Archive for April 2010

Msia-Indonesia Planters Meet To Discuss Deforestation Charges

Written by Lim Shie-Lynn and sourced from

KUALA LUMPUR -(Dow Jones)- Palm oil producers and government officials from Malaysia and Indonesia will meet May 3 to discuss the latest round of attacks by Greenpeace and other environmental organizations that have blamed producers for destroying rainforests and biodiversity, an industry executive said Wednesday.

The meeting, to be held in Kuching, Sarawak will discuss issues that affect the palm oil industry, including planting oil palms on peat soil, a practice that environmental groups say will increase greenhouse gas (GHG) emissions as peatland hold significant amounts of carbon.

Indonesia's Sinar Mas came under fire recently after Greenpeace charged the company with failing to follow sustainable plantation practices required by the Roundtable on Sustainable Palm Oil (RSPO), a multi-stakeholder group formed to promote ethical plantation practices including the preservation of rain forests and biodiversity.

The report said Sinar Mas, the parent company of the Jakarta-listed PT Sinar Mas Agro Resources and Technology Tbk and the Singapore-listed Golden Agri-Resources, was widely involved in clearing rainforests and draining peatland for developing oil palm plantations. The campaign forced global food giants such as Nestle NV and Unilever Plc to stop sourcing palm oil from Sinar Mas, despite the company being a member of the RSPO, an industry-sponsored certification body.

Sinar Mas has re-iterated its commitment to sustainable practices and appointed Control Union Certification and the BSI Group to carry out independent audits. It has also suspended a plantation manager who the company said was responsible for questionable practices.

But Greenpeace is demanding that even trading companies such as Cargill Inc boycott Sinar Mas' palm oil, amid concerns that its produce is indirectly reaching end consumers through third parties, making the boycott by Unilever and Nestle meaningless. Cargill has said it would wait for the results of the external audit before taking a view.

"It is important for us to strategise and improve communication ... to be well-positioned when the industry meets to address this issue at the RSPO level," said Mamat Salleh, chief executive of the Malaysian Palm Oil Association (MPOA).

He said the upcoming meeting will be a follow-up from a collaboration agreement signed between the MPOA, the Indonesian Palm Oil Association (or GAPKI) and other plantation organizations in early March.

The meeting has generated much speculation amid talk that some palm oil producers, particularly those in Indonesia, may be planning to set up an alternative certification body, as they felt the RSPO hasn't been able to serve their cause. Some industry executives have even said the meeting will be the precursor to setting up the alternative certification body.

Most major plantation companies in Malaysia are members of the RSPO while only some Indonesian companies have joined the body. Indonesia and Malaysia currently account for about 85% of the global palm oil supply. "The key issue in the upcoming meet is to discuss ways to address environmental and other equally compelling concerns. Producers are keen on a win-win solution at the RSPO level before opting to setup of a separate certification body," Mamat said.

Growers had threatened to walk out of the RSPO annual meeting last November and quit the organization if it agreed with demands by Europe and Greenpeace to include additional conditions such as GHG emissions to the already stringent certification process.

Many growers say they are burdened with too many RSPO requirements while those with certified oils feel the demand for "green" palm oil was sluggish as buyers weren't willing to pay a premium for RSPO-certified sustainable palm oil.

Carotech sees profit on weak US dollar

CAROTECH Bhd, a producer of palm oil nutrients and biodiesel, is hopeful of returning to profits in the current financial year ending June 30 2010, as the weak US dollar means lower loan repayment. It posted a loss of RM17.46 million in 2009.

"We should be able to break even or make some profits this year as the weak US dollar leads to considerable paper gains in our loan repayment," said Carotech managing director David Ho Sue San.

About 60 per cent of Carotech's total borrowings are in US dollar.

"Also, since the start of 2010, sales of phytonutrients and biodiesel have been quite strong," he told Business Times in an interview in Kepala Batas, Penang, recently.

Carotech is supplying 60,000 tonnes of palm biodiesel worth RM170 million to energy trader Mercuria Energy Trading SA. The one-year contract expires at the end of this year.

Since Carotech is the pioneer in extracting and selling palm tocotrienols for medical and anti-aging use, Ho revealed that European clients are starting to buy more palm oil vitamin E to formulate supplements that prevent hair loss.

