Archive for February 2012

Three steps to Felda Global listing

This is written by my colleague Maizatul Ranai stationed in Negeri Sembilan.

SEREMBAN: Three steps will be carried out to ensure the listing of Felda Global Ventures Holdings Bhd on Bursa Malaysia scheduled in May or June this year will proceed as planned.

Deputy Minister in the Prime Minister's Department Datuk Ahmad Maslan said the first step is to persuade eight members of Koperasi Permodalan Felda (KPF) to withdraw their action. These eight settlers had, for the second time, obtained a temporary order at Kuantan High Court to prevent the cooperative from making any decision at its extraordinary general meeting (EGM) on February 22, 2012.

The court order had forced the cancellation of the EGM and hindered KPF from participating in the proposed listing of Felda Global.

Ahmad Maslan said efforts to persuade the Felda settlers involved to withdraw their action was tough. He said their action was unfair to about 240,000 KPF members who mostly supported the listing.

"(As a second step) we will try to set aside the application of the injunction. This will enable the EGM to be held and allowing about 1,300 KPF representatives to cast their votes regarding the listing exercise. I believe the majority will support the listing of Felda Global. So far, the explanation on the benefits of the listing was well received," he said after launching SB Fight Back Academy at Karnival Seni Beladiri Kolej Negeri here yesterday.

Ahmad Maslan said the government is looking forward to implement the two steps, before going to the third step, which is the listing of Felda Global -- without KPF's participation.

Maslan, who is also Umno information chief, said the injunction is backed by the Opposition, who did not mind destroying the future of the settlers and Felda's staff for the sake of their own political expedient. "We know the eight settlers support the Opposition. Even PKR director of strategy Mohd Rafizi Ramli admitted that the Opposition wants to prevent the listing of Felda Global," he said.

Ahmad Maslan also responded to the opposition's claims that KPF only owns 37 per cent shares in Felda Global, compared to 51 per cent in Felda Holdings Bhd. "The Opposition is willing to see KPF own 51 per cent in an entity which only has market value of RM3 billion compared to a 37 per cent stake in Felda Global which analysts had estimated to be valued at RM20 billion upon listing on the stock market," he said.

Felda to go ahead with IPO

KUALA LUMPUR: FELDA Global Ventures Holdings Bhd (FGVH) will go ahead with its proposed initial public offering without the direct involvement of the settlers' cooperative, Koperasi Permodalan Felda (KPF), Felda chairman Tan Sri Isa Samad said.

However, Felda settlers will still enjoy any windfall from the proposed listing through a special purpose vehicle (SPV).

"I want to be clear that Felda wants KPF to participate in the IPO. However, it is unfortunate that a small group of eight Felda settlers, influenced by the National Felda Settlers' Association (Anak), have chosen to block the participation of KPF in the IPO," Isa said at a press conference held before a briefing session with Felda settlers here yesterday.

The Kuantan High Court last week allowed an interim injunction by eight Felda settlers barring KPF from transferring its shares in Felda Holdings Bhd and 10 of its subsidiaries to FGVH or any discussion to be held on behalf of KPF on the matter, resulting in the cooperative board cancelling its extraordinary general meeting yesterday.

While KPF owns a 51 per cent stake in Felda Holdings, it does not have a stake in FGVH, which is wholly owned by the government through Felda. As such, the decision to list FGVH lies wholly with the Felda board and the minister in charge of Felda.

Isa expressed disappointment with the action of the eight settlers, which he said was detrimental to the interest of 220,000 KPF members, of whom 112,635 are Felda settlers. "As a result of their action, other KPF members (non-settlers, such as Felda employees) will not be able to participate in the proposed listing of what would have been one of the largest producers of crude palm oil in the world.

"Although the action of the eight will not impact on FGVH's proposed listing, we are disappointed at their opposition-influenced decision to deprive a majority of Felda employees an opportunity to participate in the growth of FGVH," he said.

With KPF out of the picture, Felda now proposes to establish a SPV to protect settlers' interest.

"As the proceeds from the proposed listing and potential profits from the listed business now cannot be channelled through KPF, the SPV will assume this role and ensure that Felda settlers benefit directly from the proposed listing and participate fully in all future profits," said Isa. "We anticipated this. That's why we were prepared to handle it in a different way."

Isa said the listing of FGVH was going through the usual regulatory process and it had been finalised. "I urge all parties not to make any statements or speculations on the outcome. I am sure the FGVH management will provide the necessary information as to when approval from the authorities is granted."

