MY palm oil

Australia to go on opposing laws against palm oil

2012-02-01T14:32:00.003+08:00

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."

US findings on palm oil biofuel 'absurd and ridiculous'

2012-01-31T13:26:00.000+08:00

This is written by my colleague Rupa Damodaran.

KUALA LUMPUR: Malaysia is prepared to submit comments to the US Environmental Protection Agency (EPA), criticising its recent actions which could lead to a trade war of commodities.

Palm oil expert Tan Sri Yusof Basiron said the industry players will also respond to the EPA's findings which said palm oil biofuel had failed to meet the US greenhouse gas saving standards.

Europe has been a precedent and this has been cleverly copied by the EPA, he said. "It is all absurd and ridiculous if you can scheme your calculations to show low emission for one commodity against another and there is no physical or scientific justification for a fair calculation," he commented on news reports.

EPA's analysis shows that biodiesel and renewable diesel produced from palm oil from Malaysia and Indonesia do not meet the minimum 20 per cent lifecycle greenhouse gas reduction threshold needed to qualify as renewable fuel under the Renewable Fuel Standard (RFS) programme.

It said the biodiesel and renewable diesel produced from palm oil have estimated lifecycle greenhouse gas emissions reductions of 17 per cent and 11 per cent, respectively, compared to the baseline petroleum diesel fuel they replace.

It welcomes public feedback by February 27.

Meanwhile, former senior US government official James K. Glassman of the George W. Bush Institute also commented that the EPA's recent actions are raising questions about protectionism and ideological bias. "My worry is that misguided protectionism and a preference for ideology over science may be at work here."

What he found disturbing was that the US seems to be following the lead of Europe in both these respects - not to mention the lead of California (which discriminated against out-of-state biofuel additives).

Palm oil, he commented, is a vegetable oil, like canola and soyabean, which can be used for both transportation - where it's mixed with petroleum-based diesel to create a cleaner-burning fuel - and for electricity generation.

He said the reasons were a surprise and a unpleasant one when the EPA ruled that palm oil does not qualify as "a feedstock" to produce biodiesel and renewable diesel under the RFS programme.

The RFS mandates the blending of biofuels, mainly ethanol produced from corn, into petroleum-based fuels in stages, up to 36 billion gallons by 2022.

But the EPA has to approve the fuels as being bio-friendly enough. The standard that palm oil has to meet is a reduction of 20 per cent in greenhouse gas emissions over its "lifecycle" - which includes not just what gases palm oil fuel spews into the atmosphere when it's burned but also what gases are released in the growing of palm trees and the production of the biofuel.

Dr Lee Lane, a visiting fellow of Hudson Institute, in a recent presentation described the biofuels programme as flawed, especially with the arbitrary greenhouse gas standards, unreliable measurements and protectionist intent.

He said the EU has ruled against palm oil and the EPA seems in the process of doing so with the changes in the US RFS and reform of EPA which may affect palm oil.

Another blow to palm oil producers

2012-01-30T10:29:00.001+08:00

KUALA LUMPUR: Palm oil biofuel has failed to meet greenhouse gas saving standards to qualify for the US renewable fuels programme, the US Environmental Protection Agency (EPA) said, dealing another blow for southeast Asian producers in search of new markets.

The EPA said in a regulatory filing that palm oil converted into biofuels in Indonesia and Malaysia cut up to 17 per cent of climate warming emissions, falling short of a 20 per cent requirement to enter the world's largest energy market.

For 2012, the EPA raised annual renewable fuel mandates by 9.4 per cent to 15.2 billion gallons.

If the EPA findings are finalised later this year, palm oil producers would now miss out on supplying biomass-based diesel to US oil refiners and importers who currently use canola and soyoil fuels. The agency set a deadline of February 27 for public comment on its findings. --Reuters

Liberate biofuels from abroad

2012-01-27T11:28:00.000+08:00

This is written by James K. Glassman and published in http://www.forbes.com/.

He served as the US Under-secretary of State for Public Diplomacy and Public Affairs in 2008 and 2009. He is executive director of the George W. Bush Institute in Dallas, Texas.

With the demand for energy on the rise you would expect the prospect of adding palm oil, a relatively inexpensive, renewable biofuel, to the mix would be greeted with enthusiasm by government officials.

But instead of embracing palm oil as a fuel, the Environmental Protection Agency (EPA) is trying to discourage its use in the United States, and the agency’s recent actions are raising questions about protectionism and ideological bias.

Palm oil is a vegetable oil, like canola and soybean, but carrying a more concentrated punch. It can be used for both transportation – where it’s mixed with petroleum-based diesel to create a cleaner-burning fuel — and for electricity generation.

How valuable is palm oil in the current energy environment? Consider a recent editorial in the Honolulu Star Advertiser, which praised the Hawaiian Electric Co.’s plans to build a facility to convert palm oil to biodiesel and use it as a “badly needed and affordable fuel for the utility.” The editorial adds, “Of all possible biofuels, palm oil is king for its affordability, efficiency, and eco-friendliness.”

