Archive for July 2013

France promises no palm oil discrimination

This is written by my colleague Roziana Hamsawi.

KUALA LUMPUR: THE French government will not discriminate palm oil products from other vegetable oils, Prime Minister Jean-Marc Ayrault gave his assurance yesterday.

He said the French government had never been hostile towards palm oil, adding that he understood how important the commodity is to Malaysia and its people.

In a joint press conference with Prime Minister Datuk Seri Najib Razak at the Prime Minister's Office, Ayrault pointed out that this is despite some initiatives taken by the French parliament members to impose a special tax on palm oil.

Last year, it was reported that the French Senate approved a quadrupling of the tax on palm oil despite protests from major producing nations including Malaysia.

The move was, however, rejected by France's Lower House.

"The palm oil will not be treated differently from other vegetable oils and there will be no discrimination on palm oil," said Ayrault.

"I know how palm oil is very important to Malaysia, given the number of people who rely on palm oil production for their living, particularly small producers," he added. 

Najib, meanwhile, said Ayrault had assured him that there will not be any new tax for palm oil and the commodity will be treated pari passu as other vegetable oils in France.

Last Friday, the New Straits Times ran an open letter to Ayrault from the National Association of Smallholders Malaysia (Nash), which represents more than 300,000 small oil palm farmers across Malaysia, and the Malaysian Palm Oil Council (MPOC), the industry promotional body.

The letter touched on the ongoing campaign of misinformation by French companies and politicians against Malaysian-produced palm oil and it urged the French premier to put an end to such actions which are adversely affecting the country's palm oil industry.

"Allegations about nutrition and the environment cannot be allowed to stand. The reality is that palm oil is the most efficient vegetable oil in the world, is 100 per cent free of dangerous trans-fats, a major catalyst for poverty reduction and increases prosperity in Malaysia and elsewhere in the world," said both Nash and MPOC.

Malaysia, they said, far exceeds France's commitment to conservation - preserving 56 per cent of forest cover compared with France's 29 per cent, a commitment well above the United Nations' target.

Free trade is a two-way street, Ayrault

Thibault Danjou is a French entrepreneur operating in Asia (Japan, Singapore) since 1993. Below is his opinion on trade liberalisation.

KUALA LUMPUR: FRENCH Prime Minister Jean-Marc Ayrault wants to sell French flagship aircraft to Malaysia, but doesn't seem interested in Malaysia's "red gold".

Ayrault is touring East Asia and arrived in Malaysia yesterday for a two-day official visit.

These last few days, it has been rumoured in French media that Ayrault intends to make a case for Dassault Aviation fighter-aircraft Rafale, in which Malaysia has shown interest. 

Nuclear power station appears to be the other subject matter the French Prime Minister is ready to discuss.

Strengthening trade relations with one of our very first partners in Asia quite frankly seems like a jolly good idea. Our economic development is undeniably linked to our ability to export and the trade balance with Malaysia has just begun to even out.

We will offer French aircraft, French know-how in nuclear power stations just like we successfully have French cars or defense so far. 

Malaysia - and Southeast Asia in general - is a booming market. It is critical that we hop on the train while we can, rather than being stranded at the station.

But to make those deals, France needs to more clearly commit to the set of rules inherent to free trade. 

Ayrault will have to demonstrate to his Malaysian counterpart as a sign of good faith that France is open-minded and worthy of such good trade relations. 

It is obviously essential to remain as respectful and listen to the needs and wants of the countries with which we engage in international trade.

This hasn't always been the case with Malaysia. For instance, just recently the National Association Smallholders Malaysia has published an open letter addressed to Foreign Trade Minister Nicole Bricq. 

About 240,000 farmers asked Bricq to join in their effort to put an end to French smear campaign against palm oil. According to them, large brands from the French food industry often rely on advertisement belittling palm oil as a mean to show corporate social responsibility.

On the spot, Bricq explained that French authorities were already looking into it and added that she would personally make sure to let Ayrault know about it. 

Weeks later, nothing seems to have been done. This sort of condescending, patronising attitude surely cannot be sustained.

Palm oil is such a tremendous part of Malaysian economy. It represents the livelihood of more than one million Malaysians. We simply cannot afford to overlook this issue. 

French Prime Minister, please take the demands of our international trade partners into account. Carefully listen to Malaysia just like you would the United States, Germany or China. Everything to help France win those wonderful international deals!

Sabah planters see better earnings

KUALA LUMPUR: Plantation companies in Sabah will see better earnings ahead as palm oil price there is set to rise from next month.

"Effective August 1, the Sabah crude palm oil discount from Peninsular Malaysia will narrow from RM100 to RM80 per tonne," a source said.