He reiterated that no Felda settler's land would be touched. In addition, their holding in KPF remained as it was.

Garuda increases KL-Jakarta flights

This is good news for oil palm investors who frequently shuttle between Kuala Lumpur and Jakarta.

SEPANG, Selangor: Garuda Indonesia will now fly three times a day between Kuala Lumpur and Jakarta from just twice daily, previously.

Travellers from Malaysia topped tourist arrivals to Indonesia last year. "As a regional hub for both business and leisure travellers, Malaysia is a very important destination for us," said Garuda Indonesia president and chief executive officer Emirsyah Satar.

"Whether it is for business or pleasure, three daily Garuda flights will give passengers the convenience and flexibility when planning a trip to Jakarta," he told reporters after greeting passengers on flight GA816 at Kuala Lumpur Interna-tional Airport (KLIA) yesterday evening.

Also present at the launching ceremony of Garuda's additional daily flights was Malaysia Airports Holdings Bhd managing director Tan Sri Bashir Ahmad, Indonesia Youth & Sports Minister Andi Malarangeng, Indonesia's Social and Culture Minister Suryana Sastra Diredja and Garuda executive vice-president of marketing and sales Arief Wibowo.

Andi noted that last year, only five million passengers travelled between Malaysia and Indonesia. "We see potential for growth as business ties, tourism and sporting activities expand in view of the formation of an Asean Community by 2015," he added. 

As Indonesia's national airline, Garuda offers full-service network with main hubs in Jakarta, Denpasar and Makassar. Its fleet of 87 aircraft serves 31 domestic and 19 international destinations.

"With Garuda's additional daily flight, frequent flyers between Kuala Lumpur and Jakarta now have a wider choice in their flights. This additional flight will also further stimulate passenger movement between Indonesia and Malaysia," said Bashir.

Currently, Malaysia Airlines flies six times daily between Jakarta and Kuala Lumpur.

Catering to a growing demand for bicycles

Apart from meeting corporate leaders who are clever at making money, as a business journalist, I also deal with scientists collecting data at oil palm fields. Most scientists are in tune with the commercial world but there are also a handful who are penny wise pound foolish. On top of that, they also like to talk big but are not able to step up to the plate. Frustrating, huh?

At times like this, a leisurely ride in the estate under the cool canopy of oil palm leaves makes me feel there are brighter days ahead. As the gentle breeze blew past me, I remembered words of comfort from a friend -- in times of crisis, there're opportunities. That prompted a story idea in my head and led to this interview with bicycle retailer Edwin Ng.

As recreational cycling starts to regain its popularity in the Klang Valley, Joo Ngan Son Bicycle Specialist taps into the heightened demand with a third store. OOI TEE CHING speaks to former national cyclist Edwin Ng about the booming sector.

"WE will be opening our third outlet and it'll be called Volt - Your Cycling Companion," said managing director Edwin Ng, a former national cyclist.

In an interview with Business Times in Petaling Jaya, Ng said in today's fast-paced world, parents are realising that they need to spend more time with their children. "One of the ways to tighten family ties is to engage in outdoors activities together, such as cycling." 

Edwin recalls cutting his teeth in cycling in the 1980s by taking part in BMX competitions. It was also then that he started helping his father, Datuk Ng Joo Ngan, run the family's bicycle shop. 

Back in the 1970s, the elder Ng was an Asian Games gold medallist and king of road cycling. Like his father, Edwin was also talented at competitive cycling. 

In 1994, he earned the Future Sportsman of The Year award. By 1998, he had bagged more than 20 gold medals from local and international races. At the 1995 World Championship in Bogota, Colombia, he smashed the national record in the 1000m individual time trial.

However, Edwin was forced into early retirement because of injuries to his wrist, shoulder, hips and left eye during high-altitude training at Genting Highlands.

Undaunted, he channelled his passion for bicycles into retail.

In 2007, Edwin opened his first outlet as Joo Ngan Son, an obvious reference to his father Datuk Ng Joo Ngan. He bought stocks worth RM760,000 in his father's business. "I didn't borrow any money but I paid my dad bit by bit, over the next three years," he said.

Edwin is in a unique position as he has first-hand experience in competitive cycling, having been Malaysia's top cyclist in 1995. At the same time, he also has first-hand knowledge in being at the sharp end of bike retail. "Customers are key to us and always will be. We cater to mountain bikers, roadies, spinners or even recreational bikes like tandems for the family. Ultimately, success in any market is down to how well we can offer what they need," said Edwin. 