The reason that biofuels like palm oil are eco-friendly is simple. “Since they are derived from plants,” writes Elisabeth Rosenthal in the New York Times, “biofuels absorb carbon while they are grown and release it when they are burned.” Through the process of photosynthesis, plants absorb carbon dioxide, the primary greenhouse gas, from the atmosphere. So a palm tree plantation, which is typically cultivated for 25 to 30 years, acts as a carbon sink, sucking in the greenhouse gas and reducing the amount in circulation.

Palm oil has another advantage for the United States. The two top global producers, by far, are a pair of democracies with tremendous strategic importance – Indonesia, the nation with the largest Muslim population in the world, and Malaysia, which ranks 17th.

For all these reasons, it was a surprise – and a particularly unpleasant one – when the EPA ruled in December 2011 that palm oil does not qualify as “a feedstock to produce biodiesel and renewable diesel under the Renewable Fuel Standard (RFS) program.”

The RFS mandates the blending of biofuels, mainly ethanol produced from corn, into petroleum-based fuels in stages, up to 36 billion gallons by 2022. But the EPA has to approve the fuels as being bio-friendly enough.

The standard that palm oil has to meet is a reduction of 20 per cent in greenhouse gas emissions over its “lifecycle” – which includes not just what gases palm oil fuel spews into the atmosphere when it’s burned but also what gases are released in the growing of palm trees and the production of the biofuel.

The EPA calculated that the reduction of gases was 17 per cent for biodiesel made with palm oil, “compared to the baseline petroleum diesel” it replaces. That’s three points short. The EPA is now asking for public comment on its analysis.

I am not going to get into the technicalities, but a study released by Neste Oil, a biofuels company based in Finland, found that lifecycle reductions for palm oil were 52 per cent.

My worry is that misguided protectionism and a preference for ideology over science may be at work here. What’s especially disturbing is that the U.S. seems to be following the lead of Europe in both these respects – not to mention the lead of California.

On December 29, 2011 a US District Court enjoined the California Air Resources Board from enforcing the California Low Carbon Fuel Standard, the state’s version of the EPA’s RFS mandate, because California violated the Commerce Clause of the U.S. Constitution and impermissibly discriminated against out of state biofuel additives – in this case, ethanol produced out of state.

The US has had a 54-cent-a-gallon tax on imported ethanol – a trade barrier, along with subsidies for U.S.-produced ethanol – that mainly targets Brazil, which makes the biofuel from sugar cane. Congress did not renew the tax or the subsidies when it adjourned at the end of the year, but don’t bet against them being revived. There’s a long history of protecting U.S. producers. Palm oil would, of course, pose a threat to American oilseed farmers and biofuel producers.

Meanwhile, Europe has set the protectionist pace with its Renewable Energy Directive, targeted in large part at the US soybean industry. That directive, even more onerous than the RFS, has already led to threats of trade retaliation and World Trade Organization complaints.

The European Union (EU)’s calculations of lifecycle reductions for palm oil and other oilseeds are also being challenged.

“We have found a remarkable difference between the carbon reduction performance of certain biofuels calculated by the European Commission’s Joint Research Centre and a range of scientific studies,” wrote Gernot Pehnelt of the Friedrich Schiller University of Jena, Germany, and author of a research paper on palm oil emissions. “Our results indicate default values for greenhouse gas emission savings potential of palm oil biodiesel…beyond the 35 per cent threshold.”

And then there’s ideology. Palm oil, which, as the New York Times put it, was once considered a “dream fuel.” Now it is the favorite whipping boy of the political-environmental movement, from Greenpeace to Friends of the Earth to World Wildlife Fund (WWF) on down.

The complaint is that forests are being chopped down for palm tree plantations. In fact, Malaysia, especially, is trying to strike a balance: maintaining vast stretches of forest while at the same time putting land into cultivation for a crop that provides not just sustenance to low-income farmers but greenhouse-gas mitigation for the world – at a level of 17 million tons of carbon dioxide a year, “the equivalent to the annual emissions of three million passenger cars and light trucks.”

Farmers in the US deforested long ago and are benefiting from the proceeds. But, to the romanticists and radicals of the global environmental movement and their political supporters in Europe and the United States, farmers in developing nations are fair game.

It’s time to liberate markets and allow consumers to make their own decisions about the biofuels they want. Perhaps the most sensible step is for developing nations to challenge the US and Europe in the World Trade Organization. Less expensive energy and a cleaner planet hang in the balance.

CPO exports set to soar to RM85b

2012-01-20T09:18:00.001+08:00

KUALA LUMPUR: Malaysia is expected to post record high palm oil exports this year, possibly touching RM85 billion, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said. “I think RM85 billion is a reasonable target considering palm oil prices are likely to go on trading at strong levels."

The palm oil industry charted strong growth last year, posting an expansion of RM20 billion to RM80 billion from 2010’s RM60 billion.

“In view of the high prices, we must continue to increase planters’ productivity and competitiveness. So far, the replanting of unproductive trees with high yielding hybrids among independent smallholders has achieved around 80 per cent of our initial target,” Dompok said.

Another way to help independent smallholders improve their productivity is the setting up of cooperatives which will facilitate more efficient resource-sharing. So far, the Malaysian Palm Oil Board (MPOB) has helped these smallholders establish 11 cooperatives.

Dompok said MPOB had also stationed enforcement officers at 186 underperforming mills. This is to ensure only ripe fruit bunches from planters are accepted, thereby raising the national oil extraction rate.

