Archive for October 2010

IOI boss: More foreign workers needed

The government should allow plantation companies to hire more foreign workers to harvest oil palm so as not to crimp the country's palm oil export earnings, a top industry executive said.

Malaysia's palm oil output is expected to stagnate at 17.6 million tonnes for the third straight year, according to industry observers.

The Malaysian Palm Oil Association, Malaysian Estate Owners Association and Sarawak Oil Palm Plantation Owners Association have been complaining of acute shortage of harvesters for the past three years. They blamed it for the lower palm oil output and export opportunity loss of some RM10 billion a year.

IOI Corp Bhd executive chairman Tan Sri Lee Shin Cheng yesterday reiterated the call for the government to be more flexible in permitting plantation companies to hire skilled harvesters from Indonesia.

"The trees are fruiting, but there's acute shortage of harvesters and this is affecting the country's palm oil export earnings.

"The industry has been finding ways to mechanise for the last 40 years and the reality is it is difficult to mechanise. If it were that easy, we would have done it a long time ago," Lee said.

He was speaking to reporters after IOI's shareholder meeting in Putrajaya. Also present was his son, Datuk Lee Yeow Chor, who is IOI's executive director.

The older Lee sees palm oil prices rising further, possibly topping RM3,400 a tonne by the first quarter of next year, as global consumption exceeds supply. "Global palm oil consumption is going up, even in developed nations like the US, Europe and Japan. It is not just in China and India," he said.

Lee also sees CPO prices trending higher if the current floods in Asia worsen. "The current RM3,000 per tonne level does not take into account the prospects of La Nina. If you did, then the RM3,300 to RM3,400 level is not a dream but a reality." Yesterday, palm oil futures on Bursa Malaysia Derivatives fell RM24 to close at RM3,061 a tonne.

Four months ago, Indonesia signed a US$1 billion (RM3 billion) climate deal with Norway, under which it agreed to impose a two-year ban on new permits to clear forests. While the Indonesian government has not defined which type or location of forests come under the moratorium, it was reported that oil palm expansion could continue on some six million hectares of degraded and abandoned agricultural land across the country.

Yeow Chor said IOI will continue to invest in Indonesia. "The moratorium is said to limit new concessions, not existing permits," he remarked.  On IOI's capital expenditure, he said the group had allocated RM150 million for new plantings and replanting of oil palms.

Some RM30 million has also been set aside for a potential 30:70 joint venture with China's Zhong Seng Oil & Grains Co Ltd to set up a refinery in Kuantan.

I'll show you how to use your holes

Women in male-dominated professions often have to work twice as hard to attain equal standing. Soil researcher Dr Lulie Melling is one such feisty lady who is willing to wallow in peat swamps, all for the sake of science.

THE MATING CALL of frogs filled the darkened seminar room in Finland. The sound came from the laptop of a Malaysian soil scientist, there to introduce the wonders of tropical peat to her peers in Europe.

Just as Kuching-based Tropical Peat Research Laboratory director Dr Lulie Melling moved into another slide to show the brackish water at peat swamps, someone in the crowd joked that women scientists would most likely scream at the prospect of roughing it out in the deep swamp peats.

Unfazed, Lulie smiled and told the predominantly male audience: "In my hole, the men will scream first".

A master of double entendre, she explained to the sniggering crowd that many women scientists in Sarawak have, without hesitation, waded into swamp peats to collect samples while male engineers stepped back cringing, their arms folded.

As proof, Lulie showed photos of herself in inky-black pits. She recalled shivering from the cold and putting up with the itch that comes from being submerged in the mildly acidic grime when collecting samples.

There were times when peat muck gripped her shoe soles so solidly that she had to be hoisted out by several people. She showed another photo of herself covered in a heavy layer of black silt up to her neck.

Lulie was in the Finnish city of Jyvaskyla five months ago, bidding to host the International Peat Congress in 2016 (IPC2016) in Kuching, Sarawak. Having won the bid, Lulie said Malaysia can now leverage on this opportunity to draw the international peat scientist community to Kuching to gain a better insight on tropical peat development and conservation.

In an interview with New Sunday Times, Lulie said her quest to study tropical peat started in 1995. She was puzzled by the sago trees' stunted growth in Mukah, Sarawak. At that time, nobody really knew or cared about what she was doing in the peat swamps. But all that changed when soil science became increasingly linked to the highly-politicised topic of climate change.

As the Internet became flooded with news reports and blog postings claiming that oil palm planting on tropical peat soil contributed to pollution and global warming, the search for credible soil studies also intensified.