"This means plantation companies like Hap Seng Plantations Holdings and IJM Plantations, whose earnings are Sabah-centric, should be seeing better earnings from next month," the source told Business Times yesterday. 

When contacted, IJM Plantations Bhd chief executive officer and managing director Joseph Tek Choon Yee said, "Yes, we have already sealed sales contracts with our buying refineries in Sandakan for August 2013 with the revised discount."

"We've been in discussion with the refiners for quite sometime, following the restructuring of the palm oil export duties since January 2013," he said. 

"Although the narrowing of price discount is small, it's a step towards the right direction," he added.

Tek said planters in Sabah laud the narrowing of price discount amid the prevailing low palm oil prices.

It's Lipstick Day!

It's past mid-night and I can't sleep. I thought about a friend who reads when he can't sleep. Hmmm ...I think I'll write... I feel so restless. Here I am.... in front of my trusty little laptop and I google away. It turns out that today is LIPSTICK DAY.

Lovely....a day dedicated to a product that adds colour to your face. Although I'm not a fan of make-up, it's nice to doll up once in a while.

Today’s lip products are not only available in all sorts of pigments and flavours, but are available in a variety of formations including sticks, glosses, glazes and balms. Besides adding a splash of colour, some lip products include anti-oxidants, emollients and offer sun-protection as well.

Well, if you're wondering? ...yea, there's palm oil in lipstick.

Plan to produce 50pc more biodiesel

PASIR GUDANG, Johor: Malaysia is expected to produce 50 per cent more biodiesel this year to 375,000 tonnes this year, thanks to price differential between crude oil and palm oil prices that is favourable to exports. 

Currently, there are seven plants in Selangor and Johor that are in active operations, said Plantation Industries and Commodities Minister Datuk Seri Douglas Embas.

“Palm oil prices is averaging at around RM2,300 per tonne while petroleum is being sold at around US$108 per barrel. In view of this favourable price differential in the export market, our biodiesel industry is now able to churn out between 300,000 and 400,000  tonnes a year,” the minister told reporters yesterday after launching the Southern Region B5 rollout at a service station in Pasir Gudang, Johor. 

Also present at the ceremony were Plantation Industries and Commodities ministry secretary general Datin Paduka Nurmala Abdul Rahim, Malaysian Palm Oil Council chief executive officer Tan Sri Yusof Basiron and Malaysian Palm Oil Board (MPOB) director general Datuk Dr Choo Yuen May. 

Former formula 1 racing driver Alex Yoong was appointed B5 biodiesel spokesman.

 B5 is a blend of 95 per cent regular diesel with five per cent palm biodiesel. "In Malaysia, B5 is being subsidised at the pump in the central region of the country. We've spent RM74 million in B5 subsidies last year. 

"In the first half of this year the subsidy amounted to RM7.6 million," he said.   

In a move to promote the usage of biodiesel two years ago, the government has started to subsidise the price differential between diesel and biodiesel through Automatic Pricing Mechanism. It was then reported the biofuel subsidy fluctuated between 5 sen and 7 sen per litre. 

At current palm oil and diesel prices, the subsidy has settled to around 1 sen and 2 sen per litre. 

MPOB said the B5 rollout in Johor involves 415 service stations and 37,270 tonnes of palm oil biodiesel will be used in a year. "This will contribute to a saving of 43.14 million litre of fossil diesel per year," Embas said.   

Since June 2011, central region launches covered Malacca, Negri Sembilan, Putrajaya, Selangor and Kuala Lumpur. Now, with the addition of Johor, all five states will need around 150,000 tonnes of biodiesel per year to be implemented. This is about 30 per cent of the 500,000 tonnes per year of biodiesel required for nationwide implementation.

On top of the B5 subsidies, the government has also allocated around RM50 million for in-line blending facilities at depots owned by five oil companies, namely; Petronas, Shell, Petron, Chevron and Boustead Petroleum Marketing.

Among depots in the central region that is being fitted with blending facilities are Klang Valley Distribution Terminal, Tangga Batu, Port Dickson, Westports and Northport. In Johor, all three depots are located at Pasir Gudang.

Analysts mixed over RM1.2b offer for Pontian

This was written by my colleague Zaidi Isham Ismail.

KUALA LUMPUR: ANALYSTS are mixed over the RM1.2 billion price tag offered by Felda Global Ventures Holdings Bhd (FGV) for Pontian United Plantations Bhd.

Pontian is mainly involved in oil palm cultivation, extraction of crude palm oil and palm kernel, general insurance, property investment and money lending. It has 16,187ha of oil palm plantation land, mainly in Sabah. Last year, Pontian reaped RM39.48 million in net profits.