The minister was speaking to reporters after delivering his keynote address at the “Palm Oil Economic Review and Outlook Seminar 2012” here yesterday.

Later at the seminar, MPOB director-general Datuk Dr Choo Yuen May concurred with Dompok and said palm oil prices is likely to remain firm this year as Brent crude oil prices advance on rising geo-political tension in the Middle East.

Uncertain weather conditions is also likely to boost soyabean oil prices. Palm and soyaoil prices tend to move in lockstep because they are perfect substitutes of each other in cooking oil, bakery fats and biodiesel.

On the homefront, the government had introduced the B5 biodiesel blend at petrol stations in Putrajaya, Malacca, Negri Sembilan, Kuala Lumpur and Selangor. The B5 blend is basically 95 per cent regular petroleum-based diesel and five per cent palm biodiesel. Choo said continued increment in palm biodiesel usage will buoy palm oil prices.

MPOB also estimated that this year’s palm oil output could rise by another two per cent to 19.33 million tonnes as more trees mature and bear more fruit bunches, particularly in Sarawak.

Palm oil exports hit RM80.4b record high

2012-01-17T09:55:00.003+08:00

KUALA LUMPUR: Malaysia’s palm oil exports hit a record high of RM80.4 billion last year, thanks to higher average palm oil prices and sustained demand for the edible oil from Asia and Africa.

“Last year, we achieved an all-time high of more than RM80 billion. That was about RM20 billion more than 2010’s RM59.8 billion,” said Deputy Plantation Industries and Commodities Minister Datuk Hamzah Zainudin.

“We were able to do well because our planters reaped bumper harvest and our millers squeezed 18.9 million tonnes of palm oil. This lead to our refiners selling the oil at an average price of about RM3,100 per tonne. So, high palm oil prices have contributed to this record achievement,” he told reporters at the Reach & Remind Friends of the Industry Seminar organised by the Malaysian Palm Oil Council here yesterday.

Four months ago, the Indonesian government raised export taxes drastically to boost refining capacity and downstream activities. As a result, crude palm oil and crude palm kernel oil are cheaper for downstream producers there and refined products shipped out from Indonesian shores are tax-free. This lead to palm olein prices falling by US$55 (RM173) per tonne while crude palm oil price settled by US$20 (RM63) per tonne.

Malaysian refiners are losing out on this unfair level playing field.

In response, Hamzah acknowledged that refiners and downstream players in Malaysia, which include foreign investors, are fighting for their survival. He assured that the government is still fine-tuning an amicable solution that will be palatable to both upstream and downstream players in the industry. “Bear with us for a couple of more months. We’ll make the announcement after the Cabinet approves of it,” he said.

Asked if the amicable solution could involve more tax on oil palm planters' harvest, he shook his head and replied, "not likely. The government is mindful that oil palm planters are the most heavily-taxed in this country."

Also present at the dialogue were Nextview Sdn Bhd chartist Benny Lee and Malaysian Palm Oil Board chairman Datuk Seri Utama Shahrir Abdul Samad.

Yesterday, the third-month benchmark for crude palm oil contract on the Bursa Malaysia Derivatives Exchange slid RM16 to close at RM3,136 per tonne.

Lee, in his palm oil price forecast presentation before 270 participants from the oil palm industry, said that palm oil prices is likely to trade as high as RM3,450 per tonne in the next 10 weeks. "The US dollar has started to weaken again and this will provide support to palm oil prices," Lee said.

Shahrir concurred with Lee that global demand for palm oil is still strong. India and China will continue to buy large quantities of palm oil to feed its burgeoning population. "Emerging economies in Eastern Europe and North Africa will also continue to place more orders for palm cooking oil," he said. "Also, since palm oil is trading at a discount to soya oil, demand for palm oil should accelerate in the months to come," he added.

When asked about this year's forecast of palm oil output, Shahrir expressed optimism that it is likely to hold up again this year, surpassing last year's 18.9 million tonnes. "More trees will mature and bear more fruits. This is especially so from Sarawak's oil palm estates," he said.

This is good news for palm oil consuming countries around the world as Malaysia supplies half of the world's need for this cooking ingredient that is packed with vitamins.

Shahrir explained that the developing world is heavily reliant on palm as a source of nutrition because the oil crop thrives in tropical climates and yields more fats and calories than other options. It gives the developing world - where hundreds of millions of people still live on a few dollars a day - the most caloric bang for the buck.

They make millions of babies and sell them

2012-01-09T10:28:00.004+08:00

By taking on the role of cupids, scientists match-make oil palm trees to produce high yielding hybrids. OOI TEE CHING finds out how they make millions of babies that mature into 'Dolly Parton trees' populating the agriculture landscape.

NG WOO Jian fans a bunch of plumes that looked like a giant feather duster at a crowd before him at Paloh oil palm estate in Johor. A whiff of fragrant scent wafts through the air.

John Low, the Performance Management And Delivery Unit (Pemandu) director of agriculture, palm oil and rubber projects, who was among the crowd of visitors, takes a closer sniff. "It smells like five spice powder."

"That, my friends, is the smell of male pollens from the oil palm tree," Ng said. He shakes the plumes at the crowd again. With a knowing smile, he said, "And now, I'm going to show you how we make millions of babies at our secret garden."