"The best part of being in the bicycle business are the friendships that I have made," he added. True enough, as he pauses, his phone rang. He promptly excused himself to have a friendly chat with a client on a list of preparatory steps to undertake in a tournament.

Edwin notes that the appetite for cycling among urban Malaysians is growing. Nowadays, potential customers are being offered a wider spectrum of two-wheelers compared to 10 years ago. Bicycle shops need not be the old small mum-and-pop style shops, especially when the top range bicycles are costing tens of thousand of ringgit. Concept stores are opening to push cycling out to a wider audience.

Edwin positions his Volt - Your Cycling Companion concept store as a one-stop-shop for those who are passionate about cycling, including for commuting, mountain biking, racing, leisure touring and endurance training for triathlons. "The retail environment is becoming brand-orientated. More and more consumers want to frequent stores that offer quality products and friendly consultations on maintenance and repair," he said.

In his four-year stint in bicycle retail, Edwin has had clients who wanted bicycles for everything, such as commuting, recreational and racing and even one for the maid to run errands. 

But a one-size-fits-all does not exist. So, how does one go about choosing a bicycle?

"First, you have to decide on your budget and then, the features you want. Do you like to race or do you want to have multiple gears and panniers to carry all your food and beverage rations?"

Since a cyclist typically pedals 90 per cent of the time, he says saddle choice, ride comfort and sitting posture are important. "The bike has to fit the rider ergonomically."

Currently, anyone who buys a bicycle is able to deduct up to RM300 in their income tax filing. But Ng feels the government can do more to encourage healthy lifestyle among Malaysians. "It will be good if the government considers waiving the limit on income tax deduction for sporting equipment," he said.

Bicycling is good for physical and mental health because, in the long run, one can save money on healthcare and medical insurance. "The bicycle is a simple solution to a whole host of problems," he says. 

Last year, Youth and Sports Minister Datuk Seri Ahmad Shabery Cheek endorsed the World Car-Free Day on September 22 and urged the public to do their part. 

In promoting a healthy lifestyle among Malaysians, Shabery had said proper bicycle lanes should be incorporated into city planning. He also encouraged bicycle rental services where the public could rent a bicycle from one spot and return it at another. "This will help alleviate the parking problem."

This was written by my colleague Chai Mei Ling. It was published on 2nd October 2011.

I remember when I was the King on two wheels

IT all started some 50 years ago at Jalan Kuchai, Kuala Lumpur with a simple dare. Datuk Ng Joo Ngan was then 15, scrawnier than most boys in the neighbourhood, was always a target when the rest wanted to show off their prowess in anything.

His brother's friend, a cycling enthusiast, challenged Ng to a race. At stake were a bowl of noodles, RM10 and bragging rights. Ng lost to the other boy, who was a year older than him.

"My brother, Joo Pong, who is also a year older, is a very good cyclist. His friend naturally never challenged him, but always chose me as a target. I was annoyed to be taunted all the time. Plus, RM10 was a big sum then," says Ng.

The teen then decided to equip his ordinary bicycle with a racing handlebar. He also woke up at 6am daily to train for a week, cycling some 3km a day.

His determination was worth it -- he beat the friend in the next race, regained his pride, and learnt that almost anything was possible with perseverance and hard work.

"I thought to myself -- I've never been interested in or picked up cycling, but if I could beat my brother's friend, who had been cycling for two years, after having trained for just a week, I could probably beat my brother should I train harder." 

He continued training on his own every day -- sometimes joining his brother in races -- and within a year, made it to the national cycling squad at the young age of 16. Three years later, the 19-year-old represented Malaysia in the 1966 Asian Games in Bangkok, coming up up fourth in the team time trial.

The following year, Ng hauled in three medals -- two bronzes and one silver -- in the Southeast Asian Peninsular Games, now known as the Southeast Asian Games. The cyclist continued to make his mark in subsequent tournaments but his biggest break came when he represented Malaysia in the 1970 Asian Games, also held in Bangkok.

He secured a gold medal in the 200km road race -- a feat that has yet to be replicated by any Malaysian, even in later years when the event's distance was reduced to 187km. In the same year, he became the overall team and individual champion of the Tour of Jawa, and the national champion for the track and road race in Seremban. 

In 1971 Ng was crowned as the national champion for the individual road race of the Tour of Malaysia, which covered 1,020km over a span of eight gruelling days. 

He was also named Sportsman of the Year 1970 and received the award from then prime minister Tun Abdul Razak.