Asked on Carotech's earning growth prospects, Ho said it very much hinges on the Hospital Kepala Batas clinical trial on the ability of palm oil vitamin, particularly tocotrienols, to prevent stroke. "Animal studies have, so far, shown tocotrienols are able to protect brain cells from dying in the event of a stroke. If this trial in Penang proves that it works on human, many lives will be saved," Ho said.

"We're optimistic of a breakthrough finding that will spur more neuro-protective studies in other countries. As the world population age, people look to natural and preventive medicine that can help preserve the quality of life of stroke victims and their loved ones.

"Natural medication of palm tocotrienols for stroke prevention is set to be a multi-billion dollar market," he added. Conducted by Universiti Sains Malaysia, Malaysian Palm Oil Board and Carotech's team of scientists, preliminary findings of this world's biggest human trial involving 400 volunteers consuming palm tocotrienols to prevent stroke will be revealed in January 2011.

Palm oil trade barriers perpetuate poverty

EUROPE, in reducing palm oil usage in its food supply chain, blames oil palm planting for widespread tropical deforestation and peatland clearance.

France's largest frozen food maker Findus said it is removing palm oil from its products in favour of rapeseed oil. French retailer Casino, too, said more than 200 food products would be palm oil-free by the end of the year. This policy would apply to its other retail divisions like Franprix, Leader Price and Monoprix. Another food retailer Auchan said it was working on ways to guarantee all its products are palm oil-free. Carrefour, the world's second-largest retailer, said it will replace palm oil in several branded goods.

British retail chain Marks & Spencer started a campaign against palm oil by putting up five-foot displays in its UK stores stating: "We think that destroying rainforests for palm oil is too high a price to pay for a biscuit."

Two weeks ago, Greenpeace campaigners abseiled into Nestle's annual shareholders meeting in Switzerland and demanded that the food giant stop using palm oil. They hung a banner with the slogan "Nestle, Give the orangutans a break!" and claimed Nestle's use of palm oil in KitKat chocolate bars was harvested at the expense of the rainforests.

These developments have hit a raw nerve among Malaysian lawmakers.

Kanowit Member of Parliament (MP) Aaron Ago Dagang said there's a lot of talk linking oil palm planting to deforestation and climate change but until now there're no empirical evidence. "We need to look at it from all angles," Dagang said in an interview at the Parliament lobby in Kuala Lumpur recently.

He drew attention to a recent news report from Jakarta where World Growth chairman Alan Oxley said several environment non-governmental organisations (NGOs) have strong connections with the European Commission.

Oxley pointed out that up to 60 per cent of WWF Europe's revenue is funded by the EU government. Europe can prioritise environmental issues over economic growth because they are already wealthy, he said.

A quick check on the European Commission's website revealed the Directorate-General for the Environment had, in the last 10 years, handed out over €66 million (RM211 million) to green NGOs. In 1998, the EU funding to environmental NGOs was just over €2 million (RM6.4 million) but last year, the amount nearly topped €9 million (RM29 million).

Mambong MP Datuk Dr James Dawos Mamit said he is not surprised by the EU government funding these NGOs as propaganda proxies. "Politicians in the EU are using political solutions, disguised as environmental concerns, to protect trade interests of their local farmers," he said.

Mamit pointed to an independent think tank report released from Brussels, Belgium admitting the EU Renewable Energy Directive discriminates against imported biofuels, such as palm oil. The EU Renewable Energy Directive is a law that provides the guidelines for European countries to draw up their own biofuel regulations.

The GlobEcon report titled "European Policies Towards Palm Oil: Sorting Out Some Facts" , admits the Renewable Energy Directive's foreign biofuel greenhouse gas calculations as faulty and intentionally discriminate against palm oil. The report demonstrates that the default assumptions embedded in the Directive about the ecological impact of foreign biofuels are based on politics, not scientific or economic reality.

While the use of biofuels across the EU is rising, so too is the chorus of environmental activists opposing their use. Sadly, many of the claims that foreign biofuels, specifically palm oil, are a threat to the environment are seriously flawed, some even completely unfounded, GlobEcon director Dr Gernot Pehnelt wrote.

Standing before lawmakers at the European Parliament, Pehnelt explained how the oil palm industry drive economic growth to alleviate poverty in developing nations like Malaysia and Indonesia. He also urged EU lawmakers to acknowledge the sufferings in low-income nations that palm oil critics continue to perpetuate.

Mambong MP Mamit concurred with Pehnelt that the EU Renewable Energy Directive restricts biofuel imports by rejecting forest land conversion and mandating compliance to greenhouse gas emission standards that are not science-based.

