Archive for 2012

Felda Global may sell Tradewinds stake

This is written by my colleague Zaidi Isham Ismail.

KUALA LUMPUR: FELDA Global Ventures Holdings Bhd (FGV) may sell its 20 per cent stake in Tradewinds (M) Bhd, worth an estimated RM551.5 million, to fund future land expansion.

FGV president and chief executive officer Datuk Sabri Ahmad said if the company decides to sell the stake, the proceeds will be used to fund upstream expansion, namely to buy more plantation land.

It is interesting to note that apart from being the largest crude palm oil producer in the world, FGV is also Malaysia’s Sugar King. In January 2010, FGV bought over Robert Kuok’s entire sugar business in Malaysia and a 20 per cent stake in Tradewinds (M) Bhd for RM1.8 billion.

"We will evaluate the situation and seek advice from investment banks. Then we will table the matter at the board of directors meeting next month," Sabri told Business Times over the weekend.

Sabri was commenting on Tan Sri Syed Mokhtar Al-Bukhary's plan to take Tradewinds private, of which, sources said, will be restructured into four separate entities - rubber, sugar, oil palm and rice.

Syed Mokhtar, a low-profile businessman and Malaysia's seventh richest man announced last week he is taking over Tradewinds by offering shareholders RM9.30 for every share he does not own in the company.

The whole deal is also expected to lead to the privatisation of Tradewinds Plantations Bhd and Padiberas Nasional Bhd (Bernas).It is expected to cost RM2.5 billion.

"I think it makes sense for FGV to sell the stake rather than keep it because at 20 per cent, FGV does not have management control over Tradewinds. With proceeds of over RM550 million, it is better for FGV to buy controlling stakes in many other companies," said a Tradewinds source, who declined to be named.

According to a news report last week, FGV is expected to reap a 188 per cent or RM390.2 million return on investment from its strategic acquisition in Tradewinds in January 2010. Should it decide to sell its entire stake in Tradewinds at RM9.30 a share, government-linked FGV stands to reap a windfall of RM551.5 million.

It was also reported from January 2010 to date, FGV has received net dividends amounting to RM46.3 million from its 20 per cent equity in Tradewinds.

FGV is one of Malaysia's largest plantation company and yet, it is a unique entity because it leases and manages 500,000ha of oil palm land for the country's 112,635 smallholders.

Challenging times ahead

Malaysia's palm oil exports are expected to shrink to about RM70 billion this year. Refiners explain to OOI TEE CHING how overseas policy changes have and will continue to shape export trends.

SEPTEMBER 11 2011 is the date Palm Oil Refiners Association of Malaysia (Poram) members will always remember.

It was the day the Indonesian government announced its intention to widen the tax gap between crude and refined palm oil.

This made crude palm oil (CPO) and crude palm kernel oil very cheap for downstream businesses in Indonesia. On top of that, processed palm oil in the form of cooking oil, soaps and detergents shipped out from there are minimally-taxed.

Indonesia's move, since October 2011, created an unfair playing field as refiners in Malaysia found it difficult to source for affordable feedstock.

Price cutting ensued as refiners, oleochemicals, specialty chemicals, specialty fats and biodiesel producers in Malaysia fight for their survival.

As downstream businesses in Malaysia bled losses, those in Indonesia laughed all the way to the bank. Oil palm planters in both countries, however, have to contend with falling prices.

Poram chief executive officer Mohammad Jaaffar Ahmad noted that besides refiners in Indonesia, the biggest gainers are palm oil consumers around the world, while the biggest losers are oil palm planters in Malaysia and Indonesia.

"With falling prices, it's not a surprise that palm oil exports is not able to match last year's record high of RM80 billion," he said.

In the first 11 months of this year, the Malaysian Palm Oil Board reported the country had only shipped out RM65.89 billion worth of palm oil products.

China, Malaysia's biggest palm oil client had, so far, only bought 3.15 million tonnes. This is a 14 per cent shortfall from 3.67 million tonnes, posted a year ago.

Jaaffar noted China imports more than three quarters of its cooking oils and bakery fat demand. Palm oil is the second most consumed there after soyaoil.

Last week, Oil World forecasts China likely to import 61.7 million tonnes of soyabeans from the United States, Brazil and Argentina next year, four per cent more than this year's 59.2 million tonnes.

Jaaffar explained that in the last few years, China had started to import more soyabeans instead of soyaoil because it wants more crushing of soyabeans to get more soyameal to feed its pig, cattle, dairy and poultry farms.

On the other hand, India, Malaysia's second biggest market, bought 2.35 million tonnes of palm oil. This worked out to be 53 per cent more than last year's 1.54 million tonnes. Higher shipments into India was prompted by policy changes in India and Malaysia.

Since July 2012, India, which imports more than half of its total vegetable oil consumption of about 16 million tonnes a year, ended a six-year freeze on the base import price of refined palm olein, allowing easier imports of CPO.

At the same time, the Malaysian government waived export duty on five million tonnes of CPO, assuming more CPO exports to India would drive down stock level and prompt palm oil prices to rise again.

It, however, did not materialise. This is because the exports of more duty-free CPO dimmed the investment climate for refiners.

"Poram members operated at half capacity and this itself was strong enough justification to keep CPO for downstream businesses. Every tonne of duty-free CPO exports resulted in loss of market potential for every tonne of refined oil," Jaaffar said.

"It was not just the sacrifice of CPO because refiners also produce olein, stearin, palm fatty acid distillate and palm kernel oil for the oleochemical, specialty chemicals, specialty fats and biodiesel sectors," he added. Ancillary services supporting these businesses such as logistics, packaging and bulking facilities continued to suffer.