"I never expected to be rewarded. During races, I never thought about glory or rewards. There's only one thing on my mind -- to do my absolute best," said Ng, who admits to being a highly competitive person.

But a competitive streak alone wouldn't have cut it. Ng led a highly disciplined and regimented lifestyle. 

He would wake up at 5am every day, train for hours, and by 7pm, retire to bed. Success, he says, doesn't come without sweat and tears. "Up until now, I believe in training. Without training, one cannot be a champion."

Ng demanded the same commitment from young cyclists when he subsequently moved on to coaching after the Asian Games. 

He started off with the Kuala Lumpur Cycling Club, before eventually training the national squad. "I wouldn't allow my cyclists to buy a motorcycle or car, because I didn't want their focus to deviate from cycling. And I'd go from house to house in the evening to check if they were at home. They were not allowed late nights."

Among cyclists under his tutelage were M. Kumaresan, Tsen Siong Hong, Nor Effandy Rosli, Teoh Chen Hai and Ali Hassan.

Ng is proud of the fact that his cyclists have garnered over 50 gold medals at international events. His enthusiasm and love for sports also rubbed off on all his five children.

Eldest son Edwin is a former national cyclist who now runs a branch of the family's bicycle shop in Damansara Uptown, while daughters Jillian and Jacqueline specialise in synchronised swimming.

Ng is happy his children share his love for sports. "I never forced them. Whether the interest or commitment is there or not depends on them."

On how the cycling scene has changed over the years, Ng says while it has become more competitive, cyclists also have it easier these days.

Today, sponsorship is a norm, bicycling technology has advanced a lot, and cyclists are paid a salary, he points out. "It's true that bicycles are much more expensive now, but the technology is way ahead of what we had. Those days, there's no such thing as aluminium frame, they were all steel. I remember the bicycle I used in the race with my brother's friend had only one gear and cost RM75." 

Last year, another feather was added to Ng's cap when he was conferred a "Datukship" during Federal Territory Day. 

"During the first few months, I felt uncomfortable when people addressed me as 'Datuk'. It took me quite awhile to get used to the title," he says, adding that he is grateful that the government is appreciative of the efforts of former sportsmen.

"My son asked me to get a nicer car, dress up nicely, wear long pants and such, to go with the public image. But that's not me. I can't ditch my sports shirts and shorts," laughs Ng.

Ng, now 64, has been cycling for almost five decades, but he does not have any plans to "retire". 

Looking fit with a build that puts men half his age to shame, the grandfather of one still coaches at the KL Club and cycles with friends and clients. He has also been running the Joo Ngan Professional Bike Centre in Ampang for more than 20 years, happy that he can help spread the joy of cycling around.

"If I really retire, if you ask me to sit down at home....cannot lah, I cannot do that. I will cycle until I can't cycle anymore."

Mandatory health insurance for foreign workers

KUALA LUMPUR: THE government is making it compulsory by June 2012 for all employers to buy health insurance protection amounting to RM120 per year for each of their foreign workers.

"So far, the government has seen 1.4 million of insurance policies taken up by foreign workers in the construction and restaurant sectors. Those that have not taken up are domestic helpers and estate workers," said Performance Management and Delivery Unit (Pemandu) director of healthcare NKEA Dr Chua Hong Teck.

"Those employers who fail to fulfil this requirement will see their foreign workers' permit not renewed by the Immigration Department. This health insurance scheme is an add- on to the health screening requirement by Fomema Sdn Bhd," he told reporters here yesterday.

"Yes, there is no such law to enforce the mandatory element. It is done administratively by the Immigration Department," the Pemandu director said after delivering his presentation at a seminar organised by the Malaysian Institute of Management. 

Dr Chua then explained that this scheme provides hospitalisation and medical benefits at government hospitals to foreign workers with coverage of RM10,000 per year for all injuries and sickness. 

A total of 25 insurance companies and two third party claims administrators are participating in this scheme.

"At RM120, it works out to be only RM10 per month. If one can spend RM10 on a packet of cigarettes per month, then it's not much to provide health insurance for his domestic helper, right?," said the senior government official from the Pemandu, a unit of the Prime Minister's Department.

"Bank Negara Malaysia has endorsed this RM120 per year insurance policy as the most value-for-money hospitalisation coverage. Employers who have bought RM50 or RM60 per year policy for their domestic helper is just for personal accident. I'm sure it does not cover hospitalisation. 

"The employer needs to differentiate the various coverage the insurance policies offer," he added.