At Applied Agricultural Resources Sdn Bhd (AAR), seed production manager Ng and his team diligently work on thousands of mother palms to perfect Malaysia's top cash crop with the latest breeding know-how.

Just as Ng ushers the crowd to a mother palm, a research assistant propels herself up the tree by stepping on a fish-bone ladder resting on its trunk.

She then hoists and straddles herself unto one of the palm fronds with a safety harness fastened to another frond. She proceeded to slip a plastic bag over a flowering bunch, seal it tightly with a double knot and hand puffs the desired male pollens into the bag.

Ng said, "The plastic bag cover prevents weevils from reaching the nice-smelling female flowers and accidentally pollinating it with other male pollens we do not want. When we choose to breed the Dura X Pisifera (DXP) species, we don't want any anak luar nikah. So, in this instance, the bag behaves like a condom," he added.

In the last 50 years, crop scientists have been breeding the DXP hybrid because this species is able to bear very big fruit bunches. As time goes by, many oil palm planters affectionately refer the DXP hybrid as "the Dolly Parton type" because like its namesake yields voluptuous fruit bunches.

Today, Malaysia's five million hectares of oil palm landscape is populated by the Dolly Parton standard planting materials.

Meanwhile, back at Ijok, Selangor, AAR owns the world's largest oil palm tissue culture laboratory. The facility at Tuan Mee estate produces 1.5 million clonal palms per year.

In a separate interview with Business Times, Boustead Holdings Bhd deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin said: "Through such painstaking research and development effort initiated decades ago, we can now reap the benefits of high yielding clonal palms."

"This is how Malaysia is able to feed the world with more cooking oil, and at the same time, safeguard biodiversity," he said.

Boustead, the flagship investment arm of the Armed Forces Pension Fund (Lembaga Tabung Angkatan Tentera), jointly owns AAR with Kuala Lumpur Kepong Bhd.

In response to a growing world population in the next decade, Lodin noted the need to produce more food on the same piece of land.

"I'm convinced that we can meet the future of the world's cooking oil needs by developing better oil palm seeds and planting methods. These are all linked to sustainable agriculture," he said.

Since 1986, AAR and other seed producers in the country have been contributing to the replanting of unproductive trees, so as to raise the national oil palm yield. Through biotechnology advancement, they are able to increase yield and improve disease resistance.

In the 1960s, Lodin explained, the mindset was to keep superior planting materials for local oil palm planters. Fifty years on, the global scenario has changed.

"The time has come for us to leverage on uncharted potentials outside Malaysia. If we don't liberalise now, we'll be left behind," he said.

Lodin highlighted that oil palm seed exports can be a significant income earner for the country as it fetches a 50 per cent premium in the overseas market.

In total, the Malaysian Palm Oil Board (MPOB) statistics show seed companies churn out some 80 million oil palm seeds every year, of which 50 million are supplied to local planters. The remaining 30 million are sold to Malaysian planters with oil palm estates abroad.

Established seed producers like AAR reserved a sizable portion of seeds for smallholders in Malaysia, but they face a dilemma.

Oil palm seeds only has a shelf life of two years. If not sold within that time span, they have to be destroyed. This wastage is especially evident when high palm oil prices cause local planters to delay replanting activities and therefore, their purchase of germinated seeds.

"Apart from waiver of export restriction on seeds sales, we also hope to see MPOB rope in seed producers from the private sector when sourcing for new genetic materials from West Africa and Latin America for seed breeding," Lodin said, adding that such measures would help propel Malaysia to become the world's trading hub for superior oil palm seeds.

Malaysia expects plantation exports bonanza

2011-12-30T09:08:00.001+08:00

KUALA LUMPUR: Malaysia can expect record high plantation commodity exports this year as global demand for palm oil, rubber and pepper surpasses supply.

Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said from January to October, exports had jumped 28 per cent to RM118.2 billion. “That has already exceeded last year’s overall figure,” he added.

Last year’s RM113.29 billion achievement was 24 per cent higher than 2009’s RM91.16 billion. It also overtook 2008’s previous record of RM112.43 billion.

Malaysia’s plantation commodities comprise palm oil, rubber, timber, cocoa, tobacco and pepper.

In the last decade, the sector had been the nation’s second largest foreign income earner after manufacturing.

Since then, the export value has grown three and a half times.

“I think we can hit RM140 billion this year,” Dompok told Business Times in an interview.

To a certain extent, Dompok said the higher palm oil, rubber and pepper pricing was also fuelled by the weakening of the US dollar against the ringgit. In the first eight months of this year, the US dollar weakened by about three per cent against the ringgit from RM3.05 to RM2.95.

The US dollar forms the basis for major index of commodity prices. Hence, Malaysia’s plantation commodity exports like palm oil, rubber, timber, cocoa and pepper are quoted in the greenback.

The minister said palm oil earnings, which are slated to touch RM80 billion this year, will make up the bulk of the country’s plantation commodity’s exports. High palm oil prices have been contributing to higher income for oil palm planters. So far, it is averaging at around RM3,100 a tonne.

“Although palm oil is our number one revenue contributor, pepper exports seemed to have grown the fastest,” Dompok said.