Lulie pressed on with her research and in 2005, made an unusual discovery.

Her test results showed greenhouse gas emission from the peat soil planted with oil palm trees was less than that in untouched forest peatland. Her findings caught the attention of other researchers. Since then, citations of her research papers have gone up 10-fold in the last five years. Despite the international recognition, Lulie said there was still much to learn.

Apart from being technologically savvy, soil scientists needed to be physically fit to embark on remote excursions into mosquito-ridden swamps.

Lulie and her team often have to hike through slushy terrain to collect samples and data in the scorching sun and torrential rain.

With heavy scientific equipment in their knapsacks, they sometimes have to forgo tents and sleeping bags. As dusk sets in, they source wood scraps from their surroundings to build temporary shelters and toilets.

But Lulie and her team attest that what was most painful and frustrating was the time away from family and friends.

"Success in most professional careers requires long hours. Long gone are 9am to 5pm days. If you are not present at least 60 hours a week, then you are slacking," she said. She paused for a while to gaze at a photograph of her family on her office desk. "I'm very grateful my husband and son are very understanding."

A dedicated government officer, Lulie also organises soil science seminars for farmers throughout Southeast Asia. Her easygoing and jovial nature helps bridge the gap between scientists and rural folk.

Lulie first learnt that humour worked to her advantage when she organised a soil science seminar titled "Big hole, small hole & KY jelly" in 2007. It was a hit among local oil palm planters and even got the attention of more than a handful of chief executives of multi-billion dollar plantation companies from Singapore and Indonesia.

Scientists from Indonesia, the Philippines, Thailand, Japan, Fiji, Iran, and the United Kingdom flew in to learn that when peat soil is compressed by heavy machinery, oil palm roots are able to take stronger hold of the soil and feed on water and nutrients more efficiently.

A British professor came away from the field trip surprised that soil scientists in Malaysia were just as conscientious as in Europe on the need for sustainable peat development.

Lulie's second seminar, in 2008, also sensationally titled "I'll show you how to use your holes" was even more popular. Close to 700 participants learnt how to manage the water table and nutrient supplements in a variety of tropical peat fields.

Just as she is well-liked by rural farmers, Lulie is increasingly seen a role model among secondary schoolgirls in Sarawak. Her advice to young women who want to pursue a career in science: "Don't be afraid to venture into uncharted territories. There's no point re-inventing the wheel.

"Having scientists who are willing to venture out of the status quo is what drives significant discoveries," she said.

Fields of Gold: Lifting the Veil on Europe's Farm Subsidies

For the past 50 years European farmers have benefited from an exceptional set of protection and subsidies via the Common Agricultural Policy (CAP). From 1995 to 2010, the cumulative budget expenditures for European farmers have been of the order of €600 billion.

But the current debt crisis Europe face could spur tranformation of the CAP. Last month, the 27 EU agricultural ministers started a debate on the structure and the level of subsidies farmers should get from the EU budget during 2014-2020.

Although the EU has gradually reduced subsidies to farmers in recent years, at an average of €55 billion a year or 42 per cent of the CAP's budget, it remains the world's largest agricultural support scheme.

Oilseed farmers in the EU, rivals of oil palm farmers in Malaysia and Indonesia, are big recipients of CAP subsidies. The CAP acts like a tariff wall around the EU by blocking agricultural imports out while keeping prices higher in the EU.

Among financial institutions and food giants, classified as "farmers" (because they are landowners) and receiving direct subsidy amounting to hundreds of million euros under the CAP are Rabobank, ING Bank, HSBC Bank, Nestle, Unilever, Danone and Friesland Foods.

The Queen of England also qualified for £473,500 in farm aid in 2008 for Sandringham Farms, her 20,000 acre retreat and home to four generations of British monarchs since 1862.

Below is a 6-minute documentary by Jack Thurston, co-founder of , led by a grouping of European journalists, bent on identifying and tracking the amount of subsidies amount going to "farmers".

Billion-dollar trade war fuels vegetable oil politics

THE US$40 billion (RM124.4 billion) global palm oil trade makes up almost 60 per cent of the world's vegetable oils market. The bigger the palm oil industry becomes, the easier it is a target for smear campaigns by rivals via political means.

This is evident as Malaysia and Indonesia capture more market share in the vegetable oils trade, faster than rivals in Europe and North America, oil palm planters have had to endure false allegations of massive deforestation and lies about orangutan killings from western environmental non-governmental organisations (WENGOs).