RHB Research Institute thinks the price is too steep, while MIDF Research believes it is fair.

RHB analyst said the valuation seems high based on Pontian United's 2011 and 2012 net profits of RM71.7 million and RM39.5 million, respectively, translating into price-earnings ratios of 16.9 times for 2011 and 30.7 times for 2012.

"More importantly, its landbank is priced at RM74,765 per ha, which looks expensive, even higher than the valuation of RM69,300 per ha for IOI Corp Bhd's attempted purchase of Dutaland estates in Sabah in 2011," RHB analyst added.

RHB Research said FGV is under pressure to put its net cash hoard of RM5.8 billion as at end-first quarter of 2013 to good use. "The cash is becoming a drag on earnings," the analyst said.

In recommending a "neutral" call on the stock, RHB analyst estimates that the acquisition could potentially add 2.0 to 2.5 per cent annually to FGV's bottom line.

MIDF Research, however, is more optimistic on FGV's move. "We are positive on the news. However, there's no change to our forecasts pending results of the offer. We maintain a 'neutral' recommendation on FGV with a target price of RM4.76." 

Two days ago, FGV told the stock exchange that it offered to buy all shares in Pontian United for RM140 apiece. The deal is expected to be completed by the end of this year.

MIDF said the RM140 per share translates into RM75,000 per hectare, which is considered fair for a local plantation estate. "Although the purchase price is slightly higher than the IOI Corp offer, it is still fair for a brownfield estate in Malaysia."

"Assuming full acceptance and completion of the exercise by end of this year, the acquisition will increase FGV's 2014 earnings per share by 3.5 per cent," MIDF analyst said.

'Consult all stakeholders before concluding TPP'

KUALA LUMPUR (Bernama): The government should hold consultative sessions with national-level chambers of commerce and affected stakeholders before concluding the Trans-Pacific Partnership Agreement (TPP).

In a statement yesterday, The Associated Chinese Chamber of Commerce and Industry of Malaysia (ACCCIM) said an advisory committee system, like the US' be set up so that meaningful consultations could take place. 

"ACCCIM is of the view that the government needs to ensure the costs to Malaysia will not outweigh the benefits," it said. 

It said the idea of free trade was important to a trading nation like Malaysia, with possible main benefits to the Malaysian companies to expand market opportunities and for the country to attract foreign investments. 

However, TPP could interfere with the efficient supply chain developed in Asia if China remained excluded, it said.

"The TPP should also include the provision of special and differential treatment as provided in the World Trade Organisation to increase trading opportunities for developing countries," it said.

ACCCIM said the government must give due consideration to national interests over that of foreign, especially in non-trade-related issues. 

The TPP is a multilateral free-trade agreement that is currently participated by 12 countries with a combined market of 793 mil-lion people and gross domestic product of US$27.5 trillion (RM87.73 trillion). 

TPP would eventually be the largest free-trade bloc in the world and participating countries include some of the world's most robust economies, and represents more than 40 per cent of global trade. 

Tread carefully in TPP negotiations

This is written by my colleague Rozianna Hamsawi.

KUALA LUMPUR: MALAYSIA must go into the Trans-Pacific Partnership (TPP) negotiations carefully and be prepared to walk away if the terms do not cater to the country's needs, said CIMB Group Holdings Bhd chief executive Datuk Seri Nazir Razak.

He said while TPP's objective is good, "the devil is in the details". He added that since Malaysia is hosting the TPP negotiations, it should not mean that the country is inclined to agree to the terms.

"Malaysia has a unique way of doing business and TPP terms must cater to what the country needs," he said.

He said this to reporters yesterday after launching Universiti Tun Abdul Razak's Asean hall here.

Earlier, in a question-and-answer session with the students, Nazir pointed out that while state-owned enterprises are rare in the US, it is not so in Malaysia.

"The present draft (of the TPP) is punitive on state-owned enterprises and here, many companies are that kind," he said.

"It is very dangerous to go into any negotiations saying you are definitely going to conclude them. We must never do that. We must always be willing to walk away," he added.

Nazir cited CIMB's recent experience of walking away from a one-year-old negotiation to buy a stake in the Philippines' Bank of Commerce. 

Asked on the impact of Bank Negara Malaysia's stricter financing rules to curb household debt to CIMB's loan growth, he said he is not too concerned about it. "There will be some impact but it won't be a big deal," he said, adding that banks have other products which can mitigate the possible lower loan growth.

The stability and soundness of the overall banking system in the long term is the most important, Nazir said, adding that CIMB has always been suppor-tive of the regulator's policies to reduce consumer debt.