Mamit, who is an environmental expert, explained that conversion of degraded forest to oil palm plantations is just like establishing pine tree plantations in Europe and North America. "In fact, oil palm trees are better at sequestering carbon dioxide than pine trees. Herbs, bushes and shrubs in oil palm plantations thrive underneath the canopy and trunks of oil palm trees," he said.

In Europe and North America, prescribed burning is carried out in pine tree plantations every spring to eliminate pests like pine-bark beetles and fungi. Yet, such destruction of plant biodiversity and greenhouse gas emissions is often ignored.

Mamit then highlighted the hipocrisy of the EU renewable energy directive that dictates developing countries to protect the environment to a far greater degree than Europeans did at the same stage of development but refuses to recognise the high opportunity cost of foregone development.

"If our oil palm planters fail to conform to EU's definition of 'sustainable standards', we are denied access into their market," said Mamit. "It clearly is a political trade barrier meant to protect EU rapeseed oil producers."

On European green NGOs' calls to reject oil palm planting on Sarawak's peat soil and the imposition of unrealistic greenhouse gas criteria on palm oil exports, Julau MP Datuk Joseph Salang Gandum said "We need to take a more balanced view, based on logic and facts."

"These lobbies seemed more targetted at killing the growth of oil palm plantings and blocking palm oil shipments into developed nations like Europe. Such trade barriers only serve to perpectuate poverty in rural Malaysia," he added.

Gandum said oil palm planting has allowed Malaysia to supply affordable cooking oil and margarine to billions of people in other developing nations like China, India, Pakistan, Bangladesh and Vietnam. He cited numbers from Oil World and Malaysian Palm Oil Board's (MPOB) reflecting the growing global palm oil consumption and significant value addition of the palm oil industry to the nation's economy.

According to Oil World trade journal, Malaysia and Indonesia collectively export the bulk of 36.8 million tonnes of palm oil.

In the last two years, Malaysia earned between RM50 billion and RM65 billion (or US$15-20 billion) a year from palm oil exports. Indonesia Palm Oil Commission reportedly said the republic earns US$10 billion annually from palm oil shipments.

Malaysia's annual US$20 billion palm oil exports supports some two million jobs and livelihoods along the sprawling palm oil value chain.

Bankers, insurance companies, islamic financiers, freight forwarders, cargo surveyors, shipping companies, traders, brokers, stock analysts, fund managers, food scientists, process engineers, mechanical engineers, agronomists, economists, ecologists, publishers, doctors, cosmetics companies, detergent manufacturers, lecturers, land surveyors, contractors and relevant government officials are all stakeholders in the palm oil industry.

MPOB's data also show more than 330,000 smallholder families, working on 1.6 million hectares of oil palm plots, produce a quarter of the nation's palm oil exports.

"The numbers speak for themselves. The final frontier of Malaysia's oil palm planting expansion is in Sarawak. Many who live on native customary land, stand to uplift themselves from poverty through sustainable oil palm planting," Gandum said.

"When I say sustainable, I mean better enforcement of the laws governing land boundary rights, good agriculture practices and workers' rights that had already been enacted by Parliament," he added.

EU's Biofuel Norms Flawed, Penalizes Palm Oil --Executive

Written by Lim Shie-Lynn and sourced from

KUALA LUMPUR (Dow Jones) -- Flawed empirical calculations and wrong assumptions on greenhouse gas emissions make the European Union's (EU) renewable energy policy biased against non-European biofuel producers, including those of palm-based biodiesel, according to Dr Gernot Pehnelt, director of independent research and consulting institute GlobEcon in Germany.

According to the EU renewable energy directive, biofuels must result in greenhouse gas emissions reductions of at least 35% compared with fossil fuels in 2009 and rising over time to 50% by 2017, creating a market for at least 23 million metric tons of biofuels annually.

Under the proposed renewable energy directive, biofuel producers in the EU are able to claim higher greenhouse gas emissions savings than biofuel producers outside the region, said Pehnelt.

"It is particularly problematic since any reasonable emissions budgeting comparison showed palm-derived biofuel is less carbon-intensive than those produced elsewhere, including Europe," said Pehnelt, who is also affiliated to the European Centre for International Political Economy.

"The EU has embedded protectionist measures into the directive at the behest of anti-development environmentalists and the uncompetitive European biofuels industry. These measures set unfair values on greenhouse gas savings for foreign biofuels, thus precluding market access," he said.