Every year, Malaysia earns around US$20 billion (RM62.2 billion) and Indonesia US$15 billion (RM46.65 billion), from selling 32 million tonnes of palm oil all over the world, data from industry regulators of both countries revealed.

Oil World, a trade journal, confirmed that last year, Malaysia and Indonesia shipped out the bulk of 36.8 million tonnes of palm oil or 58 per cent of the 63.5 million tonnes of vegetable oils traded globally.

Soyabean, rapeseed and sunflower oils, however, commanded 26 per cent of market share.

Oil World's data show that while the vegetable oils market had doubled in size since 1990, people around the world have chosen palm oil over other oils. Among 17 major vegetable oils traded in the world, palm oil consumption exceeded soft oils like soyabean, rapeseed and sunflower.

Oil World stated that in the last two decades, global palm oil consumption expanded three times. Rapeseed oil purchase, however, only increased by 2.5 times and soyabean oil's popularity just doubled.

While global palm oil usage increased, so has the smear campaigns on oil palm planting.

In recent months, Australian zoos initiated a "Don't palm us off" campaign claiming oil palm plantings in Malaysia and Indonesia caused forest destruction of the equivalent of 300 soccer fields every hour and decimation of over 1,000 orangutans a year. Zoo visitors were told to petition to the Food Standards of Australia and New Zealand to label palm oil on all food products.

When asked to comment, Sarawak Land Development Minister Datuk Seri Dr James Jemut Masing said: "It's not true, we do not kill and eat orangutans. It is a taboo to do that.

"Sarawak thrives on eco-tourism, it is in our interests to protect our national treasures. I spent 10 days and nine nights trekking at Lanjak Entimau National Park. There were many orangutans swinging from tree to tree."

He said orangutans are not found throughout the state. These primates are only found in the Lanjak Entimau Wildlife Sanctuary, Maludam and Batang Ai National Parks. No development can take place in these three zones since they are already gazetted as totally protected.

"Therefore, it is not possible for oil palm plantations to encroach into virgin forests," he told Business Times in an interview in Kuching.

On top of that, Malaysia's environmental laws and Malaysian Palm Oil Board regulations designate oil palms to be planted on degraded land that had been subjected to extensive shifting cultivation and logged-over forest.

Oil palm cultivation has actually transformed many rural villagers' lives. "It is through planting of oil palm trees and selling of fresh fruit bunches that smallholders can save enough money for their children to further their tertiary education and become successful professionals. We have palm oil exports to thank for this," he said.

Estates in Malaysia plant oil palm, rubber and cocoa trees to produce cooking oil, margarine, rubber gloves and cocoa butter for global trade. This is part of the same early-stage growth pattern adopted by every major developed economy in the world, from North America to Europe.

"Now, the very same people who have already achieved developed status, cite fear that such development in Asia will exacerbate ecological degradation and global warming. The European Union (EU) argue against tropical forest conversion for oil palm and rubber tree planting," Masing noted.

In pushing for a halt in oil palm plantation expansion in Malaysia and Indonesia, European lawmakers and WENGOs had repeatedly said clearing of tropical forests harms biodiversity and emits carbon dioxide into the atmosphere, worsening global climate change.

"Many people believe Greenpeace, Friends of the Earth and Wetlands International are protectors of the world's forests but ... let me ask you ... are they bringing their own governments to justice for clear-cutting temperate forests?

"Are they lobbying for reforestation of deciduous forests in their own countries? Are these activists completely altruistic and selfless in their devotion to the world's forest, wildlife and indigenous people?" Masing asked.

He then adduced reports of Sarawak government spending RM10 million every year to care for and protect orangutans.

While WENGOs campaigned passionately for the fate of orangutans, until today, they had not contributed any money for the rehabilitation of orangutans and the upkeep of their sanctuaries at Maludam, Lanjak Entimau and Batang Ai. "I wish they'd walk their talk."

By criticising the virtues of oil palm planting and ignoring the evidence that economic development leads to better environmental protection, Masing said it is questionable whether these WENGOs' true commitment is to the environment or to erection of trade barriers to benefit European rapeseed farmers who are already heavily-subsidised by the EU government.

He then cited findings at, run by a European journalists grouping that tracks the EU Common Agricultural Policy (CAP) beneficiaries.

For the past 50 years, European farmers had benefited from an exceptional set of protection and subsidies. From 1995 to 2010, the cumulative budget expenditures for European farmers had been in order of more than €600 billion (RM2.5 trillion).

The CAP acts like a tariff wall around the EU by blocking agricultural imports out while keeping prices higher in the EU.