Nazir had earlier given a talk on "Transformational Leadership - The Case of CIMB", where he shared the chronicles of the banking group's growth from a merchant bank to a leading Asean universal banking group today.

"For my people, I often use the saying 'what got us here won't get us there' and that the paradigm of continuous improvement must always be adopted and the leader of the organisation is not exempted from such mentality."

He also said that in business, close relationship with the government is important, but "if you are a professional, you must never get too close".

He cited the number of times CIMB had to turn down some government-related businesses or attend government functions.

"But my problems came after my own brother became Finance Minister," he said, when responding to a question from a Malayan Banking Bhd (Maybank) employee on how he handles professionalism when he is related to Prime Minister Datuk Seri Najib Razak.

"I keep to being professional. Never get too close. That's why I recommended your boss (former Maybank president and CEO Datuk Seri Wahid Omar) as a minister. Just kidding," he said to roaring laughter from the audience in the hall.

FGV CEO's tenure uncertain

This was written by my colleague Zaidi Isham Ismail.

KUALA LUMPUR: Although the board of directors of Felda Global Ventures Holdings Bhd (FGV) has endorsed the appointment of Mohammed Emir Mavani Abdullah as president and chief executive officer, questions still remain --- for how long?

Sources said his appointment is official for the time being but the duration of his contract will depend on the authorities.

"No one really knows for how long he will be FGV captain except the prime minister (Datuk Seri Najib Razak). It all depends on him. We are in the dark as well. But the board has endorsed Emir's appointment," a source told Business Times in a telephone interview.

An English daily reported yesterday that Emir, who took over from Tan Sri Sabri Ahmad on Tuesday, may not complete his full term. Emir could be given a six-month grace period to leave FGV.

The English daily report also said according to online sources, speculation is rife that his doctorate did not come from an accredited university. Emir pursued his doctorate in Government Reforms from Warnborough University in the United Kingdom in 2008. 

"In a meeting on Tuesday, the board has advised Emir not to use his doctorate. Emir himself has insisted that his peers call him Encik Emir," said another source.

He added that the working relationship between Emir and his staff is cordial and professional, and employees continue their business as usual. 

Sentiments on the ground, however, tell a different story, with rumblings that Felda staff and settlers favour one of their own sons, FGV chief operating officer Datuk Khairil Anuar Aziz.

"Felda folk prefer Khairil but let's not forget that Emir was born in a Guthrie plantation in Malacca" said another source.

Emir was made FGV CEO-designate on January 1 as part of a succession plan after the expiry of Sabri's two-year contract. Emir has been FGV director since July 2011. 

Prior to joining FGV, Emir was with Prime Minister's Dept PEMANDU director of oil, gas and energy; and director of financial services, National Key Economic Areas.

In a statement to Bursa Malaysia, FGV announced the official appointment of Emir but did not specify the duration of the contract. 

FGV also announced the resignation of Tan Sri Dr Mohd Irwan Serigar Abdullah from its board of directors. This was due to a change of representative of the Ministry of Finance Inc.

Asean okays system to monitor haze

KUALA LUMPUR: ASEAN environment ministers have recommended the adoption of a joint haze-monitoring system (HMS) to  weed out those responsible for haze-causing forest fires.

The system, developed by Singapore, relies on satellite images of hot spots and may be used in tandem with official land-use and concession maps to pinpoint  owners of the land on which the fires occur.

Natural Resources and Environment Minister Datuk Seri G. Palanivel said Indonesia and Malaysia had agreed to share the maps only on a government-to-government basis.

“We are prepared to share the maps on all fire-prone areas and peatlands but they cannot be disclosed to the public,” he said during a joint press conference after the 15th meeting of the Asean sub-regional Ministerial Steering Committee on Transboundary Haze Pollution yesterday.

The meeting was held after two days of discussions between environment task force officials from Malaysia, Singapore, Thailand, Brunei and Indonesia on short- and long-term solutions against recurrent haze.

The talks, originally scheduled next month, had been brought forward after haze from forest fires in Sumatra and Riau engulfed parts of Malaysia and Singapore recently.

Singaporean Environment and Water Resources Minister Dr Vivian Balakrishnan said  HMS was expected to be formally launched at an Asean leaders’ summit in October. He voiced his disappointment that the concession map data could not be made publicly available but acknowledged that progress was being made towards bringing those responsible for forest fires to justice. 

  “The talks did not go as far as I’d like but they are still a step forward. The companies will know that the data is being shared and that action can be taken against them at the local level (if they cause fires),” Singapore's Balakishnan said.