Most life-cycle analysis carried out by researchers estimated greenhouse gas emissions savings of 55% for palm-oil based biodiesel, but the EU's calculation, done by its scientific and technical research arm the Joint Research Centre, showed the use of palm-oil based biodiesel failed the 35% requirement, as it achieved only a 19% reduction in greenhouse gas emissions. The life-cycle assessments carried out on palm oil showed a wide variance in greenhouse gas emissions savings as data used by the centre were based on old data.

The proposed directive, which will come into effect at the end of the year, also requires that sustainable biofuels should be produced with "no damage to sensitive or important ecosystems."

As palm oil is widely criticized by environmental groups and blamed for contributing to environmental degradation in Malaysia and Indonesia, some buyers may prefer to source other oils that are less controversial, palm-based biodiesel producers fear.

Europe's push for the use of renewable fuels in the transport sector has created one of the world's largest biofuel markets, with demand from the region estimated around 10 billion liters (3.5 million tons) in 2009.

Though palm oil-based biodiesel exports from Malaysia rose 20% or around 45,000 tons to 227,457 tons in 2009, that figure is abysmally low compared with the increase in general demand, as requirements under the directive are limiting palm-based biodiesel's access to the European market.

"The commission is committed to reducing Europe's carbon emissions. It is clear that the EU can't meet its own biofuel needs, so there is room for imports (of biodiesel). We are not against imports (of biodiesel), but the commission wants to ensure this is good for the environment and for trade as well," Marlene Holzner, spokeswoman for Energy Commissioner Gunther Oettinger, told Dow Jones Newswires, in response to this article.

But there is a ray of hope after a recent study showed the EU recently started referring to oil palm plantations as "continuously forested areas," a move industry experts consider positive for palm-oil based biodiesel in Europe.

A recent study by the International Food Policy Institute, commissioned by the Directorate General for Trade, under the European Commission, found palm oil to be the most efficient feedstock for biodiesel, as it produces byproducts and has an oil yield six times higher than comparable edible oils, such as rapeseed.

"All these studies have different results. We do not comment on the content of the studies. Once studies on the subjects are finalized, the European Commission will issue a report by the end of 2010," Holzner said.

Renewable energy feed-in-tariffs bill to be tabled in Oct

THE government is set to table a new law to establish feed-in-tariffs for renewable energy in Parliament this October, said Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui.

      "It will be for the whole range from solar, biomass, solid waste to hydro. And when I say renewable energy, I also mean methane sourced from palm oil mill effluent for use in the gas pipeline," he told Business Times by phone last night.

Earlier in the day, Chin said the Attorney General's Chambers was in the midst of drafting the new legislation on feed-in tariffs. "We will table it in Parliament this October. Hopefully, the process can be completed by the end of the year," he told reporters after the launch of the Second Malaysia-Europe Trade and Investment Forum in Kuala Lumpur yesterday.

Earlier in his speech, Chin said the New Economic Model had identified the green technology sector as one of the new sources of economic growth. "Our major initiative will be the introduction of the feed-in tariffs. Once that is done, we may need the European Union's technology and expertise to modernise and expand our renewable energy sector, especially in biomass and solar energy," he said.

Chin said the government will come up with a strategic plan to restructure the electricity supply sector. "It has to be more market-driven. We want to liberalise energy generation and distribution," he said, adding that at an advanced stage, smart grids, smart meters and other related elements will be introduced.

   The Energy, Green Technology and Water Ministry is organising the International Greentech & Eco Products Exhibition & Conference (IGEM).

Scheduled for October, the ministry expects 1,000 dignatories to fly in to Kuala Lumpur. Chin said the inaugural gathering will see Prime Minister Datuk Seri Najib Razak chairing a regional ministerial meeting on green technology development.

   To a question on the drawdown progress of the RM1.5 billion Green Technology Financing Scheme, Chin replied he is upset with the National Green Technology Centre's slow pace in processing the applications. He has now given the agency another month to do so. "I understand this is something new but after three months only 19 out of 200 over applications have been processed. I'm not happy," he said.

The RM1.5 billion Green Technology Financing Scheme was established under Budget 2010 to encourage supply and usage of green technologies. The loan is meant to help companies which are producers and users of green technologies. Developers of green technologies are entitled to apply up to RM50 million over 15 years. Companies that use green technologies can apply up to RM10 million for 10 years.

