange said this is meant to promote best business conduct among equities brokers.

“The introduction of the guidance will not only encourage fair market conduct by equities brokers in rewarding and retaining clients, but will also promote active retail participation.

“The guidance is also intended to inculcate best practices among equities brokers in the structuring of the types of non-cash rewards and incentives that can be offered by equities brokers to their clients,” it said. 

Brokers must not give any rebate on the commission that results in the client paying less than the minimum commission set out in Schedule 6.

The stock exchange also said non-cash rewards or incentives do not form part of the obligation under Rule 11.02 (3B) and may be offered to clients without being subjected to the minimum commission set out in Schedule 6. 

Bursa Malaysia stated that such non-cash rewards or incentives may be in the form of educational training and research materials. Clients can enjoy free investment seminars or talks, or a free subscription to financial journals or magazines. 

Clients can also accumulate and redeem points that are exchangeable with electronic products such as computers or telephones.

Brokers may also invite their clients to participate in a lucky draw based on their reward points.   

Bursa Malaysia noted the list of non-cash rewards or incentives above are merely examples and are non-exhaustive.

MPOC launch campaign in Europe

KUALA LUMPUR: Malaysian Palm Oil Council (MPOC) is raising publicity on the truth of oil palm planting and palm oil nutrition as it launched “a mark of provenance and an information campaign” in France and Belgium. 

In a statement issued from Paris, two days ago, MPOC chief executive officer Tan Sri Dr Yusof Basiron said this new European campaign is to combat preconceived ideas and invites the public to give their views on palm oil. 

For the past five years, many consumers in Europe are being mislead by widespread negative labelling on food and beverages at supermarkets. 

Palm oil's reputation damage is quite evident. A study by the industry revealed that in 2013, 328 products were labelled "No Palm Oil" in France and Belgium, up from 189 products in 2012. 

Last year, 39 producers replaced palm oil in their products with other fats, mainly hydrogenated sunflower oil. 

To set the record straight, MPOC's positive campaign seeks to reaffirm Malaysia’s commitment to responsible and sustainable production of palm oil. 

“We want to encourage a more balanced debate and correct the myths – the consequences of which are underestimated,” said Yusof. 

Today, many myths and falsehoods about palm oil are prevalent. This reputation damage is impacting those working in the industry in Malaysia or in Europe. 

“The truth is the palm oil industry provides a livelihood for over one million people in Malaysia, including 300,000 small farmers,” he said. "In France, palm oil imports are linked to 4,600 jobs and at neighbouring Belgium, this supply chain links 1,000 livelihoods." 

United Plantations Bhd vice-chairman Datuk Carl Bek-Nielsen, who was also at the launch, said: “We want to let every citizen and consumer form their own opinion based on the reality on the ground. 

“We hope they will realise that the Malaysian oil palm industry is committed to producing an oil that is more responsible in terms of the environment, health and the people who make a living from it,” he added.

Orchestrated by global communications agency Havas Paris, this new campaign entitled "They Say Everything And Anything At All About Malaysian Palm Oil" relies on the curiosity and exacting standards of citizen consumers. 

The integrated communication platform has several components: a press, poster and digital campaign in France and Belgium (a series of five amusing and colourful illustrations takes a playful look at widespread myths as a way of challenging the people); and an educational website ( offering informative content, together with a quiz to win a study trip to Malaysia. 

Others include a mini web-documentary (six two-minute sequences on production, animals, food, forests, health, social issues, etc) which follows the adventures of three students and young professionals who met Malaysian palm oil stakeholders; social networks to share content and interact with the public; and a platform for relaying information to the French and Belgian media.


Back home in Malaysia, MPOC had also initiated a boot camp with undergraduates from University Sabah Malaysia to raise public awareness on the reality of oil palm planting that had always adhered to balancing the needs of People, Planet and Profits.

MPOC has chosen the boot camp venue at the estates of IJM Plantations Bhd in Sandakan.

IJM Plantations is the 55 per cent-owned plantation arm of IJM Corp Bhd and one of the most efficient upstream oil palm planters in Malaysia. A relative newcomer to the plantation sector, IJM Plantations started in 1985. Today, its fully-matured estates in Sabah span over 25,000 ha. In Indonesia, it had also planted up 30,000 ha in East Kalimantan and Southern Sumatra.