To a question if employers can deduct the RM120 per year insurance coverage from their domestic helper's salary, Dr Chua replied, "this is between the employer and the domestic helper. Right now, government hospitals are experiencing around RM5 million or RM6 million a year in unpaid medical bills incurred by foreign workers. This is being borne by taxpayers' money. Is this fair to taxpayers like you and me?"

The Health Ministry had since January 2011 wanted to impose this ruling on foreign workers in the plantation sector. It was, however, repeatedly opposed by farmers.

This is because oil palm and rubber plantation firms are already footing the medical bills of their foreign workers under the Workers Minimum Housing Standard & Amenities Act 1990. This law mandates all estate owners to provide healthcare facilities and services for their staff, including foreign workers.

Malaysian Palm Oil Association chief executive officer Datuk Mamat Salleh reportedly said this ruling forces plantation companies to pay a second time what they have already been providing to foreign workers. 

"Injury-related accident cases are already covered by the Workmen Compensation Insurance. Currently, employers are paying RM72 for each foreign worker," Mamat said. "If our estate members were to participate in the medical insurance scheme, we'll be paying an extra RM50 million to insurance companies for the 400,000 foreign workers staying in the estates," he added.

'Palm oil to trade above RM3,000'

KUALA LUMPUR: OIL palm planters can look forward to another prosperous year as palm oil prices is expected to trade above RM3,000 per tonne due to global demand for the edible oil outstripping supply.

There is continued strong demand for palm oil from traditional markets, with India and China buying large quantities of palm oil to feed its burgeoning population, said the Malaysian Palm Oil Council deputy chief executive officer Dr Kalyana Sundram.

"Prices are unlikely to drop below RM3,000 per tonne. Generally, we feel that the price will be firm for the crude palm oil (CPO). It will be a good year with the first half exciting and the second half, challenging," he told reporters here yesterday.

"We should be able to export more palm oil this year, possibly breaching 18.1 million tonnes. There is higher demand from Turkey, the Philippines, Nigeria and Vietnam," he added.

Sundram was presenting his forecast at a luncheon talk titled "Crude Palm Oil - the Next Supercycle" organised by MIDF Amanah Investment Bank Bhd. 

His bullish forecast takes into account that this year's palm oil output is seen to rise by two per cent to 19.33 million tonnes as more trees mature and bear more fruit bunches, particularly in Sarawak.

On this year's CPO export quota, Sundram confirmed that Malaysians with refineries abroad could ship over three million tonnes of tax-free CPO. That works out to be 15.5 per cent of the country's 19.3 million tonnes CPO output forecast. "Like previous years, there's no change in the CPO export quota. It's still business as usual," he said.

He explained that the decision by the Plantation Industries and Commodities Ministry to maintain the export quota was to safeguard the refining industry. The decision also quelled rumours that the government might abolish the duty-free CPO export quota while keeping the 23 per cent export tax for processed palm oil. Currently, Malaysia does not tax refined palm oil exports.

Indonesia, as the world's biggest palm oil producer, now wants more downstream investments and production of refined palm products. Since October 2011, the Indonesian government has drastically widened the gap between CPO and refined export taxes. As a result, crude palm oil and crude palm kernel oil are cheaper for downstream producers there. Like Malaysia, refined products shipped out from Indonesian shores are also tax-free.

Also present at the luncheon was MIDF senior vice-president research head Zulkifli Hamzah. He said the Indonesia palm oil tax structure had dampened palm oil prices. "We think palm oil prices is likely to average at RM2,950 per tonne this year. The wide gap in the Indonesian palm oil tax structure has pulled prices down," he said. 

"It's not all that bearish though. We need to be mindful of the possibility of the US government implementing its third quantitative easing measure in printing more money. If this materialises, it will weaken the US dollar and cause commodity prices to rise," he added.

Palm oil exporters ask for help

This is written by my colleague Rupa Damodaran.

KUALA LUMPUR: Malaysian palm oil exporters to Iran are feeling the pressure of the US and EU trade sanctions, and now, they have appealed to the International Trade and Industry Ministry (Miti) for help. 

Miti Minister Datuk Seri Mustapa Mohamed said if these pressures were to continue, it would impact exports to the Middle East.  "We are trying to divert them to other growth sectors, so that they will be compensated," he told a media briefing yesterday. 

Malaysian exporters are not the only ones impacted by the sanctions which target Iran's central bank. Other Asian exporters are also facing payment problems. 