Although the EU has gradually reduced subsidies to farmers in recent years, at an average of €55 billion (RM238.15 billion) a year or 42 per cent of the CAP's budget, it remains the world's largest agricultural support scheme.

On top of that, there are also export subsidies for EU-based food multinationals like Unilever, Nestle and Danone. Last year, the EU spent about €350 million (RM1.5 billion) on export subsidies.

Masing then argued that the EU government's covert use of taxpayer funds to facilitate environment activists to lobby against the growth of oil palm plantations, in the name of "saving rainforests", is a blatant violation of international norms and Malaysia's sovereignty.

"We see these activists holding demonstrations claiming to save rainforests. But are there independent audits to determine the effects of these WENGOs policies and practices on the orangutans and my fellow Bumiputeras they claim to be helping?"

"Who are better placed to speak on behalf of the poor, voiceless and marginalised? The WENGOs and their local affiliates self-proclaiming to be stakeholders or our elected Members of Parliament?" he asked.

He described the WENGOs as whistleblowers, judge and jury, all rolled into one - a stark contrast to check and balance that elected Parliamentarians face.

Masing then referred to the European Commission website at, which revealed the Directorate-General for the Environment had, in the last 10 years, handed out over €66 million (RM285 million) to green NGOs.

In 1998, the EU funding to these NGOs was just over €2 million (RM8.66 million) but last year, the amount nearly topped €9 million (RM350 million). These fundings were advanced by European corporates and labour unions in an effort to protect domestic rapeseed oil farming which, in turn, receive massive CAP subsidies, Masing noted.

KL Kepong to expand landbank

KUALA Lumpur Kepong Bhd (KLK) is expanding its oil palm landbank in Indonesia by another 7,177ha. Currently, the group's oil palm planted area in Malaysia and Indonesia totals 170,000ha.

Its unit KL-Kepong Plantation Holdings Sdn Bhd is buying 95 per cent of PT. Bumi Makmur Sejahtera Jaya (PT BMS) from Tjong Hasan Agus Salim and Tjhang Ardy Fadrinata.

Since KLK has engaged a high conservation value study on the land and is carrying out a legal and financial due diligence, the deal is likely to materialise in the first quarter of 2012.

PT BMS now holds two Certificates of Izin Lokasi for land measuring 2,336.62ha in Desa Mentawak and Desa Air Kelik, Kecamatan Kepala Kampit, Belitung Timur, and another 4,840ha in Desa Lilangan, Desa Limbongan, Desa Jangkar Asam and Desa Gantung, Kecamatan Gantung, Belitung Timur.

These land are adjacent to KLK Group's existing plantations in Belitung.

Palm oil vitamin E can fight obesity

This was published in yesterday.

SINGAPORE — Natural tocotrienols offers more health benefits than alpha-tocopherol, the common form of vitamin E.

In a study titled "Gamma Delta Tocotrienols Reduce Hepatic Triglyceride Synthesis and VLDL Secretion" published in October 2010 issue of Journal of Atherosclerosis and Thrombosis, scientists found gamma and delta tocotrienols, derived naturally from palm oil, are potent in lowering triglyceride levels by 28 percent in the blood of human subjects after two months of supplementation.

In addition, tocotrienol-treated subjects in the double blind, placebo-controlled human trial showed decreasing trends in average weight, body fat mass, body fat percentage and waist measurement.

The study, hence, points to the potential of tocotrienols as a natural remedy in fighting obesity.

This study demonstrated that gamma and delta tocotrienols work to lower triglyceride levels, by directly suppressing genes that enable triglyceride production (SREBP1/2, DGAT2 and APOB100), suggesting that tocotrienols are able to directly regulate triglyceride synthesis in the body. At the same time, this down-regulation also translates into a reduction in the level of triglyceride transport lipoproteins (VLDL and chylomicron), which distribute fats around the body.

The study supports its in vitro research findings, by demonstrating the triglyceride-lowering effect of tocotrienols in both mice models and human clinical studies.

Moreover, the study also showed that tocotrienols may inhibit the development of atherosclerosis, a medical condition in which fatty plaque, resulting from oxidation of LDL-cholesterol (also known as "bad" cholesterol), builds up inside the arteries. It was found that gamma tocotrienol can enhance the removal of LDL-cholesterol from the blood, by inducing the expression of LDL receptors. This is a key step in achieving healthy blood lipid levels.

This research study, which involved a collaboration between scientists at Davos Life Science (Singapore), researchers at Malaysian Palm Oil Board and Phytopharma Co. Ltd. (Japan), involved 20 human subjects with borderline hypercholesterolemia and was conducted in Takara Clinic in Japan. The subjects were not receiving any cholesterol-lowering medications at baseline.