In the first 10 months of this year, pepper exports jumped the highest by 42 per cent to RM224.06 million. Timber exports slipped 3.1 per cent to RM16.52 billion, while tobacco products fell 2.6 per cent to RM833.90 million.

Rubber tappers have good reason to smile as bulk latex has been trading at good price of more than RM10 a kilogramme in the first four months of the year. Although it has since settled to around RM6.60 per kg, rubber tappers still feel motivated to tap their trees regularly.

“As world crude oil continues to trade at high prices, so will natural rubber because it is a substitute for synthetic rubber in making tyres. In the first 10 months, our rubber exports expanded by 28 per cent to RM27.34 billion,” Dompok said.

Renewable energy producers in Sabah not 'FiT' yet

2011-12-30T08:58:00.001+08:00

PUTRAJAYA: RENEWABLE energy (RE) producers in Sabah, who are mostly biomass and biogas plant operators at palm oil mills, will not enjoy the 32 sen per kilowatt per hour (kWh) under the feed-in tariff (FiT).

RE producers in Sabah will only be paid the rates accorded under Tenaga Nasional Bhd's (TNB) Small Renewable Energy Projects, according to a statement by Sustainable Energy Development Authority (Seda).

This means oil palm biomass and biogas plant operators there will only be paid 21 sen per kWh instead of the promised 32 sen per kWh under FiT.

Energy, Green Technology and Water Minister Datuk Seri Peter Chin had reportedly said heavy power users in Peninsular Malaysia and Sabah, who use more than 350kWh or whose monthly bills exceed RM77, are to start paying the one per cent RE levy this month.

However, Seda, the implementing agency under Chin's ministry, said on Tuesday TNB will collect the RE levy only from consumers in Peninsular Malaysia. This is because there has yet to be a gazette to this effect in Sabah.

The regulator said RE producers in Sabah will only be eligible for FiT when the one per cent RE levy is collected by Sabah Electricity Sdn Bhd, a 70 per cent-subsidiary of TNB, from heavy power users in Sabah.

Sarawak, however, is exempted from the RE levy because under the Renewable Energy Act 2010, the FiT is only applicable to Sabah and Peninsular Malaysia.

FiT essentially guarantees RE producers a premium selling price over that generated from depleting and finite sources such as oil, gas and coal.

Power generated from sustainable sources that benefits from FiT includes that of oil palm biomass, biogas, small hydro and solar.

Meanwhile, RE producers will not automatically receive payment under the FiT from December this year. This is because RE producers need to go online and bid for the quota and the relevant FiT rate.

The FiT rate differs for varying RE technologies and installed capacities. RE producers have to apply for licence from Seda via http://seda.gov.my/. Online application is meant to facilitate quota allocation on a first-come, first-serve basis.

Within a week of bidding, Seda announced that applications for the FiT allocation under the categories of biomass and solar projects were fully taken up.

Yesterday, it clarified that some of these applications were incomplete and disqualified. Therefore, the portion of FiT allocation applied for will be released for online bidding again today, at 10am.

Seda has limited individual solar energy producers to 12kWh each. Multiple applications for the same installed site is also not allowed. The new measures are meant to encourage more people to install solar panels on their roof tops and sell back excess energy to TNB.

Malaysians pioneer China’s oleochemicals industry

2011-12-27T08:59:00.004+08:00

Malaysians who pioneered China's oleochemical industry close to 10 years ago are now benefiting from its 1.3 billion consumers' pursuit of better living standards, writes OOI TEE CHING.

MALAYSIAN investors in China’s oleochemical industry are gaining from the rising demand for eco-friendly soaps and detergent as consumers there pursue better living standards, said Malaysian Palm Oil Board (MPOB) director-general Datuk Dr Choo Yuen May.

“Household cleaning products made from oleochemicals are increasingly seen as sustainable alternative to petrochemical variants,” she told Business Times in a recent interview.

Detergent made from cheaper petroleum by-products like kerosene, containing an active ingredient called linear alkylbenzene sulfonates (LABS), takes a very long time to biodegrade. This can cause foaming at rivers and excessive algae growth in the lakes. The algae covered lakes robs oxygen from the water, leaving fishes and other aquatic organisms to die.

As detergent manufacturers seek to improve their environmental profile, many replaced LABS with methyl ester sulfonates (MES), eventhough it is a little bit more expensive.

Choo said MES is sourced from palm oil and palm stearin. Both are renewable resources and easily available in Malaysia. Therefore, it is not a surprise that Malaysia is a global hub for making oleochemicals, which are then processed into biodegradable detergent.

Since the 1990s, MES-based laundry detergent started to gain popularity as it is readily biodegradable, renewable, agreeable to vegetarians and most importantly — cleans well, even in cold water. Current market leaders of such a green product include Japan’s Lion Corp and America’s Stepan and Huish Detergents.

When contacted, Emery Oleochemicals (M) Sdn Bhd group chief executive officer Dr Kongkrapan Intarajang concurred with Choo that the bright outlook for palm oil-based detergents is fuelled by the global trend towards formulations derived from renewable plant-based ingredients instead of depleting fossil fuel.

In China, Emery with one of its shareholders Sime Darby Plantation Sdn Bhd partnered detergent manufacturer Guangzhou Lonkey Industrial Co Ltd to form Guangzhou Keylink Chemical Co. The joint venture company is setting up a 40,000-tonne a year MES plant. “Our MES plant in China is nearing completion. We hope to commission it next year, in the first quarter,” said Kongkrapan.