For 2011, exports to the Middle East increased by 15.1 per cent to RM28.0 billion. Of the total, exports to Iran increased to RM3.21 billion.

According to the Malaysia External Trade Development Corporation, exports were mostly palm oil, electrical and electronic products and rubber.

Nestle to scoop up Pfizer's baby formula

LONDON: SWISS food group Nestle is in pole position to buy Pfizer's US$10 billion (RM30.3 billion) Wyeth infant nutrition business in a two-horse race with French rival Danone and so boost its fast-growing Chinese business. 

The two European groups have emerged as clear frontrunners in the auction after first-round bids were submitted before Christmas, while US groups Mead Johnson and Heinz are also involved in the second round. 

"Assets as good as this do not come along very often. Nestle has deeper pockets than Danone and we would not expect them to give up on this deal. It is Nestle's deal to lose," said one banker working on the auction. 

The Pfizer unit is an attractive US$2.1 billion (RM6.36 billion) turnover business growing at 8 per cent a year and based around its top SMA Gold brand. Some 60 per cent of Wyeth sales are in Asia, 30 per cent in Europe, largely Britain, and 10 per cent in Latin America. 

It ranks number five globally in the infant milk formula market - the world's fastest growing packaged food category - after Nestle, Mead Johnson, Danone and Abbott Laboratories . 

"The key strategic attraction in our view is Pfizer's position within the US$6 billion (RM18.1 billion) Chinese infant formula market. The market is unusual in having super-charged Chinese growth rates as well as highly attractive margins," said analyst Robert Dickinson at brokers Citi.

China's infant formula market is set to double in size to US$16 billion by 2016, having grown at more than 20 per cent over the last five years to feed 16 million new births a year. 

Pfizer's business has a quarter of its sales in China. 

Nestle, the world's biggest food group and infant formula maker, has a relatively small presence in this Chinese market but could leap to No. 3 nationally with the Pfizer unit buy. Market leader in China, Mead Johnson, saw its national sales jump 40 per cent in 2011, led by its top Enfamil brand.

International brands gained from a 2008 milk tainting scandal that damaged the reputation of domestic companies. 

A deal for the Pfizer unit is well within Nestle's scope, with its low debts and AAA credit rating, and it could easily outbid Danone in a bidding war.

The Swiss group has said it is looking for deals after cancelling a share buyback programme. The purchase will stretch the smaller Paris-based Danone financially and may force it to sell off assets to mount a bid.

Credit Suisse analyst Robert Moskow values the unit at US$10 billion or 17.8 times its historic EBITDA profit. This compares to similar infant nutrition deals in 2007 when Nestle bought Gerber at 15.7 times and Danone purchased Numico for 22 times. A deal is some way off in the auction process and completion is expected to be delayed until the summer for tax reasons. Both European companies will face anti-trust hurdles.

Nestle, whose main formula brand is NAN, is likely to have to sell 25 per cent of Pfizer's unit sales by disposing of interests in Latin America, Australia and South Africa.

Danone, which sells Dumex as well as Milupa and Bledina brands, might have to sell 30 per cent of Pfizer's sales including Britain and Ireland.

Analysts say the situation in China is less clear. Danone's 14 per cent share in second place plus Pfizer's eight per cent share in fifth would overtake leader Mead Johnson's 16 per cent. Nestle has a relatively small four per cent share of that market. --Reuters

Green Ocean banks on Novelin for profit

This is written by my boss Francis Fernandez.

KUALA LUMPUR: Green Ocean Corp Bhd is poised to post a record profit of between RM15 million and RM20 million in the financial year ending 31 March 2013.

The loss-making company is expected to register its first profit in four years for the financial year ending 31 March 2012.

“We should make a profit in the range of RM2.5 million,” said its group managing director Lee Byoung Jin in an interview with Business Times.

Lee, a South Korean national, and parties aligned to him control about 28 per cent of the company.

Green Ocean is banking on the Novelin technology to get back to the road of profitability. The technology was developed by the Malaysian Palm Oil Board (MPOB), and Green Ocean pays the board a royalty for a 20-year exclusive use of the technology.

The technology, known as Novelin, allows Green Ocean to produce cooking oil which has cold stability at zero degree Celcius, which means it can be used during the cold winter period.

Palm-based products tend to solidify at about 24.1 degree Celcius, which means palm oil-based cooking oil can’t be used during winter.