"Our studies show that tocotrienols have the potential for the prevention or treatment of metabolic syndrome. This research contributes further evidence that natural tocotrienols is a far more powerful form of vitamin E with unique health-related benefits not shared by alpha-tocopherol, the common form of vitamin E," said Arthur Ling, chief executive officer of Davos Life Science Singapore, a company specializing in the research and development and production of tocotrienols.

Tocotrienols, which are members of the vitamin E family, are effective in lowering the levels of triglyceride, a form of fat in the blood. High levels of triglyceride are closely linked to an increased risk of cardiovascular and metabolic diseases. An elevated triglyceride level is one of the risk factors for the identification of metabolic syndrome, which is linked to an increase risk of cardiovascular disease, diabetes and stroke.

"Other studies have shown triglyceride-lowering effects of eicosapentaenoic acid (EPA), a polyunsaturated fatty acid found in oily fish, which is approved by Japan's Ministry of Health as a treatment for hyperlipidemia," said Dr. Daniel Yap, head for Tocotrienol R&D, Davos Life Science.

“This study reveals that tocotrienols have a more significant serum triglyceride-lowering effect than EPA. More importantly, tocotrienol did not have any observable side effects, suggesting that it could become a natural remedy to lower triglycerides effectively."

Joint Malaysia-Indonesia council proposal to fight palm oil threats

KUALA LUMPUR: Malaysia and Indonesia should set a joint council based in Europe and the United States to fight negative perceptions and unfounded allegations made against the palm oil industry.

The proposal came from former primary industries minister Tun Dr Lim Keng Yaik. The ministry is now known as the Plantation Industries and Commodities Ministry.

He said both countries should set aside some funds for the council and appoint an articulate person to attend all forums organised by non-governmental organisations (NGOs) campaigning against the palm oil industry.

"The person must be prepared to debate with them based on well-researched facts and figures on our side," Dr Lim said in a keynote address at the Second International Conference on the Future of Palm Oil Business 2010 here on Monday, Oct 18.

"Malaysia and Indonesia as the main palm oil producers must come to the forefront to fight these threats. I am confident that we will win in the end because their campaigns are based on half-truths and sometimes outright lies," he said.

Dr Lim said despite being successful in penetrating major markets in Europe and the US, palm oil was facing threats from various sides.

"Our success in global markets due to a superior and less costly product prompted Western competitors and their trade and labour union allies to react. They would like to block our product from their markets if possible," he said.

Fortunately, for consumers across the globe, free trade in goods and services is protected by international laws and norms, Dr Lim said. "So, we are able to sell our goods freely, satisfying rising global demand in the process, at least for the time being," he said. -- Bernama

The World Bank’s palm oil mistake

This opinion piece by Thomson Ayodele, the director of Nigeria-based Initiative For Public Policy Analysis, was published in the New York Times.

WHEN the World Bank held its annual meeting last weekend, there was much discussion of trade imbalances and currency wars, but nothing about Nigerian palm oil. 

That’s a shame, because the bank’s loans for plantation agriculture in sub-Saharan Africa and other developing regions — some US$132 million of which have gone to oil palm cultivation — have been humanitarian and economic triumphs. 

Yet now, under misguided pressure from environmental groups, the bank is turning its back on the program.

Palm oil, which is extracted from the pulp of the oil palm, is an essential food in sub-Saharan Africa and other poor regions. Accounting for almost 40 percent of the world’s vegetable oils, it is an indispensable source of vitamins and calories. 

The developing world is heavily reliant on palm as a source of nutrition because the plant thrives in tropical climates and yields significantly more fats and calories than other options. It gives the developing world — where hundreds of millions of men and women still live on a few dollars a day — the most caloric bang for the buck.

Nigeria’s palm oil industry, which once led the world, was moribund by the end of the last century. But thanks to the World Bank program, it is now one of the world’s largest producers, after Indonesia and Malaysia. In addition to providing food, the palm oil sector offers jobs, employing tens of thousands of Nigerians who earn wages similar to those of college graduates. In a country where most people have limited education, this sector has been essential to helping the broader Nigerian economy grow.

The industry is also diverse, as both small-scale landholders and a growing number of industrial farms have used the World Bank loans to invest in more efficient harvesting and production techniques. The revival of the palm oil industry gives Nigeria hope that its economy will not be forever hostage to petroleum production — and the pollution and graft that inevitably accompany it.