As palm oil stock level continues to rise and prices suddenly plunged in October, the government was compelled to respond to refiners' plea.

But then again, the policy change to lower the tax from the 23 per cent and stop exports of duty-free CPO was not immediate. "It's better late than never," Jaaffar heaved a sigh of relief.

From tomorrow onwards, the 2013 palm oil tax structure will be lowered from 23 per cent to stagger at between 4.5 per cent and 8.5 per cent. If palm oil price hovers between RM2,250 and RM2,400 a tonne, the tax is 4.5 per cent. And if the palm oil prices were to jump to RM3,450 per tonne, the tax is 8.5 per cent.

Designed to fluctuate on a monthly basis, February's palm oil tariffs will be announced on January 15.

Jaaffar said since Malaysia's new palm oil tax structure will be similar to that of Indonesia, refiners here would stand a better chance to buy up more CPO and reduce the current high stock levels in the country. This will spur refining activities and players would be able to reap economies of scale and make some money to stay in the business.

Asked on the outlook for 2013, Jaaffar expressed cautious optimism. His reservation stems from possible rejection of palm cooking oil shipment to China.

Every year, China's food processing companies spend billions of dollars to buy close to four million tonnes of the kitchen staple from Malaysia. "Effective January 1 2013, palm oil shipments into China that do not meet the 2009 edible oils quality control specification will be turned away," said Jaaffar.

Despite Poram's appeals on the practicalities of trading in meeting China's Inspection and Quarantine Bureau specification, it seems "off-spec" shipment can no longer be re-refined at its shores. This is not in line with trading norms.

Jaaffar is concerned China's move may re-ignite similar demands from other palm oil clients. As early as in the late 1970s to early 1980s, trading corporations in Pakistan and India had demanded for guaranteed landing quality and weight without wanting to pay for cost-adding arrangements.

If palm oil exporters were to surrender to demands that are not of the usual business practice, this exposes them to risks of being manipulated without any explicit avenue to legal redress or compensation. "What redress can our members avail to?" he asked.

With a heavy sigh, Jaaffar said Poram has no choice, but to advise exporters to be cautious when selling palm oil to China. "Our members will be trading at their own risks."

'95pc of palm oil to China meets rules'

BANGI, Selangor: THE  Malaysian Palm Oil Board (MPOB) assures that 95 per cent of palm cooking oil shipments into China have  met the quality control specifications introduced there since 2009.

"Based on information given by Chinese authorities, only five per cent of the shipments did not meet the specifications," said MPOB director-general Datuk Dr Choo Yuen May.

"Analysis of these shipments showed that non-compliance is mostly related to excessive free fatty acids," she said in an email to the New Straits Times.

These off-specification shipments were likely to have been shipped from Malaysia when the quality of oil was near expiry but still within the limits set by Palm Oil Refiners' Association of Malaysia (Poram). "This would result in the oil being non-compliant with China's specifications when it reached the seaports there."

Choo was responding to concerns raised by Poram that enforcement of China's new quality control rules exposes palm cooking oil shipments to risks of rejection for reasons exporters have no control over. This dilemma is seen to have wide implications because China is Malaysia's biggest trading partner.

One of Malaysia's significant exports to China is palm oil for use by food processing companies.
Every year, China spends some US$4 billion (RM12.3 billion) to buy close to four million tonnes of the kitchen staple from Malaysia.

Poram chief executive officer Mohammad Jaaffar Ahmad reportedly said China's enforcement of the new rules from Jan 1, was not the usual business practice and could open the floodgates for other palm oil importers to demand the same. This indirectly puts exporters at risk of being manipulated by clients without any explicit avenue to  legal redress or compensation. 

Palm oil shipments into China that do not meet the new specifications would be turned away. "We were told that off-spec shipments will no longer be allowed to be re-refined on China's shores. What redress can Malaysian exporters avail to? This leaves Poram no choice but to advise members to trade at their own risk when selling palm cooking oil to China," Jaaffar said.

Choo assured palm oil exporters that MPOB's office in Shanghai had been engaging China's Administration of Quality Supervision, Inspection and Quarantine body to extend the enforcement grace period for the 2009 rule.

The Chinese authority, however, reiterated that the enforcement was applicable to all imports of edible oils. This move is fuelled by China's efforts to improve the safety and quality of imported products.

Choo said palm oil exporters had to comply with China's quality controls as the 2009 standards were internationally harmonised. "MPOB can only do its part if the standards imposed proved to be discriminating against palm oil," she said.

I remember you!!

When I attended Tun Dr Lim Keng Yaik's funeral recently, I thought back to the time when I first sat in the front row seats of a palm oil press conference hosted by him many, many years ago.

He pointed at me and smiled at other senior reporters who were standing behind me and said, "This reporter is new, ah?" I turned around wide-eyed and saw many reporters laughing along with the Minister of Primary Industries. I was puzzled but thought nothing of it.

Soon, I experienced firsthand and finally understood why many experienced journalists stood far, far away when the minister spoke.

My notebook and spectacles were splattered with his saliva as he spoke out with passion against anti-palm oil campaigns funded by soyabean farmers in the US. As the press conference came to a close, I moved aside to wipe my glasses.

A few months later, at the next press conference I knew better to stand behind other journalists and shout my questions from afar to Dr Lim.

He craned his neck and swayed from side-to-side to figure out who was asking the question. "I cannot see you, come nearer la."

I reluctantly waved my right hand in the air and peeked from behind this big and burly cameraman from TV3. Dr Lim grinned and wagged his pointer finger. "I remember you... the new girl!"

Jokes aside, Dr Lim took on his ministerial tasks seriously. He would always go to the ground whenever there were issues with the commodity sector, especially when prices start to slide.