The Novelin technology, which has been trademarked by the MPOB, is a game changer in the global cooking equation as it removes palm oil’s Achilles’ heel in cold weather. If proven to be commercially successful on a large scale, it is also a significant cash cow for Green Ocean, which has already commercially tested its products in the South Korean market.

Green Ocean has never posted a double-digit profit, and Lee, who took the company over some three years ago, has been busy cleaning up the company’s balance sheet.

Today, the company has about RM9.70 million debts and about RM34.78 million assets, and Lee is excited about the future.

“We are expecting to get a grant of about RM24 million from the government’s Performance Management and Delivery Unit (Pemandu) sometime in March to build a new factory. The new factory will help us increase our production capacity by as much as 10 times. Our current production facility has a capacity to produce 11,000 tonnes of cooking oil, but with the new plant, our capacity will increase to 100,000 tonnes," Lee said.

Green Ocean currently has a pilot plant near Port Klang, and the new plant, which will take about nine months to complete, will be located in the same area.

He added that Pemandu is involved because the project undertaken by Green Ocean is part of the government's Economic Transformation Programme.

Lee proudly pointed out that his company is 100 per cent export-based, namely to South Korea and China, and that Green Ocean is the only company in Malaysia with the exclusive Novelin technology. "We are the first and only company doing this right now," said Lee.

Green Ocean: It's merely a target

KUALA LUMPUR: Green Ocean Corp Bhd has clarified that its RM15 million to RM20 million profit statement is merely a target set by the management for the financial year ending March 31 2014.

This is provided the signing of an agreement to supply the entire premium cooking oil production to a conglomerate will materialise by fourth quarter of financial year ending March 31 2012 and the expansion to proceed as planned, Green Ocean said.

It was responding to Bursa Malaysia's query yesterday on certain statement's published in the Business Times article entitled "Green Ocean Banks On New Technology For Profit" yesterday.

The company also said that the management was targeting its first profit in four years for the year ending March 31 2013 and not 2012 as reported. It also clarified that it is actually applying to get a grant from Pemandu in March 2012 and not an approval for the grant as reported.

Felda increases presence in North America

This is written by my colleague Kamarul Yunus.

KUALA LUMPUR: FELDA Global Venture Holdings Sdn Bhd (FGVH) has made another milestone in spreading its refining business in North America by forming a strategic partnership with Bunge Ltd, a leading global agribusiness and food company.

On December 12, 2011 New York-based Bunge, through its North American unit, announced that it has formed a joint venture with the Canadian arm of FGVH, Twin Rivers Technologies-Enterprises de Transformation Graines Oleagineuses du Qubec (TRT-ETGO), to combine commercial activities related to seed crushing and edible oil refining operations of their plants in Canada.

The joint venture, Bunge ETGO L.P, will handle the buying and selling of oilseeds for their crushers at Bunge’s Hamilton, Ontario plant and TRT-ETGO’s plant in Becancour, Quebec.

Bunge country manager in Canada, Rick Watson said the joint venture creates an organisation that can more effectively serve the growing demand for canola and soy bean meal and oil in the domestic and export markets. 

“Managing the commercial aspects of both facilities as a single company provides a number of efficiencies, reducing the overall cost of running both facilities,” he said in a statement made available to Business Times.

The combined crush capacity of Bunge ETGO is two million tonnes per year and both plants are able to crush either canola seed or soyabeans. While Bunge and TRT-ETGO will continue to own and operate their respective facilities, the joint venture will be responsible for all commercial aspects of the business including oil seed procurement, product sales and risk management.

TRT-ETGO acting chief executive officer Wira Adam said the company is excited about the prospect of working with Bunge. “Bunge will honour all open contracts and the new commercial team is looking forward to providing new marketing opportunities for customers. While the new commercial team include employees from both companies, TRT-ETGO will be closing its trading office in Montreal and relocating a few employees to Becancour or the joint venture's office in Oakville, Ontario," he said.

However, financial terms of the transaction were not disclosed.

A news wire recently reported Felda is discussing a strategic alliance with five global trading houses, including Bunge, Archer Daniels Midlands Co and Cargill Ltd. Quoting sources, the report said the strategic tie-up, likely to be in February 2012, is expected to shore up investor interest ahead of Felda's US$2 billion (RM6 billion) listing of agribusiness arm Felda Global by mid-2012, turning it into a palm oil and rubber trading powerhouse.

Felda, which accounts for 8 per cent of global palm oil output, is keen to tap that growing interest as it seeks to widen market access and monetise its assets. 