But the bank’s legacy of success is now in serious jeopardy. Under the leadership of Robert Zoellick, a former United States trade representative, the bank has wavered from its poverty-reduction mission and is increasingly focusing on achieving fashionable political and social goals. As Mr. Zoellick put it, “We are all committed to ensuring that positive developmental outcomes — including environmental and social sustainability — are at the core of all our activities.”

This is a huge, and disturbing, change in direction. 

The World Bank was conceived out of the wreckage of World War II, and its mission has always been simple: extend low-interest loans from rich nations to support development projects in poor nations. Of necessity, many of these loans support agriculture-related projects. These projects do two crucial things. First, they help poor nations feed their populations. Second, they generate goods that can be traded in global markets, thus linking the developing world economically with the wealthy world.

The results have been extraordinary. According to the bank itself, since its inception, life expectancy in developing countries has risen by more than 20 years. Adult illiteracy in poor nations has been cut in half since 1980. And over the past two decades, the number of people living on less than US$1 a day, while unacceptably high, has dropped for the first time.

But in many cases this progress has now run afoul of environmental groups that often put ideology ahead of the needs of the poor. And, unfortunately, these groups have persuaded Mr. Zoellick to suspend all loans for palm-related plantation agriculture indefinitely as the bank undertakes a review of its policies.

The critics of palm oil production, mostly in the United States and Europe, claim that it contributes to the destruction of forests. Yes, Nigeria has a problem with deforestation — but that is primarily in the country’s north, and almost all oil palm plantations are in the south. The forest depletion in the north is generally due to climate problems and the population’s reliance on firewood for fuel.

Indeed, the expected drop in palm oil production because of the World Bank’s decision is likely to worsen deforestation, as a weakened economy will force more Nigerians to chop down trees for cooking fuel and shelter.

The environmental effects of palm oil production around the world should certainly be given consideration, but any new regulations should not impede poverty alleviation in the developing world, as poverty is the biggest driver of ecological harm. And there are many multilateral organizations that focus on environmental health, including several within the United Nations, that are far better equipped than the World Bank to handle the job.

Mission creep is a threat to any large bureaucracy. What has made the World Bank almost uniquely successful over the last half-century has been its sustained focus on the most important humanitarian goal: lessening poverty. The moment the bank takes its eye off economic growth, it loses its reason for being. The residents of the developing world will be the casualties.

Sarawak oil palm planters want bigger say

OIL PALM planters in Sarawak want to be included in the formulation of government policies that are affecting their future livelihoods.

In doing so, Sarawak Oil Palm Plantation Owners Association (Soppoa) is seeking board member status at both Malaysian Palm Oil Board (MPOB) and Malaysian Palm Oil Council (MPOC).

"The future growth of the oil palm industry is in Sarawak," said Soppoa vice-president Paul Wong. 

Last year, Sarawak overtook Johor to be the second biggest oil palm state in the country after Sabah when it produced two million tonnes of crude palm oil.

A case in point that Sarawak's pecularity has not been given due attention is the Performance Management & Delivery Unit's 10-year economic transformation programme having no mention of infrastruture investment in roads and bridges from estates to mills and refineries, more funding for peat agriculture research or ways to facilitate development of native customary land.

"If we were board members at MPOB or MPOC, we would have had our say in the formulation of government programmes affecting Sarawak's oil palm industry," Wong told Business Times in an interview in Kuching.

"One of the pressing problems we face is uncollected fresh fruit bunches rotting in the fields due to labour shortage. We face shortage of around 25 per cent, or 25,000 of plantation workers," Wong said. Soppoa estimates that as much as 2.5 million tonnes of fruit bunches, or 500,000 tonnes of oil, are left to waste across Sarawak's 800,000ha of oil palm plantations.

At a conservative pricing of RM2,000 per tonne, it translates into RM1 billion loss in export opportunity and millions of ringgit in tax loss to the federal and state governments.

Soppoa has appealed to the goverment to relax the rules on hiring foreign labour.

"Instead of facilitating practical solutions to address the shortage of workers, we were told that the government plans to impose a higher levy on unskilled foreign workers. Oil palm operations are labour-intensive and this cannot be avoided. However, we believe that improvement can be made overtime on the productivity," Wong said.

Five months ago, Home Minister Datuk Seri Hishammuddin Hussein reportedly said the government is planning to reduce foreign workers from 1.8 million to 1.5 million in three years.