Choo noted MPOB’s research in MES is applicable in China because this biodegradable detergent cleans well at low dosage, even in washing water that has high mineral content. “Although China’s household waters tend to be high in mineral content, it is not a problem. Detergent manufacturers like Lonkey will find it easy to formulate concentrated washing powder using MES,” she said. Among Lonkey’s popular laundry detergent brands in the Guangzhou province include Gaofuli and Yeshu.

In Malaysia, KLK Oleochemicals Group’s unit, KL-Kepong Oleomas, operates a 50,000-tonne per year MES plant. “We’re carrying out some upgrading works and doubling the capacity to 100,000 tonnes,” said KLK Oleochemicals managing director A.K. Yeow.

As the world’s top oleochemicals producer, Malaysia exports around 2.2 million tonnes every year. Malaysia’s lead is partly driven by its community of engineers and chemists having the ability to process palm oil and palm kernel oil into more than 100 types of downstream products.

With such technical prowess and advantage, Malaysians have become pioneers and key investors in China’s oleochemical industry.

Among the earliest to set foot there are Wilmar International Ltd, in which Robert Kuok’s Kuok Group is a substantial shareholder. The other pioneer is Kuala Lumpur Kepong Bhd’s (KLK) unit KLK-Taiko Palm Oleo Co Ltd. Other Malaysian investors include Teck Guan Perdana Bhd and Kwantas Corp Bhd.

Wilmar’s pioneering investments have given it a headstart over its competitors. Today, it is the biggest player in China’s oleochemical industry with an estimated annual capacity of 800,000 tonnes.

As early as 1999, KLK's Yeow frequently flew to China to assess the benefits of producing oleochemicals there.

He recalled scouting for an affordable industrial site equipped with basic infrastructure of piped water and consistent electricity supply.

The management finally chose Zhangjiagang, a town two hours drive from Shanghai, and yet easily accessible by sea.

During the last five years, KLK-Taiko Palm-Oleo had invested some RM200 million there. Today, the facility is able to churn out 220,000 tonnes of fatty acids, soap noodles and glycerine in a year.

Teck Guan’s oleochemical plant at Rugao town, about four hours drive from Shanghai, is able to produce up to 200,000 tonnes of fatty alcohol, fatty acid and glycerin per year.

Kwantas’ unit Dongma (Guangzhou Free Trade Zone) Oleochemicals Co Ltd plants in Zhangjiagang near Shanghai and in Guangzhou have a combined 200,000-tonne annual capacity. These plants make soap noodles, glycerine and other oleochemical derivatives.

Asked on China’s oleochemical demand in the next five years, Choo said: “Last year, China consumed some 2.5 million tonnes. The market continues to grow because consumption of soaps, detergent, cosmetics and bioplastics will expand as living standards improve”.

She also noted that through China’s Cleaning Industry Association’s appeal for affordable and steady supply of oleochemical ingredients from Southeast Asia, the China government had lowered palm stearin import duty to 2 per cent.

Choo, however, sees the demand for oleochemicals moderating in future. The operating environment there has become highly competitive. “It will not be as fast as previous years, around 10 to 15 per cent annually.”

Nevertheless, she remains optimistic that new applications like biolubricants, green chemicals, bioplastics and biopolymers will continue to drive the oleochemicals industry there. Choo also expects more usage of palm-based polyols in China’s polyurethane industry.

Kulim gets shareholder nod for RM700m land buy

2011-12-23T16:06:00.004+08:00

Johor Baru: Kulim (Malaysia) Bhd shareholders yesterday gave the go-ahead for the company to buy six parcels of oil palm plantation land in Johor for RM700 million cash from Johor Corporation (JCorp).

While the shareholders’ approval indicate their optimism of the purchase and of Kulim’s outlook, for JCorp, the RM700 million it will get from the sale means it will have cash to meet its obligations on bonds maturing next year.

The sale is a major component of the JCorp group’s rationalisation exercise.

The RM700 million cash accruing from the estates’ disposal is the first out of the expected RM1 billion cash to be generated before July 31 2012. The balance of RM300 million will come from internally generated funds.

JCorp president and chief executive officer Kamaruzzaman Abu Kassim said, in a statement yesterday, that the group is finalising a plan for repayment of its remaining debts. As part of the exercise, CIMB Bank which is also its adviser, and Maybank will act as joint lead managers for the new bonds issue in 2012.

Kulim shareholders approved the purchase of six parcels of oil palm plantation land totalling 13,687ha and two palm oil mills at an extraordinary general meeting held here yesterday.

Meanwhile, Massive Equity Sdn Bhd (MESB), a special purpose vehicle jointly owned by JCorp and CVC Capital Partners (CVC), welcome the acceptance KFC Holdings Bhd and QSR Brands Bhd of its offer to buy the two fast food companies.

The privatisation of QSR will not result in JCorp itself incurring additional debt. This is because funding for the transaction will be done via MESB on the strength of the future cash flow of the two businesses. Once the sale to MESB completes, the proceeds will be returned to all shareholders of QSR and KFC.