Wonders of palm oil vitamin E

MOST people think vitamin E only comes in a single form, but there are actually eight -- four tocopherols and four tocotrienols. The commonly found vitamin E supplements on the shelves of pharmacies are tocopherols.

While tocopherols have been more extensively studied, there is now mounting medical evidence showing tocotrienols have greater benefits when it comes to preventing brain cell death.

Using mouse brain cells, scientists at the Ohio State University Medical Center found that tocotrienols -- and not tocopherols -- have the ability to stop an enzyme in the brain from releasing fatty acids that eventually kill nerve cells.

In an email interview, Professor Dr Chandan Sen says tocotrienols, the potent variants of vitamin E, are not abundantly present in the American diet. This is because the margarine and cooking oil, which is largely made up of soy, canola, sunflower and olive oils, only have the tocopherol variants of the vitamin E family. Ten years ago, Dr Sen had already discovered tocotrienols' ability to protect the brain from stroke.

The current study offers more details on how that protection works. "All eight different forms of the natural vitamin E have their distinct functions. Our research suggests that tocotrienols target specific pathways to protect against neural cell death and rescues the brain, after stroke injury," says Dr Sen, professor and vice chair for research in Ohio State's Department of Surgery and senior author of the study.

"Here, we've identified a novel target that explains how neural cells are protected by tocotrienols, the lesser known but far more potent form of vitamin E."

Strokes occur when a blood vessel in the brain is blocked or bursts.When this happens, oxygen supply carried by blood vessels does not reach the brain cells, which then start to die. Symptoms of a brain stroke are sudden. They include sudden numbness, paralysis or weakness in victim's face, arm, or leg, especially on only one side of the body, sudden vision changes, inability to understand or formulate speech and a sudden, severe headache.

High blood pressure, high cholesterol and diabetes are some key risks that trigger brain strokes. Dr Sen says his team of researchers have studied an enzyme that is activated after a stroke in a way that causes brain cells to die.

"We found that it can be put in check by very low levels of tocotrienols. So, what we have here is a naturally derived nutrient, rather than a drug, that provides this benefit," says the professor, who is also the director of Ohio State's Comprehensive Wound Center.

Dr Sen and colleagues had linked tocotrienols' effects to various substances that are activated in the brain after a stroke before they concluded that this enzyme could serve as an important therapeutic target. The enzyme is called cystolic calcium dependent phospholipase A2, or cPLA2.

Following the trauma of blocked blood flow associated with strokes, an excessive amount of glutamate is released in the brain. Glutamate is a neurotransmitter that, in tiny amounts, has important roles in learning and memory. But too much of it triggers a sequence of reactions that lead to brain cell death ­ the most damaging effects of a stroke.

Dr Sen and colleagues found that brain cells treated with tocotrienols were 100 per cent more likely to survive than cells exposed to glutamate alone. He also noted that only a small amount of tocotrienol is needed to achieve these effects -- about 250 nanomolar, which is 10 times lower than the average amount of tocotrienol circulating in humans who consume the vitamin regularly.

"What this means is, you don't need a lot of palm oil vitamin E to see these effects," he says. "You only need 100mg, twice a day, for 10 weeks to build up an adequate tocotrienol concentration in your system," he adds. This research by Ohio State University appeared in the March 2010 issue of Journal of Neurochemistry.

Supported by the US National Institutes of Health, the study was co-authored by Savita Khanna, Sashwati Roy and Cameron Rink of the Department of Surgery and Narasimham Parinandi and Sainath Kotha of the Department of Internal Medicine, all at Ohio State University; and Douglas Bibus of the University of Minnesota. New Jersey-based Carotech Inc has been the main supplier of palm oil vitamin E brandnamed Tocomin and Tocomin SupraBio for such studies for almost a decade.

"We are proud to have been regularly chosen and associated with medical studies in tocotrienols, a naturally occurring nutrient in palm oil," Carotech Inc vice-president WH Leong says in a separate interview. To date, Carotech is the world's largest and only GMP-certified tocotrienol producer.

"Tocotrienols -- not tocopherols -- taken orally as supplements, are able to penetrate deep into our internal organs like the brain, kidneys and liver. It is this characteristic that offers bright promise in clinical trials that seek to save lives from killer diseases such as strokes, heart attacks and cancer," adds Leong.

