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

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