In 1999, Dr Lim was instrumental in propping up plunging rubber prices by rallying the top three rubber producers, namely; Thailand, Indonesia and Malaysia to stock up and release the supply to the market gradually.

Dr Lim was a super-salesman as he helped popularise palm oil all over the world. He introduced a credit scheme to exchange palm oil for Cuban sugar and Russian jets and spare parts. When times were tough, Lim made sure palm oil was burnt at power stations. As stock levels came down, palm oil prices would rise again and oil palm planters get to earn a decent living.

Dignatories at his funeral, including the King, noted Dr Lim has served the country well. Indeed, many tree planters have immense respect for him as he showed unwavering courage and wit in challenging critics of the oil palm and timber industries at international debates. I, for one, will remember Dr Lim as a minister who's very clever at driving poignant messages across, in good humour.

Below is a video clip of Yang di-Pertuan Agong Tuanku Abdul Halim Mu'adzam Shah, the King, conveying his condolences to Dr Lim's family. Also present is Tan Sri Dr. Koh Tsu Koon, President of Parti Gerakan Rakyat Malaysia.

China to enforce rules on palm oil

KUALA LUMPUR: Malaysia’s palm oil exporters will be trading at their own risk when selling cooking oil to China as the world’s most populous nation seeks to enforce rules, which were introduced in 2009.

“We are unable to yield to China’s cost-adding measures that are not of usual business practice,” said Palm Oil Refiners’ Association of Malaysia (Poram) chief executive officer Mohammad Jaaffar Ahmad.

This dilemma has wide implications because China is Malaysia’s biggest trading partner.

One of Malaysia’s significant exports to China is palm cooking oil for daily use. Every year, China spends some US$4 billion (RM12.3 billion) to buy close to four million tonnes of the kitchen staple from Malaysia.

It was reported that from Jan 1, China’s Inspection and Quarantine Bureau will start  enforcing a new set of technical specifications requiring the quality of imported edible oils to be of "landed quality" instead of "shipped quality".

Palm oil shipments into China that do not meet the new specifications would be turned away, said Jaaffar.

Explaining the implications of the new rules on imported edible oils, he likened the process to a consumer buying fruits from the supermarket and bringing them home. 

"If you buy apples from the supermarket, you accept the quality as it is, at the time of purchase. You do not hold the supermarket responsible if, on the way home, the apples get bruised or deteriorate in quality because of oxidation from the high heat of your car parked under the sun."

The move seems to hold palm oil exporters responsible for the deterioration of the oil although the price paid is not that of door-to-door delivery. "If the Chinese quarantine authorities want guaranteed landing quality, new cost-adding arrangements have to be paid for."

Jaaffar said the problem was not new as in the late 1970s to early 1980s, trading corporations in Pakistan and India had insisted on similar demands without wanting to pay for cost-adding arrangements.

"At that time, India and Pakistan wanted guaranteed landing quality and weight. After years of negotiation, we finally came to a compromise to give in to the cargo weight (final) but we cannot offer the quality for the same price."

Now, this demand, which is over and above trading norms, is being revisited with China.

"We've appealed on the practicalities of trading in meeting the new technical specification but the Chinese authorities seem to insist that 'off-spec' shipments will no longer be allowed to be re-refined at its shores.

"We are aware that authorities from China and Malaysia need to ensure imported cooking oil remains affordable and safe to consume by China's 1.3 billion population and, at the same time, reap steady income for palm oil exporters here," Jaaffar said.

In April last year, during his second official visit to Malaysia, Premier Wen Jiabao promised Prime Minister Datuk Seri Najib Razak closer diplomatic and trade ties.

Even though China had long been running a trade deficit with Malaysia, Wen reportedly said China had no complaints. In fact, China agreed to continue buying Malaysian palm oil. "Malaysia and China are facing economic development challenges. Therefore, with deep cooperation, we can deal with such challenges and fulfil our mutual interests," Wen reportedly said.

Jaaffar expressed hope that both countries would come up with mutually beneficial arrangements.

"It is in the interest of Chinese consumers that they should be able to go on buying affordable and nutritious cooking oil. It is also in the interest of palm oil exporters that shipments into China should not be rejected for reasons they have no control over."

Brighter future for oleochemicals

Malaysia's oleochemical producers have suffered unfair competition when Indonesia restructured its palm oil taxes to woo downstream investments to its shores. But as Malaysia is set to change its tax structure from January 2013, local producers now see brighter days ahead, writes OOI TEE CHING. 

When Indonesia changed its palm oil tax structure in October 2011, oleochemical producers in the country gained access to cheaper feedstocks. 

On the flipside, the refining community in Malaysia suffered when they found it difficult to source for affordable feedstocks. Price cutting ensued as refiners, oleochemical, specialty chemical, specialty fats and biodiesel producers here fight for their survival.

"Despite the creation of unlevel playing field for more than a year, manufacturers here somehow managed to chalk up more exports," said Malaysian Oleochemical Manufacturers' Group (MOMG) chairman Tan Kean Hua. 

He said as palm oil futures fell from a high of RM3,600 in April 2012 to RM2,400 currently, it became easier to export oleochemicals. 

"We shipped out more volume, albeit at lower pricing, especially in the second half of this year," he said in an interview in Kuala Lumpur.

Yesterday, the third-month benchmark palm oil futures on the Malaysia Derivatives Exchange traded RM23 higher to close at RM2,431 per tonne.

According to the Malaysian Palm Oil Board, the country exported RM10.64 billion worth of oleochemicals in the first 11 months of this year.

Asked if oleochemical exports are going to hit a record high this year, he said: "We'll definitely surpass the RM11.5 billion mark by the end of the year."