SANDAKAN: The Palm Oil Bootcamp 2015 organised by Malaysian Palm Oil Council (MPOC), in collaboration with IJM Plantations Bhd and Universiti Malaysia Sabah (UMS), aims to help create a more knowledgeable workforce for the palm oil industry.
The Bootcamp sought to expose UMS undergraduates to activities within an oil palm plantation and the related supply chains, in the hope that the exposure would generate interest among participants to contribute positively to the Malaysian palm oil industry.
This may be either by choosing a career within the industry, or disseminating information that they have to gained among their peers, especially on sustainability issues.
Eighteen university students were shortlisted for the bootcamp based on their academic and extra curriculum achievements. They toured IJM Plantation's home base in Sandakan, Sabah.
They met up with the plantation company's agronomists at the Quality, Training and Research Centre (QRTC) at Desa Talisai Estate in Sugut.
At IJM Plantation's nursery facilities, the UMS undergraduates were briefed on how designer seedlings were produced, where the best breed of male pollen is matched with select mother palms.
Like other plantations companies, IJM Plantations leverage on predator and prey controls at its estates. Barn owls serve as eco-friendly pest control measures, keeping rodents away from the growing trees.
The undergraduates also learnt the practical aspects of fruit harvesting, transportation to the mill and optimum palm oil extraction from the fruits.

Bank Negara encourages renminbi use in China trade

KUALA LUMPUR: Bank Negara encourages but does not make it mandatory the usage of the renminbi in bilateral trade between Malaysia and China, a senior official said.

As the central bank, our role is to facilitate a conducive environment for businesses to choose whichever currency that is cost effective,” said Bank Negara director of investment operations and financial market department Adnan Zaylani Mohd Zahid.

Last year, he said, 2.2 per cent of China-Malaysia bilateral trade were invoiced and settled in renminbi.

“In the first half of this year, we’ve registered 1.5 per cent,” Zaylani told reporters at the Palm Oil Industry Leadership Forum held here yesterday.

“Following the appointment of Bank of China in Kuala Lumpur as the Renminbi Clearing House and better publicity of renminbi usage, this year, we should be able to see trade value settled in renminbi surpass 2.2 per cent of total trade,” he added.

Given that less than 3 per cent of Malaysian companies transact in renminbi, compared with a global average of 22 per cent, Zaylani noted there is real scope for growth, especially when China is Malaysia’s biggest trading partner.

Zaylani explained that the appointment of a Renminbi Clearing House in Kuala Lumpur is backed by currency swap between Bank Negara and its counterpart in China, People’s Bank of China.

The original currency swap arrangement between China and Malaysia was established in 2009 with just 80 billion renminbi. It was enlarged to 180 billion renminbi in 2012 and renewed for three years to 2015. Recently, both governments extended it for a further three years to 2018.

The renminbi is now the first foreign currency to be included in the Malaysian clearing system via Bank Negara's subsidiary Malaysian Electronic Clearing Corp Sdn Bhd (MyClear). Bank of China in Kuala Lumpur is working with MyClear in settling renminbi via the Real-time Electronic Transfer of Funds and Securities System (Rentas).

The Palm Oil Industry Leadership Forum is being organised by the Malaysian Palm Oil Council (MPOC) and supported by the Bank of China (Malaysia) Bhd, Malayan Banking Bhd and Bursa Malaysia.

In order to maximise value in the supply chain, palm oil exporters are encouraged use more of Bank Negara's renminbi swap lines established with the People’s Bank of China given the fact that China is Malaysia's biggest trading partner.

Bank of China (Malaysia) corporate banking department general manager Phelicia Ding, who spoke at the forum, explained a palm oiĺ exporter can benefit by seeking funding in the renminbi and subsequently, swap it into Ringgit, which can then be used to pre-finance commodity contracts.

Palm oil buyers in China can pay for the goods delivered in renminbi, which can be used to unwind its renminbi-funding position. “Palm oil exporters may be able to negotiate with buyers in China for better terms, such as longer contracts and possibly premiums,” Ding said.

As long as the US dollar remains the trade currency of choice, many transactions will continue to require a three way conversion, from the ringgit to the US dollar to renminbi with a loss of basis points at each conversion.

“We can avoid double conversion. There’s savings to be reaped from direct conversion between the ringgit and renminbi. Businesses in Malaysia can open bank accounts in renminbi and trade directly,” she said.

Separately, MPOC chairman Datuk Lee Yeow Chor concurred that with Bank of China in Kuala Lumpur chosen as the renminbi clearing house, palm oil exporters using bank facilities in Malaysia can have direct access to onshore renminbi markets in China without having to route their transactions through a mainland lender.

"This renminbi clearing house in Kuala Lumpur will certainly help in making trade flow smoother 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.

NST photographer wins MPOC award

KUALA LUMPUR: A black and white photo by New Straits Times photographer Sairien Nafis has won second place at the World Palm Portraits Photography Competition, earning US$1,000.

The international competition, organised by the Malaysian Palm Oil Council (MPOC), now in its third year, received more than 5,000 entries from more than 45 countries.

Sairien, a well-travelled photographer, received the award from MPOC chairman Datuk Lee Yeow Chor at the 2015 Palm Oil Industry Leadership Award dinner here last night.