Indonesian Environment Minister Professor Dr Balthasar Kambuaya said the country’s strict regulations about public information and transparency made it difficult for the concession maps to be made available to the  public.

  Instead, the maps will be made available on a case-to-case basis upon request.

On another matter, the ministers commended Indonesia’s commitment to speed up the ratification of the Asean Agreement on Transboundary Haze Pollution, planned for early next year.

 In response, Balthasar said the documents for ratification were pending review at Parliament and were expected to be passed by the end of the year.

 He said the Indonesian government welcomed the offers for bilateral collaboration projects from Malaysia and Singapore and was identifying the areas of cooperation.

 The ministers noted efforts taken by Indonesia to mitigate the occurrence of fires in its peat lands and fire-prone areas, expressing their appreciation for the  implementation of Indonesia’s plan of action in dealing with trans-boundary haze pollution.

Honoured with ISP fellowships

SIBU: Three members of Incorporated Society of Planters (ISP) were named ‘Fellowship of ISP’ at the 10th ISP National Seminar 2013 held here recently.

Heading the list was Tan Sri Dato Seri Lee Oi Hian, who is chief executive officer of Kuala Lumpur Kepong Bhd. An Honours graduate of Agricultural Science from Universiti Malaya, Lee later pursued his Masters in Business Administration from Harvard Business School in the US.

The second ISP member called to fellowship was Innocent Peters, chairman of ISP Management (M) Sdn Bhd. The third recipient was Abdullah Busu Hanifah, chairman of Library/OT Committee of the Board of Directors of ISP.

ISP chairman Daud Amatzin proudly announced the award ceremony attended by 1,230 people, was reflective of solid support from Sarawak's oil palm and rubber industry.

Sarawak Chief Minister Pehin Sri Abdul Taib Mahmud officiated at the opening of ISP seminar that highlighted increasing challenges face by oil palm estate managers.

The keynote address, presented by Sarawak Plantation Bhd chairman Datuk Amar Hamed Sepawi, received a rousing response when he urged the government to tackle mounting barriers to palm oil exports in Malaysia’s free trade agreement talks with the European Union.

Among current issues discussed were the cause of haze enveloping Singapore and Peninsula Malaysia that emanated from Sumatera's peat fires. While many news reports and social media portals alleged oil palm planters were to be blamed for slash and burn activities at peat land, the truth is far from that.

Unknown to many, peatland is highly flammable in times of drought, if not properly managed. Many cash crop farmers who cannot afford heavy machinery for land clearing, torch up peatland and unsuspectingly set off fires that smoulder underground for weeks and months.

The reality is many oil palm planters have been actively preventing the spread of fire at peatland that may have been set off by cash crop farmers or carelessly ignited by cigarette butts in times of drought.

ISP chief executive officer Azizan Abdullah spoke out that oil palm planters who invested big sum of money to compact peatland and maintain water table at the canals throughout their estates should be given a pat on the back for stemming the spread of peat fire.

Kuching-based Tropical Peat Research Laboratory director Dr Lulie Melling concurred and explained that fire does not spread if the peatland had been compacted and is constantly moisturised in canals of water.

KLK denies illegal slash-and-burn activities

KUALA LUMPUR: PT Adei Plantations, a unit of Kuala Lumpur Kepong Bhd (KLK), maintained that it has never engaged in any illegal slash-and-burn activities at its estates.

Yesterday, a Reuters report quoted national police spokesman Ronny Franky Sompie stating that PT Adei is going to be charged with environmental damage.

An individual found guilty of starting a forest fire can  face a jail term of up to 10 years and fines of up to 10 billion rupiah (US$1 million). A company, found guilty by the courts, can also have its profits seized, operations shut down and be sued for damages.

It was reported that the Indonesian police are investigating four other companies for suspected involvement in the fires but have not identified them. Indonesia's environment ministry, last month, named eight Southeast Asian companies as possible suspects.

In response, KLK reiterated its earlier stand that claims that it is involved in irresponsible burning practices are totally unfounded. 

"We have no intention, no reason and no interest to clear any of our palm trees in PT Adei as they are mature and of prime age, and will remain highly productive for many, more years to come," KLK said.

On 25 June 2013 , PT Adei’s Nilo Complex was visited by Drs. H. Zulher, MS., the Kepala Dinas Perkebunan Propinsi Riau and his team, to investigate claims that PT Adei was involved in the use of illegal slash-and-burn method in its plantations.

Based on his findings and observation, he acknowledged that the claims were unfounded and noted that the fire was not in the estates of PT Adei.

He went on to say that the fire was started in an area which PT Adei had enclaved for conservation purposes, but which the community living in the vicinity of PT Adei’s estates was trying to clear for cultivation.