Carotech Inc's parent company Carotech Bhd is listed on Bursa Malaysia stock exchange. Apart from supplying palm oil vitamin E for medical research at Ohio State University in the US, Carotech is also facilitating the same nutrient for human trials on prevention of strokes and heart attack at Hospital Kepala Batas in Penang.

Led by Universiti Sains Malaysia and Malaysian Palm Oil Board's team of scientists, this world's biggest human trial using palm oil vitamin E is filed and viewable at the US Food and Drug Administration website. This means the findings of this three-year trial ending January 2011, whether positive nor negative, shall be published worldwide.

If the outcome is positive, Carotech will be the world's first to embark on making cholesterol-lowering medicine from palm oil vitamin E.

IOI Corp: CPO can hit RM3,000 per tonne soon

IOI Corp Bhd anticipates palm oil prices to hit RM2,800 to RM3,000 a tonne in the next few months as it braces for lower output.

As one of the most efficient planters and biggest palm oil producers in the country, IOI's price forecast is highly awaited by vegetable oil traders and analysts around the world.

IOI executive chairman Tan Sri Lee Shin Cheng said that he expected the group's current-year palm oil output to fall as much as 8 per cent to around 715,000 tonnes. In the last financial year ended June 30 2009, IOI managed to squeeze 777,310 tonnes of palm oil from its 80-odd estates.

"I still hold the forecast at between RM2,800 and RM3,000 per tonne because of localised weather phenomenon like El Nino that affects output. There's also the labour shortage issue - workers come and go," Lee told reporters on the sidelines of the official opening of Hong Leong Bank's branch in Bandar Puteri Puchong, Selangor, yesterday.

At an economic conference two months ago, when palm oil was trading at around RM2,400 a tonne, Lee said he was optimistic of prices trending upward to between RM2,800 and RM3,000 a tonne. The price did rise to a high of RM2,700 a tonne, but has fallen rapidly in the last four weeks.

When asked why, Lee replied: "The US dollar has weakened against a stronger ringgit and that has dragged palm oil prices (lower) to a certain extent." According to Bank Negara Malaysia's website, US$1 is at RM3.21 currently, from RM3.45 a month ago.

Lee does not expect the palm oil price to continue falling. "Demand for palm oil is very strong all around the world, especially traditional markets. Palm oil is the best vegetable oil in the world. It is nutritious and far more flexible in its applications," he said.

Yesterday, third-month benchmark crude palm oil on the Bursa Malaysia Derivatives market traded RM39 lower to close at RM2,500 a tonne.

Sarawak CM: We will reject false claims to NCR land

MUKAH, April 6 (Bernama) -- Chief Minister Tan Sri Abdul Taib Mahmud today reiterated the state government''s stand of not entertaining any false land claim.

But at the same time, the state government will not allow those with genuine claims, especially over Native Customary Rights (NCR) land, to be "cheated of their rights". Taib gave this assurance when launching the Land and Survey Department's Land and Survey Information System (LASIS) for the Mukah Division, here, today.

The system is an integrated land information system incorporated with Geographic Information System or GIS capability.

It was jointly developed 25 years ago and continuously refined and enhanced based on the Information and Communication Technology platform by the department, Sarawak Information Systems Sdn Bhd (SAINS) and the Information and Communication Technology Unit in the Chief Minister''s Department.

The international and national award-winning system involves the automation of much of the major work processes of the department in enhancing its service delivery efficiency. It is used in land planning, survey computation, cadastral mapping, land alienation, land valuation, titles registration and the land revenue system.

Taib also gave the assurance that the government would uphold utmost integrity when dealing with land-related issues. He cited a case in the 1980's involving the residents of an Iban longhouse, Rh. Chang who had claimed ownership of a piece of land between Sibuti and Niah in the Miri Division.

"The government then had given the right to develop the land to a private company. But it later decided to rescind the right when it found a piece of document signed by the Resident of the Miri Division under the former colonial government which had indeed allocated the land to the longhouse folk. The government could have conveniently hid it but it did not do so," he said.

Taib said the state, with a population of 2.5 million, had a good land administration system although it was still plagued by land ownership and boundary disputes. He said the situation had been aggravated by instigators out to gain political mileage by exploiting the land issues. "We have to date issued 600,000 land titles and another 188,000 titles for NCR land," he said.

On LASIS, he described it as a big boon to the state's land development programmes where it aimed to open up hundreds of thousands of hectares before 2020.