"I've always viewed photography as creating art in journalism as I'm a newsman at heart. I'm happy to dedicate the award to my wife and three-year-old daughter. They are my inspiration," Sairien said.

To gain a better insight into oil palm seeds production, he visited Paloh and Kekayaan Estates at Johor owned by Kuala Lumpur Kepong Bhd in June this year.

There he met up with scientists and documented the intricate process of tree breeding and production of designer oil palm seeds.

Through painstaking research and development, oil palm planters reap the benefits of high yielding clonal palms. This is how Malaysia is able to feed the world with more nutritious cooking oil, and at the same time, safeguard biodiversity.

Sairien submitted his shots to the World Palm Portraits Photography Competition. Judges liked his black and white perspective shot at Kekayaan Estate featuring flocks of long-legged white birds feeding on insects.

During his career, Sairien's other notable assignments include covering Japan's tsunami and earthquake disaster in 2011 and daily lives of Syrian refugees in Jordan.

Oh no! Not the sun ...

What has palm oil got to do with swimming? It's in the sunscreen :)

If you're going to be exercising in the water, it's worth getting a sunscreen resistant to water and sweat.

People who have sensitive skin or skin conditions like rosacea should use sunscreens designed for children. 

Go for titanium dioxide or zinc oxide instead of chemicals like para-aminobenzoic acid (PABA), dioxybenzone, oxybenzone, or sulisobenzone. 

If you have skin irritation or allergies, avoid sunscreens with alcohol, fragrances, or preservatives.

Sunscreens help shield you from the sun's dangerous ultraviolet (UV) rays in two ways. 

Some work by scattering the light, reflecting it away from your body. 

Others absorb the UV rays before they reach your skin.

A few years ago, choosing a good sunscreen meant you just looked for a high sun protection factor (SPF) -- which rates how well the sunscreen protects against one type of cancer-causing UV ray, ultraviolet B (UVB). SPF refers to blockage of UVB rays only.

Research soon showed that ultraviolet A rays (UVA) also increase skin cancer risk. While UVA rays don't cause sunburn, they penetrate deeply into skin and cause wrinkles. Medical practitioners estimate that up to 90% of skin changes associated with aging are really caused by a lifetime's exposure to UVA rays.


What goes around, comes around. This is a reminder to the greedy bullies who ruthlessly lure the arrogant and selfish cowards among us to hurt the innocent.

Let there be light. God has always been and is watching over the vulnerable and innocent.

FGV may seek revised terms for US$680m Eagle High deal

KUALA LUMPUR: (Bloomberg) Felda Global Ventures Holdings Bhd (FGV), the world’s biggest crude palm oil (CPO) producer, is considering seeking revised terms for its US$680 million (or RM2.8 billion) deal to buy a stake in PT Eagle High Plantations, said people with knowledge of the matter. 

It might ask for a lower price to take into account issues discovered during due diligence on the Indonesian company, they said. The two companies reached a preliminary agreement in June and said they planned to announce a final pact by the middle of last month, a deadline that has since been extended to October 31. 

FGV said, on August 14, it had “substantially completed” due diligence and was in the process of negotiating the terms of the definitive documentation. FGV shares rose as much as 4.9 per cent before closing unchanged at RM1.22 yesterday. 

Eagle High dropped 1.2 per cent yesterday, the first decline in a week, compared with a 0.3 per cent slide in Jakarta’s benchmark gauge. It has lost 43 per cent since the initial deal was announced.

Since the start of the year, CPO prices have declined 13 per cent to current low level of RM2,000 per tonne. There are urgent concerns that slowing Chinese growth will hinder other emerging economies. 

Eagle High owns about 425,000ha, of which 152,000ha have been planted, according to a June filing to Jakarta stock exchange. 

FGV announced to Bursa Malaysia on June 12 it planned to buy 37 per cent of Eagle High from Indonesian conglomerate Rajawali Group for US$680 million in cash and shares. That implies an enterprise value of about US$17,400 per hectare, compared with the US$25,900 that Sime Darby Bhd paid for New Britain Palm Oil Ltd in March, said FGV chief executive officer Datuk Mohd Emir Mavani Abdullah in a July interview. 

The Employees Provident Fund, a substantial shareholder in FGV, is concerned about the valuation FGV was paying for a small stake in Eagle High, Bernama reported in June. 

FGV said in an emailed statement the deal was “still in process for the time being” and the final report on due diligence would be announced at the company’s upcoming shareholders meeting. 

Darjoto Setyawan, managing director of Rajawali Group, did not respond to an email and call. Eagle High corporate secretary Rudy Suhendra said he was not in a position to comment as the deal was being done by the parent company. 

FGV, which manages more than 450,000ha in Malaysia and Indonesia, has lost nearly three-quarters of its market value since its June 2012 initial public offering. Its second-quarter net income fell 70 per cent to RM46.1 million due to lower palm oil prices.