It has taken more than a year for Malaysia to change its palm oil tariffs, in response to Indonesia's tax cut. Effective January 1 2013, Malaysia will lower crude palm oil (CPO) tax from 23 per cent to stagger at between 4.5 per cent and 8.5 per cent. 

If palm oil prices hover between RM2,250 and RM2,400 a tonne, the tax is 4.5 per cent. And if the prices were to jump to RM3,450 per tonne, the tax is 8.5 per cent. Exports of duty-free CPO will also be prohibited. 

If the government had responded earlier with the tax restructure, would Malaysia's oleochemical exports have been even higher? Tan pursed his lips and tactfully replied: "Let's not look into the past." 

"With the new palm oil tax structure coming into place, there's more certainty on the horizon. Apart from CPO, refiners also produce stearin, another feedstock variant that is critical to our members. When refiners produce more of such feedstocks, our members are able to churn out more fatty acids, soap noodles, esters and glycerine," he added.

MOMG members churn out 25 per cent of the world's 10 million tonnes of oleochemical demand. There are 18 oleochemical producers in Malaysia with a combined annual capacity of 2.6 million tonnes. 

After almost two decades, Malaysia is still the world's oleochemical hub. This pole position stems from the community of its process engineers and chemists' expertise to fine-tune ways to turn palm oil and palm kernel oil into more than 100 types of downstream products.

The three oleochemical giants in Malaysia, namely IOI Oleo Group, KLK Oleo Group and Emery Oleochemicals (M) Sdn Bhd, had recently taken to invest further downstream to make more profitable specialty chemicals. 

Tan, who is also IOI Oleo executive director, said his company is investing RM130 million to build a new fatty ester and a 20,000-tonne specialty oleo derivative plant at the Prai Industrial Complex in Penang.

KLK Oleo Group reported that it is spending in excess of RM600 million to build an integrated methyl ester sulphonate and fatty alcohol plant in Shah Alam and a specialty fatty ester facility in Klang.

Emery Oleochemicals is pumping more than RM400 million into its Telok Panglima Garang facilities to produce biolubricants, green polymer additives and surfactants. 

Apart from the three giants, ICM Specialty Chemicals Sdn Bhd is also investing RM130 million to put up a specialty ester plant in Pulau Indah, Klang. A 55:45 joint venture between Chemical Mate Technologies Sdn Bhd and Italy's Societa Chimica Lombarda Pte Ltd, ICM's plant is scheduled to start operations by mid-2014.

In a separate interview, ICM managing director Kenneth Chang Boon Kit expressed the need for a closer public-private collaboration. 

He envisions the government setting up a dedicated platform for institutions of higher learning and technical colleges to work more closely with the chemical industry. This way, academicians can update and fine-tune their research and syllabus to that of manufacturers' needs.

"By pooling our resources together, Malaysia will be able to sustain a critical pool of chemists to work on product development and engineers to design better processing plants," he said.

Hotline for Sabah planters

The Ministry of Plantation Industries and Commodities, will continue to ramp up activities to support the already soft crude palm oil prices (CPO) from falling further.

In a statement yesterday, the ministry said due to weak CPO prices, there are cases in Sabah where millers are not buying fresh fruit bunches (FFB), thus affecting the income of the commodity producers, especially the smallholders.

"The ministry views this scenario seriously as it will affect the livelihood of smallholders, and together with the Malaysian Palm Oil Board (MPOB), it has set up a hotline to help smallholders who have difficulty in selling their FFBs to millers."
Starting January 1 2013, the government will slash CPO export duty from 23 per cent to between 4.5 per cent and 8.5 per cent. It will also stop exports of duty free CPO.

In a move to reduce national stockpile, the government has also sped up implementation of the B5 programme and encourage other sectors to use palm oil-based fuel up to 10 per cent of their daily fuel.

The ministry and the MPOB will continuously monitor the situation closely and will take action to ensure operations are not disrupted. The phone numbers are: Kota Kinabalu 088-493700; Sandakan 089-224248; Tawau 089-777611; and Lahad Datu 089-867545.

Palm oil refiners heave a sigh of relief

This is written by my colleague Rupa Damodaran.

KUALA LUMPUR: PALM oil refiners yesterday heaved a sigh of relief with the government's new export tax structure for 2013, which they say will help restore Malaysia's competitiveness.

The new structure which comes into force January 2013, would detract crude palm oil (CPO) from being shipped out, thus enabling the refiners to use it for their downstream activities.

The move will also raise the competitiveness of Malaysia in processing olein and stearine and exporting products.
Palm Oil Refiners Association of Malaysia (Poram) chief executive officer Mohammad Jaaffar Ahmad is pleased that the government has fulfilled its promise.

Downstream players have been hoping for the government to heed their call to scrap the quota as they said it lowered the industry's competitiveness and reduced national revenue.

"The new tax structure has yet to be implemented, but we are hopeful that the refiners can improve their profit margin next year," he said. At 1.5 per cent to two per cent for palm olein , he said, it would be more manageable and makes it a level playing field compared to Indonesia's eight to 10 per cent.

After more than a year, the Cabinet responded to the plea of the refining community, to lower the tax from the 23 per cent. 

Yesterday, the Plantation Industry and Commodity Ministry announced the new palm oil tax structure for January 2013. The next announcement for February 2013 palm oil tariff structure is scheduled on 15th January. 

The plight of the refiners and others in the local downstream palm oil industry was felt more following neighbouring Indonesia's review of its export tax structure last year to boost its own refining industry.

Now that the government has come up with the much needed tax structure, Mohd Jaffar said, it is up to the refiners and their innovativeness to improve their profit margins.

However news reports said Indonesia may also soon introduce changes to its export tax structure to ward off the stiff competition in January. Its agriculture minister recently said there will also be tax changes to reduce the stockpiles.