It would also be a tremendous boost to the development of SCORE (Sarawak Corridor of Renewal Energy) within the next 20 years with its emphasis on heavy and downstream industries, marketing, handling of logistics and transportation and others, he added.

Planters want facts on peatland oil palm planting

The future of oil palm plantings lies in Sarawak as Malaysia's agriculture land is limited. Since Sarawak has overtaken Johor to be the second biggest oil palm state in the country after Sabah, it is only logical for the Malaysian Palm Oil Board (MPOB) to be more forthcoming in the communication of facts and figures of oil palm planting on peatland to planters there.

"The future growth of the oil palm industry is in Sarawak's fertile agriculture land," said Sarawak Oil Palm Plantation Owners Association (Soppoa) secretary Phillip Ho. "But we now have a big problem of uncollected fresh fruit bunches rotting in the fields due to labour shortage," he told Business Times in an email interview from Miri.

"Malaysians are averse to working in plantations. Estate works, by nature, are far from the bright city lights. We have very little choice but to depend on foreign labour to do the job," he said.

Last year, Sarawak only harvested two million tonnes of palm oil. Soppoa estimates that a 10 per cent average of uncollected fruits at RM2,000 crude palm oil price translates into RM400 million loss in export opportunity from Sarawak.

In a separate interview, Kapit member of Parliament Alexander Nanta Linggi stressed that it is of national economic interests that MPOB inform the public more frequently on progress studies of sustainable peatland farming so that investors understand how best to optimise what is available in Sarawak.

Non-governmental organisations (NGOs) like Greenpeace and Wetlands International have claimed that oil palm planting on peatland causes tremendous pollution in the form of greenhouse gas emission when water is drained from the soil. These groups, however, failed to provide any credible scientific evidence to support their allegations.

"Last week, in Parliament, I urged MPOB to give us a clearer understanding of peatland agronomy. This is necessary so that we, lawmakers, can better discern unfounded claims by critics," Linggi said.

As at December 2009, Sarawak's oil palm planted area stood at 840,000ha, of which close to 10 per cent of the hectarage is owned by 7,300 smallholder families.

Linggi spoke of higher economic potential of oil palm planting compared with other cash crops.

"About 70 per cent of my constituency population is living below the poverty line of RM840 monthly income," he said. "Nobody criticises pineapple planting on peatland. So, why are there unfair attacks from NGOs when my people want to plant oil palms?" he asked.

"With closer cooperation between MPOB and planters in Sarawak on how best to plant oil palms on peatland, more people will be on the right track to lift themselves out of poverty. I see this as part of the New Economic Model that targets high income via sustainable development," he added.

Linggi said he supports the good intentions of the Sarawak state government agencies like the Land Custody and Development Authority (Pelita) and the Sarawak Land Consolidation and Rehabilitation Authority (Salcra) to develop customary rights land (NCR) land so that the rural poor is lifted out of poverty. But this can only be achieved with sincerity.

"I urge Pelita and Salcra, in managing such joint ventures, be more engaging with participating natives and not burden them with inefficiencies. Government officials should be more mindful that it is the participating natives' land that is being developed, not state land. Investors, too, should accord good dividends to native shareholders," he said.

According to recent filings in the Hansard Report, Kanowit Member of Parliament Aaron Ago Dagang asked if the nutritional value of palm oil harvested from peatland is inferior to that planted on hill slopes. In response, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said, "the oil quality is just as nutritious."

In 2008, the government had set up the Institute of Tropical Peat to address concerns over the cultivation of oil palm on peat land. MPOB had also published a technical manual on peatland oil palm planting and is carrying out studies on ways to reduce production costs.

Dompok then sought tighter support from all Members of Parliament to help spread the truth and facts of sustainable practices by oil palm planters to quash baseless allegations by NGOs, who have been using under-handed tactics to lobby against oil palm planting in Sarawak's 1.6 million ha of peatland.

Planter-gov talks can cut wastage

Billions of ringgit are wasted along the whole palm oil value chain every year but oil palm planters say closer ties with the government can prevent such losses.

"So far, reports have been focusing on labour shortage. It is not just that one issue. It is more of inefficiencies along the whole value chain," said Layar Positif Sdn Bhd managing director Charles Chow, an oil palm smallholder in Sandakan, Sabah.