All along, KLK noted that PT Adei has been practising zero-burning policy. The fire was outside its concessions. PT Adei had, in fact, taken quick action to help douse the fire.

KLK and PT Adei remain committed, at all times, to co-operate with the relevant government bodies in their investigations into the source of the fires in Riau province.

FGV expands landbank in Indonesia

KUALA LUMPUR: FELDA Global Ventures Holdings Bhd (FGV) is spending RM44 million to expand its plantation landbank in Indonesia by 21,037ha, or 27 per cent.

FGV yesterday signed agreements to buy a 95 per cent stake each in PT Temila Agro Abadi and PT Landak Bhakti Palma in West Kalimantan.

PT Temila owns 8,193ha in Sebangki district of Landak, neighbouring FGV's existing 14,385ha held by PT Citra Niaga Perkasa. PT Landak Bhakti owns 12,844ha of rubber land in Sekadau province, a two-hour drive from the other two oil palm plots.

These purchases are funded by FGV's initial public offering proceeds of RM4.46 billion. Pending yesterday's deals, FGV still has RM3.85 billion in its kitty.

"It's a strategic investment in two core commodities that is expected to enhance future earnings and shareholders' value," said FGV chairman Tan Sri Mohd Isa Abdul Samad.

"Since PT Temila and PT Citra are next to each other, we can reap economies of scale in lower labour costs by sharing the nursery and palm oil mill," he told reporters after the signing of the agreements here yesterday.

Also present were FGV chief executive officer designate Dr Mohd Emir Mavani Abdullah, chief operating officer Datuk Khairil Anuar Aziz and head of global plantations Fairuz Ismail.

Upon completion of the land buys, FGV's landbank in Indonesia will total 77,422ha. 

As at March 2013, there were 343,521ha of oil palm estates leased in Malaysia by Federal Land Development Authority (Felda) to FGV.

As the world's largest crude palm oil producer, FGV harvested 4.91 million tonnes of fresh fruit bunches (FFB) in 2012. Its oil extraction rate averaged at 20.51 per cent, while its FFB yield amounted to 19.13 tonnes per hectare.

One way to improve yields is to replace unproductive oil palms with higher-yielding hybrids. Asked on FGV's replanting progress, Fairuz said the group is committed to its aggressive plan of replanting 15,000ha a year. 

If this plan is consistently executed, FGV is expected to achieve the ideal age profile for its oil palm plantations by 2025.

FGV is one of largest plantation companies in Malaysia but it is unique because it leases and manages 500,000ha of oil palm land for 112,635 smallholders. 

Meanwhile, the group's sugar business is held via MSM Malaysia Holdings Bhd. Its refineries in Perlis and Penang are capable of producing 1.1 million tonnes of refined sugar a year. These are then packed and retailed under "Gula Prai" and "Gula Perlis" brands.

Last year, FGV achieved a RM905.1 million profit after Land Lease Agreement liability, tax and zakat. The group paid out 14 sen a share, or 64 per cent of profit, as dividends.

Malaysia's bond market to remain buoyant

KUALA LUMPUR: Malaysia's bond market is likely to remain vibrant but will see lower issuance on moderation in overall economic activity.

“2012 was a bumper year. In the first half of the year, private debt issuance amounted to RM29.9 billion. The bulk of it comes from the power generation sector, followed by real estate, plantation and financial services,“ said Maybank Investment Bank Bhd vice president and head of fixed income research Tan Chee Wee. 

He noted that the current ratio of government to corporate bonds stands at 55:45.

“There should be more bond issuance in the second half of this year, given the current low-yield environment,” he told reporters on the sidelines of “The Asean Fixed Income Roadshow” organised by Bloomberg LLP here yesterday.

“By year end we expect this figure to pick up pace and possibly hit the range of RM70 billion to RM80 billion. Malaysia’s resilient domestic demand and sustained fiscal support will underpin the growth of Malaysia’s bond market, which is currently the biggest in Asean,” he added.

This forecast is good, considering from 2008 to 2011 the average annual gross issuance was RM60.1 billion. 

When asked to forecast performance of bond market, he said: “The market is very vibrant and liquid. We think the 5-year bond yield still has room to rise from 3.32 per cent by another 5 to 10 basis points,” he said. 

Yesterday, Malaysian Rating Corp Bhd’s (MARC) in its “2H2013 Malaysia Bond Market Outlook” revised its earlier projection of gross corporate bond issuance to RM70 billion-RM85 billion for 2013 from between RM75 billion and RM90 billion initially.

This is due to lower issuance in the first half of this year, slower growth in private investment and the moderation in overall economic activity.