Pisang goreng favourite

Not all oils perform well under high temperatures. Tan Bee Hong finds out that palm oil has a high smoke point which makes it a stable oil for deep frying

FRIED chicken, banana fritters, keropok lekor... what do these three top favourite foods on the local menu have in common?

They are all deep fried foods of course. But they are not the only ones. We deep fry lots of other items too — from potato and tapioca chips to curry puffs and tempura.

Why do we love deep fried foods? For one thing, the colour of deep fried food is an appetising golden brown. Secondly, there’s the crispy texture. Thirdly, frying in oil enhances the aroma of the foods.

Cooking food by immersing them in hot oil or fat is practised all over the world.

But not all oils are suitable for deep frying. Some oils are not stable. When heated, different cooking oils react differently as they  break down and eventually start to smoke (also known as smoke point).

When a particular oil is said to have a high smoke point, this means it can be heated to a relatively high temperature before it starts to smoke. Some oils perform better for high heat cooking, like sauteeing or deep frying and some don’t. 

Generally, vegetable oils have higher smoke points than animal fats (lard, butter). But oils such as olive oil has a low smoke point. Also, refined oils have higher smoke points as the process of refining removes impurities that causes oil to smoke.

But why is it important to have a high smoke point? At smoke point, oil breaks down, gives off an unpleasant, putrid odour and when food is cooked with this, it takes on an unsavoury flavour.
When oil reaches smoke point, there is also the danger of it catching fire and erupting into flames.

After deep frying, discard whatever oil is left. It is not advisable to reuse the oil. No, it’s not because used oil is “dirty” but rather, when oil is exposed to heat for a long time, the smoke point is lowered. 

In the process of deep frying, bits of food such as batter or bread crumbs (used to coat food such as chicken) inevitably break off and get into the oil. These impurities will lower the smoke point.

Palm oil has one of the highest smoke point of all oils, at 235°C. Here’s how it compares with some popular oils:
Virgin olive oil 210°C
Corn oil 232°C
Sunflower oil 199°C
Sesame oil 232°C
Rice bran oil 245°C
Coconut oil 250 °C
Soya oil 210°C

An interesting observation about frying with palm oil is that its high smoke point means food deep fried in it will absorb less oil.

Palm oil is also high in nutrient content, highly resistant to oxidation and suitable for all methods of food preparation, from deep frying, stir frying to roasting and baking. It is also a good choice as a salad oil. There is no need to keep different types of oils in your larder as palm oil will meet all your cooking requirements.

Produced from the fruit of the oil palm (Elaeis guineensis), it contains a variety of fats, vitamins and nutrients, with no unhealthy trans-fatty acids that is found in hydrogenated oils.

Palm oil is free of artery-clogging trans-fats as it is made up of a balanced mix of fatty acids containing vitamins A and E and nutrients our bodies need. It contains 40 per cent oleic acid and 10 per cent linoleic acid, which are monounsaturated fatty acid and polyunsaturated fatty acid respectively. Those are the good fats and like it or not, our bodies require fat.

Palm oil is a rich source of carotenoids and vitamin E which makes it stable against oxidative deterioration. Unrefined palm oil and crude palm oil are nature’s richest source of carotenoids as compared to the other vegetable oils — 15 times more than carrot, and 300 times more than tomato.

Unlike other vegetable oils, palm oil is the only one containing the full spectrum of Vitamin E (tocopherols and tocotrienols). The lesser known form of vitamin E, tocotrienols, are powerful anti-oxidant that kills free radicals in the body. This helps lower the risk of certain chronic diseases and delay the body’s ageing process.

Studies by Dr Paul Sylvester, Professor of Pharmacology and director of Graduate Studies and Research at the College of Pharmacy, University of Louisiana, on the health benefits of palm oil show it has anti-cancer properties and the fatty acids of palm oil can inhibit and/or delay experimental carcinogenesis.

When red palm oil is refined and processed, some of the carotenes are lost but not the tocotrienols and other nutrients.


Oil palm trees (Elaeis guineensis jacq.) originates from West Africa. They were introduced to Malaya by the British in 1870 but as an ornamental plant. In 1917, the first commercial planting of oil palm was in Tennamaran Estate in Selangor. Today, the oil palm is the leading agricultural crop in the country  (about 15 per cent of landmass), spanning across  five million hectares.

The oil palm is the most efficient oil-bearing crop in the world. It requires only 0.26 hectares of land to produce one tonne of oil while soya bean, sunflower and rapeseed require 2.22, 2 and 1.52 hectares, respectively, to produce the same amount of oil.

Indonesia and Malaysia are the largest producers and exporters of palm oil in the world, accounting for two thirds of the world’s vegetable oils and fats shipment.

The oil palm tree produces compact bunches of fruit weighing up to 25kg each. Each bunch has about 1,000 to 3,000 small, dark purple to orange red (when ripe) fruitlets comprising a hard kernel (seed) enclosed in a shell (endocarp) which is surrounded by a fleshy mesocarp.

Both produce different types of oil but what we know as palm oil is that which is extracted from the mesocarp, so essentially, it is a fruit oil, not a kernel oil.

The oil yield from the fruit is high and as much as 5kg of oil can be obtained from a fruit bunch weighing 25kg.

Health benefits of red palm oil

This is written by my colleague Bilqis Bahari.

RED palm oil, though having been in existence for several centuries, is now seen as the preferred solution for various health conditions, particularly those relating to vitamin A deficiency. 

Malaysian Palm Oil Board (MPOB) director general Datuk Dr Choo Yuen May told Business Times that red palm oil contains the highest source of natural carotenes as well as tocopherols and tocotrienols. 