The move will also give Kulim, which is currently the controlling shareholder of QSR, an opportunity to sell off its stake in the food retail businesses and focus on its core plantation business.

Kamaruzzaman said the acquisition will enable JCorp to gain direct controlling interest in both companies it considers as having good fundamentals and long-term value.

Boustead sees bountiful year amid high CPO prices

2011-12-23T14:58:00.001+08:00

KUALA LUMPUR: BOUSTEAD Holdings Bhd expects to rake in record profit this year as palm oil prices continue to trade at buoyant levels of around RM3,000 per tonne.

Out of its six core businesses, plantation is the biggest earnings contributor, followed by shipbuilding and property development. In the three quarters ended September 2011, Boustead's plantation division contributed RM267.1 million or 45.5 per cent to the group's RM585.9 million pre-tax profits.

So far, Boustead makes an annual profit of between RM450 million and RM700 million.

Although palm oil prices have been settling from its high of RM3,800 per tonne nine months ago, the third-month benchmark palm oil futures contract on the Malaysia Derivatives Exchange is averaging at around RM3,100 per tonne. Yesterday, the contract closed RM25 higher at RM3,097 per tonne.

"We're looking at record profits this year as palm oil prices are still strong," said Boustead deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin.

The group has an agriculture land bank of 97,648ha and so far, three quarters of that are already planted with oil palms.

"Our tree profile is at a favourable phase, of which 46 per cent of our oil palms are of prime ages. We expect to harvest about 1.1 million tonnes of fresh fruit bunches this year," he said.

With promising results, Boustead is setting aside RM1.4 billion in capital expenditure for next year. "About 30 per cent of the money will go to plantation," said Lodin.

Yesterday, both Boustead and Pharmaniaga Bhd shareholders approved all resolutions to have Boustead's entire pharmaceutical division placed under Pharmaniaga.

Lodin said the corporate move will allow Pharmaniaga to expand its manufacturing capacity in Kedah and Perak. "Our total capital expenditure for the pharmaceutical division amounts to RM95 million, of which a third will go to the information system," he added.

Pharmaniaga is in the business of making generic drugs. It also supply, trade and install hospital equipment. Last year, it secured a 10-year concession to distribute medicine to government hospitals and clinics.

"We have a 10-year supply concession to all 3,750 healthcare outlets under the Health Ministry throughout the country. The book value is worth some RM900 million," said Pharmaniaga managing director Datuk Farshila Emran.

Lodin said Boustead is still interested in buying ExxonMobil Corp's oil and gas assets in Malaysia, if the latter's deal with San Miguel Corp does not materialise. "We first had a discussion with Esso in August last year. If there is a review with whomever they have made an agreement with, we are open and prepared to talk to anyone," he said.

San Miguel, in August, agreed to buy Exxon's entire 65 per cent stake in Esso Malaysia for about US$206 million (RM655 million), or RM3.50 per share. This will give it control over a chain of petrol stations and one refinery with a capacity of 88,000 barrels a day. Although the deal won the government approval last month, it has yet to be concluded.

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LTAT does not dismiss prospect of privatising BHIC

KUALA LUMPUR: The possibility of the Armed Forces Pension Fund or Lembaga Tabung Angkatan Tentera (LTAT) being the vehicle to privatise Boustead Heavy Industries Corp Bhd (BHIC) is increasing.

Tan Sri Lodin Wok Kamaruddin, who is LTAT chief executive, did not dismiss the prospect of LTAT privatising BHIC. He, however, denied that BHIC's parent, Boustead Holdings Bhd, planned to privatise BHIC.

"Once again, we confirm that Boustead does not have any intention to privatise BHIC. We can't comment on what LTAT is going to do about BHIC," said Lodin, who is also Boustead deputy chairman and group managing director. "That you would have to ask LTAT. It is for LTAT's board of directors to collectively deliberate upon," he told reporters after Boustead's shareholders meeting here yesterday.

A research house highlighted that a privatisation made sense given that BHIC's earnings visibility looked secure for the next 10 years after being awarded a RM9 billion contract from the Defence Ministry to design, build and deliver six second-generation patrol vessels.

It could also be advantageous for LTAT to privatise BHIC to avoid public disclosure and scrutiny, given the sensitivity of such government defence contracts.

LTAT owns 61 per cent of Boustead and 8.15 per cent of BHIC. When pressed on what he thought of such a suggestion published in the media, Lodin said: "Anyone can air their views in the newspapers."

On whether LTAT is considering loosening its grip on Boustead to increase share liquidity, he said: "It is good to have liquidity. LTAT will do so at the right time and right price and make some capital gains along the way."

Making palm oil sustainable

2011-12-22T16:09:00.002+08:00

This is contributed by Datuk Dr Zakri Abdul Hamid, science adviser to Prime Minister Dato' Sri Najib Razak.

THE virtues of oil from olives, sunflower seeds, canola, soybean and corn are familiar to consumers in the West and the affluent countries of the Middle East and North Africa. That's not the case with palm oil, even in those large markets for the product.

That may be a vestige of the bitter attack on the palm oil industry mounted in the 1980s by the soybean lobby, complete with self-serving claims that palm oil could harm human health. Malaysian scientists, including Tan Sri Augustine S.H. Ong, then attached to the Palm Oil Research Institute of Malaysia, countered with authoritative documentation that, in addition to its numerous industrial uses, palm oil is indeed a versatile, nutritious ingredient.