He urged the Malaysian Palm Oil Board (MPOB), the Immigration Department and the finance and human resources ministries to be more engaging with smallholders. "By having regular dialogues, all stakeholders in the industry stand a better chance of finding pragmatic solutions to minimise wastage throughout the supply chain," he said.

Since MPOB is on an aggressive drive to get smallholders to replant unproductive trees with high yielding hybrids, one would expect matching expansion in milling, refining and storage infrastructure. Chow related how smallholders experienced tremendous wastage from price volatility when fruit bunches were rotting in the field because the industry lacked adequate storage.

When palm oil prices go up, planters are happy. In March 2008, prices soared to its highest of RM4,486 a tonne and that prompted overseas buyers to cut back their purchases and when the global financial crisis set in, it prompted governments in China and India to tighten credit facilities. This lead to a flood of defaults and prices fell to a low of RM1,390 a tonne in October 2008.

Chow recalled how shipments were stuck in Sandakan and Lahad Datu ports when buyers delayed taking delivery in the hope that prices would fall. "At that time, refiners' storage were filled to the brim and mills turned away our produce because they are operating at full capacity," he said.

Sabah, the largest oil palm planting state in the country. Last year, it saw output shrink for the first time ever to 5.45 million tonnes because there were not enough labourers to harvest fruit bunches in the plantations.

Since there was a critical shortage of harvesters, Sabah output fell miserably. As much as 20 per cent more fruits or one million tonnes of palm oil were left unharvested in the plantations because of critical shortage of strong and experienced hands, Chow said.

He said MPOB, in giving new licences for expansion of planted area, should give accurate worker estimates to the Human Resources Ministry so that the industry is able to hire enough harvesters to collect the fruits.

"Let's say, if the government had approved recruitment ratio of one harvester to 10ha, we could have harvested an additional one million tonnes of palm oil. At a conservative pricing estimate of RM2,000 per tonne, opportunity loss in palm oil exports from Sabah works out to be RM2 billion," he said.

In a separate interview, Valentino Ting, another smallholder based in Sandakan said what he sees now is an ad hoc approach to complaints and that the same problems remain.

Last year, Sabah produced 5.45 million tonnes of palm oil and this should translate into some RM80 million of cess collected by MPOB. "We want MPOB to use a portion of the money collected to upgrade and expand bulking facilities at the ports. In case of a price plunge in the international market, smallholders like us can continue to sell fruits to the millers," he said.

IOI to seek green cert for oil palm estates in Indonesia

This newsreport by Reuters appeared in Business Times pullout today.

IOI Corp targets to plant up 60,000ha of its Indonesian land holdings with oil palms in five years and will then seek "green certification" for these estates, a top official said yesterday.

IOI, Malaysia's second largest listed planter, has come under fire from green groups who say it has destroyed rainforests and engaged in open burning to clear its Indonesian estates - an allegation the firm has strongly denied.

Group executive director Datuk Lee Yeow Chor said while the "noise by the environmentalists" had slightly affected palm oil exports to Europe, they had overlooked that oil palm estates helped drive developing countries like Indonesia.

"We don't plan to expand further into Indonesia but we will focus on planting and developing the areas," he said in an interview at Invest Malaysia 2010. "And we will apply to the Roundtable on Sustainable Palm Oil for a green certification," he said, referring to an industry body of consumers and planters that has developed an ethical certification system that includes pledges to preserve forests and wildlife.

IOI currently has about 80,000ha of land in the Indonesian province of Kalimantan in Borneo Island after venturing into Indonesia in 2007. The firm has obtained green palm oil accreditation for some of its plantations in Malaysia.

IOI's plantation holdings total roughly 250,000ha, and Lee said the firm has allocated RM200 million this year for plantations to boost plantings and other expenditure as prices of the vegetable oil steadily grow.

"There is a strong upward trend for palm oil prices and this current level of RM2,550 is very supportive," Lee said. Supply has been affected since a year ago and we only expect a moderate increase in Malaysian output this year. And although countries like India and Pakistan recorded a 38 to 40 per cent jump in palm oil imports last year from Malaysia and Indonesia, demand will steadily rise in 2010 as the global economy recovers, he added.

Plantations account for about 50 per cent of IOI's profits.

Since taking its property arm private, IOI has managed to get its long-delayed Singapore development projects off the ground and facilitate funding requirements for land acquisitions. Lee said preview sales of its Seascape Collection Residences in Singapore's Sentosa Cove have been encouraging and expects the project to contribute positively to this year's earnings. -- Reuters