“Carotenes in red palm oil, converted into vitamin A in the body, are a powerful source of antioxidants. These nutrients are used to treat health problems related to vitamin A deficiency, such as night blindness among children.”

“The vitamin A in red palm oil is 15 times more than carrot and 300 times more than tomato in terms of retinol equivalent,” she said in an interview recently.

She also said tocopherols and tocotrienols, which are naturally occuring vitamin E in tropical oils, help scavenge damaging free radicals. This means palm oil vitamin E helps slow down ageing and possibly prevent atherosclerosis and cancer.

According to the United Nations, vitamin A is an essential nutrient needed in small amounts for the normal functioning of the visual system, and maintenance of cell function for growth, red blood cell production, immunity and reproduction.

The United Nations also said that vitamin A deficiency is a major nutritional concern in lower income countries such as Africa and India.

Choo said night blindness, an eye condition that results in poor vision in low lighting conditions especially at night, affects as many as eight to 10 million malnourished children worldwide. If left untreated, vitamin A deficiency may lead to permanent blindness and death. “Carotenes in red palm oil have proven to be a very good source of pro vitamin A to help treat the disease,” she said.

According to Mayo Foundation for Medical Education and Research, the recommended dietary allowances of vitamin A vary among children with different ages. On average, children aged one to three years old would need 300 micrograms of vitamin A daily, while those from four to eight years old would need 400 micrograms daily. Those aged nine to 13 years old would generally need 600 micrograms of vitamin A daily.

Apart from local clinical trials, MPOB has also carried out the same research with reputable universities in the US, South Africa, Vietnam, India, China and Australia. 

The studies consistently show that red palm oil is able to treat vitamin A deficiency in children who suffer from night blindness. 

As an example, Dr A.J. Spinnler Benadé in one of papers titled “A place for palm fruit oil to eliminate vitamin A deficiency” stated that sweet snack or biscuits containing red palm oil given to school children suffering night blindness saw improvement in their vitamin A deficiency problem.

“If 35-50 per cent of the recommended daily intake for vitamin A were to be provided by red palm fruit oil, it is sufficient to prevent vitamin A deficiency,” he said in the research paper.

Dr Benadé fed the malnourished children biscuits baked with Carotino red palm baking fats. The affordable and tasty snack proved to be an ideal carrier for beta-carotenes and other micronutrients.

“The plus point is that children love snacks, so feeding compliance is not an issue. It contains no trans-fatty acids and its rich content of carotenes and vitamin E help to extend the shelf life of the biscuits,” Choo said.

Subsequent studies expanding on Dr Benadé’s research showed “Carotino biscuits” made an important contribution to the intake of beta-carotenes and specific micronutrients in vulnerable groups such as pregnant women, nursing mothers and adults working long hours under strenuous conditions.

“Through MPOB’s technology, red palm oil extracted from the palm fruit is rich in phytonutrients, retaining as much as 80 per cent of carotenes and also contains vitamin E (tocopherols and tocotrienols), phytosterols, squalene and co-enzyme Q10,” she said.

Nowadays, carotenes extracted from red palm oil are fast replacing synthetic vitamin A in multi-vitamin formulations. This is because scientists and doctors warn the dangers of synthetic vitamin A overdose in these supplements.

“Apart from being incorporated in multi-vitamin pills, carotenes are increasingly seen a popular choice in the food colorant market. As adverse effects of artificial colorants become clear, the demand for natural red palm carotene becomes even apparent,” she said.

Genting Plantations bets on genomic research

KUALA LUMPUR: Genting Plantations Bhd is betting on genomic research to boost its fresh fruit bunch (FFB) yield by 15 per cent to 27 tonnes/ hectare/year, as it plant up more designer oil palms, said president and chief operating officer Yong Chee Kong.

Currently, Genting Plantations' average FFB yield is around 23 tonnes/hectare/year.

Genting Plantations, a 55 per cent unit of Genting Bhd, owns agricultural landbank of 66,000ha in Malaysia and another 162,000ha in Indonesia, through joint ventures.

"We hope to improve this number (FFB yield) by 15 per cent in the mid-term through genomic research and precision breeding," said Yong. 

 He was speaking with the media after Genting Plantations' biotechnology unit ACGT Sdn Bhd, signed on to American chemical company DuPont's marker-assisted selection technology. In the next 30 months, DuPont promises ACGT to develop skills, tools and techniques aimed at raising oil palm yields.

DuPont, which was represented by its Asean group managing director, Ho Hsing, said the group has more than 9,500 scientists and engineers, with five innovation centres in Asia. "We're pleased to improve agricultural productivity here."

DuPont's collaboration with ACGT seeks to bring down research cost. "DuPont's marker-assisted selection technology is able to scale up and bring down research tenure to six years from the current traditional selection system which takes 11 years," said ACGT chief executive officer Derrik Khoo.

Khoo assured stakeholders that ACGT is working with existing oil palm genes. "There is no genetic introduction or modification. We've so far planted up an experimental plot of about 10ha."

Also present was head of GGT Sdn Bhd, Genting Plantations' plant breeding subsidiary, Dr Lee Chong Hee, who explained that ACGT's findings will enable his team to come up with "designer palms" that can bear many more fruit bunches with super-oily fruitlets.

An industry rises to the occasion

What has palm oil got to do with condoms?  Surprise! Surprise! It's in the lubricant and spermicide.

BOOST FOR MALAYSIAN RUBBER: Three decades after HIV/AIDS reared its ugly head, millions are still dying from it. Dec 1 -- World AIDS Day -- is a stark reminder of that horrifying fact. Without an effective vaccine or cure, Malaysian condoms have become the best defence in most parts of the world against the epidemic and other equally fatal, sexually-transmitted diseases, write Tan Choe Choe and Ooi Tee Ching

The world's biggest condom maker has factories in Malaysia and Thailand. Supplying up to 15 per cent of the world's current market, Karex Industries Sdn Bhd's manufacturing facilities hardly have a day to stand still. And the company is working at turning its factories wholly automated to roll out more rubber at a much faster rate.