Last year, Malaysia’s bond market posted a record when corporate bond issuance more than doubled to RM124.6 billion from RM55 billion posted in 2011.

MARC report also said in view of the government’s debt-to-GDP ratio amounting to 53 per cent, which is close to the self-imposed debt ceiling of 55 per cent, it expects the Malaysian Government Securities (MGS) and Government Investment Issues (GII) bond issuance to total between about RM90 billion and RM95 billion for 2013. 

After excluding MGS/GII that have been redeemed in the first half of the year and maturing over the next six months, MARC expects the net issuance to be in the range of RM39.4 billion to RM44.4 billion.

Last week, five banks in Southeast Asia took the initiative to spur more active bond trading by quoting and distributing bond prices in their domestic markets via Bloomberg terminals.

They are Malaysia’s Malayan Banking Bhd (Maybank), PT Bank Negara Indonesia, Security Bank of the Philippines, Thailand’s Kasikornbank and Singapore’s Overseas Chinese Banking Corp (OCBC).

The bond trading portal, facilitated by Bloomberg terminals, will help to create transparency and integrate southeast Asia’s capital markets. 

Nitin Jaiswal, head of Asean sales for Bloomberg, said there are plenty of local banks in Asean countries with strong balance sheets that were looking to “step out of their own market” when it comes to putting money into bonds.

“We felt we should start a portal where banks can go and find out which markets they should be investing in. Now, they will be able to find those names, see the indicative price and negotiate trade from there,” Jaiswal said.

Keep soil moist, for peat's sake

PROPER MANAGEMENT: Is peat fire uncontrollable? Experts tell Ooi Tee Ching that fire does not spread if the peatland had been compacted and is kept moisturised with canals of water

IN the last two weeks, there had been considerable news on how much Singapore and Malaysia suffered from the haze that emanated from Indonesia due to peat fires there. Does this mean people in the Riau province of Sumatera are not weepy-eyed and choking from the blaze and haze?

Understandably, Indonesian Coordinating Minister for People's Welfare Agung Laksono and Environment Minister Balthasar Kambuaya slammed critics from Singapore and Malaysia who were quick to blame and offer unsolicited advice. 

It is unfortunate that many took to the "I'm more worthy than you" attitude via the media and Internet and claimed global demand for palm oil is fuelling forest fires while the Indonesian government dispatched water bombing planes and helicopters to battle the peat fires.

The Indonesian Palm Oil Association had also responded positively when secretary-general Joko Supriyono reportedly said his team prepared 26 fire-fighting units to help put out the flames.

But like the years before, such positive efforts often go unnoticed because the truth is not sexy when pit against damning rumours. Inevitably, those who are more skilful at spreading rumours and attracting media attention continue to influence public perception.

This is seen when the Association of Plantation Investors of Malaysia in Indonesia testified that Malaysian companies are not at fault in clearing land using fire. Indonesia's Kementerian Lingkungan Hidup & Kepolisian and other local authorities, too, confirmed they had visited TH Plantations Bhd's estates there and found no evidence of open burning.

Although these testimonies reflect reality on ground zero, bad news spreads faster than the peat fires. The damage was also just as immediate. 

Share prices of Sime Darby Bhd, TH Plantations and Kuala Lumpur Kepong Bhd (KLK) on the Bursa Malaysia fell victim to this unfortunate blame game.

When asked to comment on the spate of media reports on peat fires in Sumatera, Incorporated Society of Planters (ISP) chief executive officer Azizan Abdullah said: "Oil palm planters who carry out proper peatland development and water management at their estates should be given a pat on the back for stemming the spread of peat fire. Instead, what we see is a stab in the back. 

"This is very unfortunate. If not for optimal water table management and infield perimeter drains throughout the peat plantations there, the haze could have been worse," he told Business Times on the sidelines of a recent conference organised by ISP in Sibu, Sarawak.

"Do you know that plantation companies invest a lot of money in heavy machinery to clear the land, compact the peat soil and dig up a maze of canals? 

"This is to compress the peat soil and keep it moist so that the oil palms can grow properly and yield to their potential. Incidentally, this process makes the soil less flammable and hinders fire from spreading," he said.

Most of the oil palm plantations in Riau are at a mature stage and as such there is not much room for new plantings there. "So, by logic, allegations of plantation companies carrying out slash and burn jobs at their estates just does not hold water," he said.

He praised Indonesian President Susilo Bambang Yudhoyono for having the wisdom to set the record straight with government officials who reacted badly to emotional pressure and unjustifiably subjected plantation companies to media prosecution. 