Malaysia has about 1.8 million foreign workers in manufacturing (39 per cent), construction (19 per cent), oil palm, rubber, timber and cocoa plantations (14 per cent), housemaids (12 per cent), services (10 per cent) and the rest in agriculture. The contributing countries are Indonesia (50.9 per cent), Bangladesh (17.4 per cent), Nepal (9.7 per cent), Myanmar (7.8 per cent), India (6.3 per cent), and the rest from Vietnam.

Why does World Bank hate palm oil?

Alan Oxley is chairman of World Growth, a Washington DC-based grouping that promotes free trade in the interests of poverty eradication.

Log on to for more information.

MANY LARGE global resources companies now refuse to take finance from the World Bank for major projects in developing countries. Bank procedures now increasingly make the bank a regulator, and not of compliance with policies of governments, but of non-governmental organisations.

This is about to happen in palm oil, an industry which is very important to developing nations like Malaysia and Indonesia.

Last year, the Indonesian affiliate of Friends of the Earth, along with other NGOs, exercised a right under the rules of the World Bank Ombudsman to complain that the International Finance Corporation (IFC), the bank's private sector arm, failed to ensure that Wilmar International, a large commodity company based in Singapore, followed World Bank rules for a loan it made to a Wilmar palm oil project in Indonesia.

The bank's own rules demanded that the ombudsman investigate and report directly to the president of the World Bank, Robert Zoellick. This is overkill enough. Imagine a complaint that a commercial bank did not follow its own loan rules being automatically reported to the president of the Bank, regardless of its gravity.

Zoellick compounded the overkill. Before the enquiry began he ruled out any more loans for palm oil projects until the review was finished. The overreaction became clear when the enquiry reported only a minor transgression and certainly not a system failure. Yet after he received the report, he announced that the bank's whole system for engagement in palm oil projects would be reviewed.

Here he was following to the word the NGO script on "how to capture a multilateral institution". He gave the NGOs the play they wanted -- the opportunity to embed further NGO policies into bank rules. And they did, bombarding the bank with suggestions. More concerned to show the bank was "listening" to the NGOs, than to set effective development policy, bank staff have proposed tough, new rules.

They would demand borrowers comply with sustainability and environmental standards that are more onerous than any government of a palm oil producer, including Malaysia. They even go beyond those of the Roundtable on Sustainable Palm Oil, a body set up jointly by Worldwide Fund for Nature (WWF) and oil palm producers which sets voluntary sustainability standards for the industry.

Smallholders (they produce around 40 per cent of palm oil) would have to adopt systems to verify the sustainability of their oil palm plots. No such systems exist. Everybody in the certification business knows it is costly and impractical for smallholders. They are anyway unnecessary. Large palm oil producers control 60 per cent of production, and demonstrate the sustainability of those estates.

The bank itself admits palm oil is great for lifting the poor out of poverty. So why is it toying with rules that elevate the green interests of NGOs, mostly based in wealthy countries, over the bank's core mission of reducing poverty?

There is a long and dismal history here. For nearly 20 years now, bank regulations in a number of areas, mostly playgrounds for western NGOs -- mining, energy, water and forestry -- have been progressively captured by them. A peak year was 1999. Then Zeollick's predecessor twice removed, James Wolfensohn, agreed to a "partnership" on forestry with WWF.

The result is that the WWF now exercises more influence on World Bank policy on forestry than World Bank board members. The giveaway here is not that loans for forestry require that recipients certify forestry is sustainable, but that the bank's criteria for certification recognise only one system -- that of the Forest Stewardship Council (FSC). WWF set up the council and Greenpeace and Friends of the Earth, both of whom oppose commercial forestry, are members.

The bank has locked out other systems, such as that of the Malaysian Timber Certification Council (MTCC), which are not only more widely used in the private sector, they demonstrate best practice in certification of sustainable forestry policy in ways the FSC cannot. For example, growers and NGOs have equal say, but no veto, in the MTCC system. In FSC, growers are outvoted by NGOs.

The FSC system is also anti-development. It requires businesses to move towards WWF policy to cease or reduce forestry in natural forests, even where governments have earmarked such land for agro-development to raise living standards. The new bank rules on palm oil would move the bank in the same direction.

Today the bank's private arm is supporting a project, ironically initiated by Wilmar, to introduce into Uganda the very oil palm plantation model to reduce poverty which the bank itself supported in the past in Malaysia and Indonesia. Under the new rules, this would end.

It is hard to believe the board of governors of the bank, where developing countries have a formal voice in bank policy, would subscribe to this. They won't have a say if the procedures to implement the new policy on palm oil are followed. Bank management and their NGO cronies, not the board, will set the new policy.