Unknown to many, since 2009, Malaysia has emerged as the world's largest supplier of condoms, meeting 20 per cent of the world's condom demand of 20 billion pieces a year.

With 15 per cent of the market share in Karex's grip alone, the privately-owned Malaysian company churns out some three billion condoms that are distributed around the world a year.

Last year, the Malaysian Rubber Export Promotion Council's data showed condom manufacturers here exported 4.37 billion pieces, valued at around RM285 million. This year, the value of condom shipments is expected to surpass RM300 million. Sales remain robust as this form of birth control is widely used in the prevention of sexually-transmitted diseases (STDs), especially HIV/AIDS.

An effective vaccine or cure for this terrible illness has yet to be found three decades after it was first uncovered.

An American gay man called Timothy Brown, who received a bone marrow transplant in 2007 to treat a type of blood cancer while he was a student in Germany, is the only person who seems to have been cured of the illness as the transplant appears to have kicked the HIV virus out of his system.

Previously referred to as the "Berlin Patient" to protect his identity as a HIV-positive man, he has since shrugged aside the cloak of anonymity to show the world that five years after his transplant, he remains free of the virus, despite having long given up his anti-viral drugs.

Brown's case is a beacon of hope for many terminally ill HIV-patients, though it is still not clear how he has fought off the infection. 

But it has spurred renewed optimism in the medical community as scientists continue their search for a viable, effective cure or vaccine. Until that is found, the humble rubber condom remains the best bet at preventing HIV infection.

Karex's managing director Goh Miah Kiat also estimates that 40 to 50 per cent of the current global consumption of condoms is for the prevention of HIV/AIDS and STDs, a trend that his own company closely reflects.

Indeed, Karex, which opened for business in 1988, emerged as the No. 1 supplier of condoms globally because of the company's foresight to focus on this market segment, which is competitive as the customers are generally government health and family planning agencies, non-governmental organisations (NGOs) and multilateral bodies like the United Nations.

"A lot of people didn't look into this market segment because of the low profit margin, but we saw it as a potential. We looked into it, and we expanded our production accordingly. So today, we have the capacity that a lot of our competitors do not have."

For Nulatex Sdn Bhd, a relative newcomer in the high-entry-barrier industry of condom manufacturing, the increasing awareness of the efficacy and reliability of condoms in the fight against the HIV/AIDS epidemic has proven to be a huge boon.

"It has driven our rather steady growth over the years, what with ongoing HIV/AIDS awareness campaigns around the world.  But even so, it depends on religious and cultural acceptance. It is unlike gloves for healthcare, where the demand for that rubber will shoot up when there's an illness outbreak.

"For condoms, there are no sudden push factors -- it has always been used for STDs prevention, family planning, and personal hygiene -- issues that have always been around," said its managing director, Chan Cha Lin.

From about 200 million condoms per year in 2007, Nulatex's production capacity has gone up to 360 million a year. "If you look at our order quantity, the biggest part of our sales is from the sale of regular condoms, which are used primarily in the prevention of HIV/AIDS and assurance of personal hygiene."

The company has been selling a lot of its rubber to the African continent as well as China through various social marketing projects and NGO-initiated HIV/AIDS prevention programmes.

No. 1 worldwide, but not popular at home
THE  condom is regarded by the National Community and Family Development Board or Lembaga Penduduk dan Pembangunan Keluarga Negara (LPPKN) as an ideal family planning tool, since it forms an actual, physical barrier to prevent sperm and egg from meeting.

With correct and consistent use, figures show that male and female condoms provide 98 per cent and 95 per cent effectiveness, respectively.

As an actual physical barrier to the exchange of bodily fluids, condoms are also ideal in the prevention of STDs, something which other methods of family planning cannot do.

In recent years, the pattern of HIV/AIDS infection in the country has slowly but clearly been moving away from what is now regarded as the "traditional" transmission patterns; infection is no longer occurring exclusively among needle-sharing drug addicts, passed on from sex workers to their clients and vice versa, or only among men who have sex with men.

Instead, alarm bells are ringing among health practitioners and policy-makers as a new pattern of infection has emerged -- increasingly, the disease is being passed on from husbands to wives -- drug addicts who have spouses and those who visit sex workers are not necessarily single males.

The majority of men who have sex with men in Malaysia, too, are actually married and lead seemingly normal, conforming lives on the surface.

Yet, no matter their proclivities and notwithstanding that Malaysia is the No. 1 condom supplier in the world, Malaysian men are not fond of using them. Local condom consumption is estimated at just 80 million pieces a year.

According to the Malaysian Population and Family Survey 2004 conducted by LPPKN, the condom is used only half as frequently as birth-control pills as a form of contraception, at 7.4 per cent versus 14 per cent.

The emergence of other long-term or more permanent methods of contraceptives may also have overcome the usage of condoms among some quarters. “We have been using condoms in the country since the 1960s and today it is still not the most popular method of family planning. Birth control pills remains the preferred choice because of the ease of use," said LPPKN chairperson Tan Sri Napsiah Omar.

There is also the reality that it is almost taboo -- religiously and culturally -- to be caught with a packet of rubber; to the point that such precaution is regarded as indicative of immoral behaviour.

Condom manufacturer Goh Miah Kiat feels, however, that it is an unnecessary taboo. Young adults should be provided some form of protection, he said. As it stands, the Health Ministry has itself reported that it is seeing an increasing number of pregnancies among adolescents aged 10 to 19 years (from 3.1 per cent in 2010 to 4.1 per cent last year).