When asked to comment on satellite pictures showing many hotspots across Sumatera as indicative of fiery blaze within the plantation companies' land bank, Azizan replied, "we must take note that in Indonesia, 20 per cent of the land bank is under the plasma scheme, of which smallholders occupy scattered enclaves within the plantations." 

He noted that the fires may have been started by the local communities for their own cash crop cultivation in these enclaves.

"In the last 15 years or so, Malaysian plantation companies, especially Sime Darby Plantation which pioneered the concept, have adopted a zero burning approach and use heavy machinery to clear land and carry out soil compaction. So, why would they behave any differently when they invest in Indonesia?" he asked.

Kuching-based Tropical Peat Research Laboratory director Dr Lulie Melling concurred with Azizan that such misunderstandings continue to recur because the communication of facts and figures on the differences between a well-managed peatland and one that is not, is still very much lacking. 

"There has to be more public awareness on this topic because decision makers need to be able to differentiate facts from mistaken assumptions about peat soil and peat fire," she said when met on the sidelines of the ISP seminar.

In her usual attention-grabbing way of explaining scientific concepts, she said: "Peat soil is actually very sexy. It's always soft and wet. 

"I tell farmers to treat the peatland like their wife. If you love her but leave her high and dry, you would have unwittingly set off a ticking time bomb of contempt. 

"Beneath her calm surface of grassland is a dried up layer of angry debris ... just waiting to ignite into a raging fury when there's a spark of fire."

She reiterated that good peat soil management is the basis for sustainable food production and a preventive measure against the spread of fire. "We need to differentiate between managed and unmanaged peat. If you spot patches of grassland, it is most likely unmanaged peat where the top layer of debris is dry and highly flammable," she said.

So, when a uninformed or poor farmer who cannot afford heavy machinery for land clearing, torches up the grassland, he unsuspectingly sets off a fire that smoulders underground for weeks and months.

In explaining the difference between unmanaged and managed peat, she drew an analogy of comparing the cross-section profiles of a sponge cake and that of the Sarawak layer cake, her favourite dessert.

She pointed to a sponge cake and asked, "Can you see the big holes? This is the profile of unmanaged peat."

She then used a rolling pin and flattened the sponge cake. "When there is considerable soil compaction by heavy machinery, the big holes in the peat become small holes and the top layer of debris become densed like a layer cake. The compaction enhances capillary rise, resulting in higher water-filled pore space in the peat," she said. 

She took two candles and stuck one on the sponge cake and the other on the dense layer cake. "Can you see which one is standing erect?" she asked, tilting her head with a smile.

"I tell this to planters at my workshop sessions ... it pays to be romantic ... it's satisfaction guaranteed for those who spend time on foreplay before they sow their seeds. I always remind planters that peat soil requires a lot of tender, loving caressing," she added.

In her next demonstration, Melling lit a candle and tried to burn the dry sponge cake and the layer cake that is soaked in water. The dry sponge cake caught fire while the moist layer cake remained relatively intact. 

"See ... fire is not likely to spread in peat that had been compacted and is constantly moisturised," she concluded.

Indeed, land compaction and establishment of a canal system is a prerequisite to any oil palm plantings in Sarawak's peatland. Melling noted a lot of effort goes to ensuring water levels in the canal system is at 50cm to 75cm from the surface. This is achieved through a series of stops, weirs and water gates.

Palm oil exports to Vietnam climbed 20%

KUCHING: Malaysia's palm oil exports to Vietnam stood at 173,732 tonnes in the first five months of this year, 20 per cent more than a year ago, Plantation Industries and Commodities Minister Datuk Seri Douglas Uggah Embas said yesterday.

He expressed optimism on the commodity's future growth potential, in line with the improved economic and living standards in Vietnam.

He said this while officiating at the first Malaysia-Vietnam Palm Oil Trade Fair and Seminar 2013 (POTS) in Ho Chi Minh City, Vietnam.

"Malaysian and Vietnamese oils and fats players are encouraged to embark on collaborative initiatives to further enhance trade relationships in the commodity. 

"This is so as to meet the increasingly sophisticated demands of Vietnamese consumers," he said in a statement issued by his ministry here.

Last year, Vietnam bought 468,722 tonnes of palm oil from Malaysia, 12 per cent more than 420,104 tonnes in 2011.

He said the Malaysia-Vietnam seminar, which attracted over 200 participants from both countries, was the 30th edition in this POTS series, since its introduction in 2006. 

It is being organised in Vietnam for the first time to promote consumption of the nutritious palm cooking oil and oleochemicals that goes to production of soaps and detergent.

Speakers at the seminar include head honchos of oil palm plantation companies and international experts of the oils and fats trade. --- Bernama