Govt issues tax free palm export quotas

KUALA LUMPUR: Malaysia has issued this year's tax-free crude palm oil (CPO) export quotas of 3 million tonnes after weeks of delay, sources said yesterday, ending speculation it will scrap the quota to help its refiners compete with Indonesian rivals. 

Sources said some palm oil firms like IOI Corp Bhd and state run plantation agency Felda Group received their quotas last week. The total quotas account for 15.5 per cent of projected 19.3 million tonnes of CPO output this year in Malaysia, the world's No.2 biggest palm oil producer. 

The move ends weeks of talk that Malaysia will scrap the quota, which has tightened regional supply for its refiners after Indonesia raised its export tax for the crude grade to jump-start its own processing industry.

Malaysian refiners struggle to compete against Indonesian rivals who enjoy better margins, with growing output and refined palm oil export taxes that were slashed last year to half that of the crude grade. 

"The refiners have not been forgotten. The government is looking at providing incentives to refiners to encourage them to go further downstream and produce higher value products compared to Indonesia," a government source said. "The incentives will be done via special funding from the government. There will be an announcement at the end of this month," added the source. 

Local media said last week that the government will scrap the duty-free export quota for CPO while maintaining 23 per cent export tax for the grade to safeguard the refining industry. Malaysia does not tax refined palm oil exports. --Reuters

Wah Seong in West Africa oil palm venture

KUALA LUMPUR: Wah Seong Corp Bhd, an oil and gas services company, is diversifying its business to plant oil palms in West Africa.

In its filing to Bursa Malaysia yesterday, Wah Seong said its unit WS Agrco Industries Pte Ltd was buying a 51 per cent stake in oil palm company Atama Resources Incorporated for US$25 million (RM75 million) from Silvermark Resources Inc and Giant Dragon Group Bhd Ltd.

Directors of Atama are York Shin Lim Voon Kee, Tommy Lo Seen Chong and Chua Seng Yong. Atama has a 30-year concession over 470,000ha in Congo to cultivate crops including oil palms.

Feasibility studies showed 38 per cent or 180,000ha of the concession area is suitable for oil palm cultivation, Wah Seong said.

The concession requires Atama to pay Francs CFA2500 per hectare of planted area in royalties to the Congo government, once it harvests the oil palm fruit bunches. It is expected to develop the oil palm plantation over 15 years, with planting to start in the second quarter of 2013.

Wah Seong sees its expansion into Congo's oil palm plantation as a source of sustainable and recurring income. "It is also an upstream integration because we're already in the business of supplying boilers, steam turbine and oil room centrifuges to palm oil millers both locally and overseas including Africa," it said. The Congo government has waived import duty on these equipment and machineries for five years.

Founded in 1994, Wah Seong's profits are mainly contributed from its pipe manufacturing and coating for the oil and gas sector.

Australia to go on opposing laws against palm oil

KUALA LUMPUR: Australia Trade Minister Dr Craig Emerson say his government will continue to oppose any laws that attempt to discriminate palm oil because such a move can spark trade war with Malaysia and Indonesia, the world's biggest suppliers of this food ingredient.

Emerson and his team of government officials were here yesterday to bridge the remaining gaps in the negotiation of a free trade agreement with Malaysia.

Among issues discussed were palm oil labelling effects by Australia Chip Manufacturers and reduction of import duty on palm oil products and vegetable oil.

When asked to comment on Australian government official standpoint with regard to the Australia's Food Standards Amendment (Truth in Labelling - Palm Oil) Bill 2010, first introduced in 2009 and sponsored by independent Senator Nick Xenophon, Emerson replied, "We've all along opposed that private member's Bill. It had since been sitting in the House of Representatives. If that Bill gets reactivated, then our official standpoint is that we would again oppose it."

The controversial Bill called for any products containing palm oil to be labelled. Palm oil is present in over 40 per cent of all packaged foods in Australia, but is usually identified as vegetable oil.

While the proposed Bill did not become law, its negative influence seemed to have taken effect. Last year, Australia's purchase of Malaysian palm oil dropped 7 per cent to 117,104 tonnes from 2010's 125,986 tonnes. In 2009, it bought 126,152 tonnes.

Lately, Xenophon, the man behind the controversial Bill has backtracked in his lobby. He now calls for all foods containing vegetable oils including soyabean and rapeseed to be labelled as well.

In response, Emerson said, "the federal and state governments sees this has taken off as a separate exercise to study the labelling of all oils and sugars in various foods. The advantage of this process is that it's not discriminatory and does not single out palm oil."