Speaking to the New Sunday Times on the sidelines of the World Population Day 2012 celebrations by LPPKN a few months ago, Napsiah (far right in the photo) expressed concern that about seven or eight children were born to unmarried teenage mothers every day. 

"Many of them don't even know how a baby is conceived."

In an email interview later, LPPKN said: "From a public health perspective, prevention is more important (and) primary prevention of unintended pregnancy in adolescents involves the delay in the initiation of sexual activities until psycho-social maturity, or marriage, depending on the religious or cultural perspective.

"Secondary prevention is the use of safer sex practices by those who are sexually active, and who do not plan on abstaining from sexual activities."

This would most certainly include the use of condoms, even though the federal agency admits that awareness of condom usage is still low in Malaysia, despite its advantages. "Condoms do not require a visit to a health professional or a prescription. They're sold in drugstores and family planning clinics.

"Given the fact that Malaysia is currently the major latex condom manufacturer in the world, it is an added reason why wider usage of condoms should be encouraged locally," it added.

Hotter demand at sports meets

THIS  year's London Olympics chalked up a new record for the highest number of free condoms handed out in the Games Village -- 150,000 -- and has been cheekily regarded as the "raunchiest games ever".

Previously during the Beijing Olympics, 100,000 condoms were supplied. The Athens Olympics in 2004 prepared 130,000 condoms for the athletes.

The Sydney Games in 2000 originally allocated 70,000 pieces, but had to pump in an extra 20,000 very quickly.

Goh Miah Kiat of Karex doesn't really see a direct correlation between major sports meets and sales of condoms. But Malaysian condom export figures, provided by the Malaysian Rubber Export Promotion Council, indicate that in the last five years, whenever a major sports meet pops up, there is always a sudden spurt in condom sales from the previous year. 

For example, we exported 55 per cent more condoms in 2008 compared with 2007. In 2010, which is the World Cup year, our sales jumped 33 per cent more from before; this year, sales are expected to surpass US$100 million (RM303 million), still a jump of at least 10 per cent from last year.

"We don't have customers in the United Kingdom but based on our World Cup experience in Africa, there were a lot more enquiries from interested buyers, and many wanted to custom make some condoms with fun ideas to commemorate the sporting event," said Chan Cha Lin of Nulatex.

One of the most common enquiries that they received was to customise condoms with the design and colours of a country's flag. 

"Say if you were a Brazil supporter, you would probably buy a condom designed in the colours of that country's flag."

And he thinks it's only logical that when there's an influx of tourists in one spot for a sporting event, there will be an increase in "extra-curricular activities".

'Side effects' of China's new edible oil controls

KUALA LUMPUR: China's new quality control rules on imported edible oils may spur food price inflation and possibly wastage if not properly implemented.

China is Malaysia's biggest export market, while Malaysia is China's largest trading partner in Asean. 

One of Malaysia's significant exports to China is palm cooking oil for daily use. Every year, China spends some US$4 billion to buy close to four million tonnes of the kitchen staple from Malaysia.

It was reported that from January 2013, China's Inspection and Quarantine Bureau will start to enforce a new set of technical specifications requiring the quality of imported edible oil to be at a cost-adding level.

The current understanding is that as long as palm oil exporters meet Poram's specifications, shipments from Malaysia are likely to qualify quarantine rules imposed on vegetable oil imports into China.

In a recent interview with Business Times, however, Palm Oil Refiners Association of Malaysia (Poram) chief executive officer Mohammad Jaaffar Ahmad begged to differ. 

He noted that there could be a misunderstanding and that there are actually many uncertainties at play. 

In explaining the implication of China's new rules on imported edible oils, Jaaffar likened the process to a consumer buying fruits from the supermarket and bringing it home.

"If you buy apples from the supermarket, you accept the quality as it is, at the time of purchase. You do not hold the supermarket responsible, if, on the way back home, the apples got bruised or deteriorate in quality from the high heat of your car parked under the sun," he said.

The new rules in China, to be effective from January 2013, seemed to hold palm oil exporters responsible for the quality of oil deterioration although the price paid is not that of door-to-door delivery.

"If the China quarantine authorities want guaranteed landing quality, new cost-adding arrangements would have to be factored in. This can be very expensive and will result in unnecessary food price inflation in China," he said. 

Last month, China's inflation rate fell to a three-year low, having expanded only 1.7 per cent from a year ago.

"We need to be more discerning of the implication of the new rules. We are well aware authorities from both China and Malaysia need to ensure imported cooking oil remains affordable and safe to consume by China's 1.3 billion population and at the same time, reap steady income for palm oil exporters here," Jaaffar said.

Back in April 2011, during his second official visit to Malaysia, Premier Wen Jiabao promised Prime Minister Datuk Seri Najib Razak of closer diplomatic and trading ties. 

Even though China has long been running a trade deficit with Malaysia, Wen reportedly said China have no complaints. In fact, China agreed to continue buying Malaysia's palm oil. 

"Malaysia and China are facing economic development challenges. Therefore, with deep co-operation, we can together deal with such challenges and fulfil our mutual interests," Wen reportedly said.

In forging warmer trading ties, Jaaffar expressed hope that both countries will come up with mutually beneficial arrangements.

"It is in the interest of China's consumers that they should be able to go on buying affordable and nutritious cooking oil. It is also in the interest of palm oil exporters that shipment into China should not be rejected by reasons they have no control over," he added.

Plantation Industries and Commodities Minister Tan Sri Bernard Dompok is scheduled to visit China for the Malaysia-China Palm Oil Trade Fair & Seminar 2012 in Chongqing from November 29 to 30 2012.