This does not have to be the case. All a member of the board has to do is ask.

Malaysia, the world's second largest palm oil producer, can play a key role here. The prime minister is a member of the board and represents Southeast Asia. That also includes the world's biggest palm oil producer, Indonesia. This would also be of interest to African and Latin American board members where oil palm is grown and China and India who are major consumers.

These are the parties who should be shaping World Bank policies on palm oil, not Western environmental NGOs who show little interest in ensuring environmental policies complement policies to remove poverty, not replace them.

Lack in skills and equity policy, hurdles to investment

This is written by my colleague, Tan Choe Choe.

Several factors are deterrents to a larger number of German investors putting their money into Malaysia, and top of the list is the lack of a qualified workforce.

"Malaysia doesn't need Nobel laureates or a man who can go to the moon but qualified, hands-on people to raise their level of competence," said German Ambassador to Malaysia, Dr Guenter Georg Gruber.

He said Malaysians appear to have the notion that an engineer's work is to get suited up and sit in the office all day. 

"Nobody in Germany does that. A qualified engineer goes down to the pits and repair the machines himself, if need be, and he is respected for the willingness to get his hands dirty. Here, the engineers are ... different."

He said this boils down to the lack of emphasis and importance placed in vocational training.

Possibly, it stems from the lack of social acceptance of a person who works with his hands here, Gruber told Business Times in an interview, in conjunction with the 20th anniversary of the reunification of East and West Germany tomorrow.

Social acceptance is equally high in Germany whether you are a painter, an electrician or an engineer - as long as you are a master of your craft. "In fact, if you are a good electrician, you will be highly respected and earn good money."

This appreciation of applied knowledge is probably what propelled Germany to become a world leader in innovation, science and technology today.

As a case in point, he cited his two brothers: one who is a painter and the other, an electrician. Both earn more than he does.

Malaysians are too engrossed in the paper chase that they forget about skill acquisition. Parents' role in this obsession cannot be downplayed, Gruber said. "You should always ask what the industry needs. But here, parents only want to send their children abroad, (probably) to some third-class university to get a foreign degree."

Another factor which he feels is holding back German investors is the Bumiputera equity policy.

Germany's "hidden champions" - the powerful, often family-owned small- and medium-scale enterprises (SMEs) - are keen to invest here, but are wary of having to give up a substantial share of their business to a "complete foreigner".

"These are often businesses which have been kept in the family for possibly hundreds of years. They would not want to share their company with someone they don't know."

Although they have heard of many positive news from the government on reducing the equity quota, Gruber said that many were still hesitant and adopting a "wait and see" attitude to assess how the new policies would be implemented.

One major German SME which is already here, B-Braun Medical Supplies Sdn Bhd, is currently suffering from market access problems due to the Bumiputera issue, he disclosed.

B-Braun is a company with worldwide presence and an established history of supplying medical solutions in the surgical, pharmaceutical and healthcare management fields. It does not have a Bumiputera partner, which prevents the company from bidding for government contracts.

"B-Braun has been investing since 1972 because they have had good experience here and want to continue. But they are being excluded in public tendering because of the Bumiputera issue," said Gruber.

Although this was initially regarded as a "small issue", it is now becoming a sore point for the company as a new Asean rule states that any company excluded from public tender in an Asean member's market "would be excluded from all Asean markets".

"This is not a very positive image for Malaysia if you want to attract more foreign investments," Gruber said.

Germany has long been recognised for its "highly specialised small and medium enterprises" segment. They are often called "hidden champions" because most produce inconspicuous products but are global market leaders in their own segments.

"We don't want to impose any ideas on the Malaysian government. They have to choose for themselves whether they want to evolve to remain competitive. Malaysia is doing a lot of reforms as we speak and many initiatives are laudable and fantastic. But implementation, as always, has been a bit of an issue here."

Germany is one of the top four investors in Malaysia in terms of cumulative investment value, currently at more than RM16 billion. Even during times of economic crisis, such as last year, when overall foreign direct investments into Malaysia dwindled considerably, fresh money was still coming in from Germany of about RM200 million.

Gruber said that although German investments have remained quite constant, Malaysia has to work harder to stay competitive. "We have to be frank. A lot of investment goes to China now and to be and remain a world-class leader, Malaysia has to find its niche."

He suggested that the country look at expanding its efforts in developing the renewable energy and pharmaceutical sectors. "Malaysia is uniquely blessed with many renewable energy sources - palm oil, biomass, sun, water - but it has not fully capitalised on them," Gruber said.