Now, the palm oil industry is once again confronted with new challenges, possibly more formidable and multi-faceted than the earlier one -- that of the need to be environmentally sustainable.

Sustainability in the palm oil industry means making minimal impact on the environment from the time of planting through to processing the oil in the mills. Today, the Malaysian palm oil industry has largely got it right, but sustainability concerns linger among some, mainly Western, consumers and well-meaning non-governmental organisations.

Two recent episodes illustrate this concern. One is the proposed Australian "Truth in labelling -- palm oil Bill" which has since been rejected by its House of Representatives Economics Committee following the intervention of the Malaysian government and Malaysian Palm Oil Council.

Lately, even some well-meaning members of the Girl Scouts of America are mounting a campaign for their organisation not to use palm oil as an ingredient in their world-famous Thin Mint cookies as "oil palm cultivation destroys the habitat of orang-utans". Such concerns have to be addressed to ensure the crop remains the golden egg-laying goose we would always like it to be.

Forest clearing, the agronomic practices used to cultivate the plants from seedlings to the fruit production phase, processing the fresh fruit bunches into oil at the mill -- all relate to sustainability.

A sovereign country like Malaysia is fully entitled to open up its forests for agriculture or settlement, of course.

Our second prime minister, Tun Abdul Razak Hussein, started the Felda scheme in the 1960s, a man ahead of his time as evidenced by the aspirations articulated in the Millennium Development Goals (MDGs) agreed some 40 years later.

A primary objective of the MDGs is poverty alleviation, a mission that Tun Razak expressed in those days with his slogan, "land for the landless; jobs for the jobless".

The "Felda Story" remains a textbook example of best-practice poverty eradication, according to renowned Columbia University economist Jeffrey Sachs.

So, while it is true that oil palm plantations mean forest displacement, Malaysians are also fully aware of the need for balance. Malaysia is committed to managing forests in a sustainable manner, not just for economic reasons, but also for maintaining environmental stability and ecological balance.

According to the United Nations Food and Agriculture Organisation, Malaysia has approximately 62.3 per cent of its territory under forest cover -- 20,456,000 forested hectares in total. At the Earth Summit in 1992, Malaysia pledged to keep at least 50 per cent of our land mass under forest, including national parks, wildlife sanctuaries and nature reserves. That promise is still intact today.

Within these protective areas Malaysia can honour its commitment to maintain suitable habitats for our flora and fauna, including the iconic orang-utans in Sabah and Sarawak.

With the current focus on global warming and greenhouse gas emissions, it is instructive to note that, relative to other oil producing crops, the oil palm emits up to 10 times more oxygen and absorbs up to 10 times more carbon dioxide per hectare per year, figures far superior to any crop planted in temperate countries.

Spearheaded by the Malaysian Palm Oil Board (MPOB), the Malaysian oil palm industry is making a serious effort to meet the challenges of sustainability. Last year, MPOB released the Malaysian Palm Oil Sustainability Manual, which spells out the principles and procedures to be adhered to by estate and mill managers and other workers along the supply chain to achieve sustainability.

For example, plantations today routinely employ barn owls to reduce rodent populations rather than chemical baits, a perfect means of biological pest control. Chemical weed killers and pesticides are minimally used as the oil palm is a hardy plant largely unaffected by pests and diseases. There are standard operating procedures of waste management at the oil palm mills in accordance with environmental quality acts and regulations.

In response to the urgent and pressing global call for sustainably produced palm oil, a global organisation, the Roundtable on Sustainable Palm Oil (RSPO) was formed in 2004 with the objective of promoting the growth and use of sustainable palm oil products through credible global standards and engagement of stakeholders. The organisation is still "a work in progress" and has not matured into a one-stop clearing-house for the trading of sustainable palm oil.

Malaysia is already mulling the idea of establishing its own "Malaysia Sustainable Palm Oil" standard, a move which is similarly being considered by Indonesia. Such moves can only be applauded, for in the long run, the benefits not only accrue to the palm oil industry and this country, but to the whole global community.

Don't make Felda settlers pawns in political game

2011-12-19T13:01:00.001+08:00

This is written by my boss.

UNFORTUNATELY, the planned flotation of Felda Global Ventures Holdings Sdn Bhd (FGV) on the stock exchange has entered the political realm, a murky environment where lines separating truths, half-truths and outright lies become blurred.

While the initial public offer (IPO) for FGV has now entered its final stages, the subject matter's entry into the political environment was made official when the president of the National Felda Settlers' Children Association (Anak), Mazlan Aliman, recently gave a veiled threat to the government by reminding Putrajaya that Felda settlers are a formidable voting force in at least 54 federal seats -- a threat no doubt, directed at a government that is close to facing the polls.

Anak has been outlining reasons it is against the planned listing of FGV, while attempting to create a perception that it is not politicising the subject and is trying to save Felda and the settlers from the lions.

That's a bit difficult to consume since Mazlan is also a member of opposition party Pas' central committee, a sworn enemy of the incumbent ruling coalition. But let us stop there.

The fact is Felda is not a political party. Although it was started by former prime minister, the late Tun Abdul Razak Hussein, in 1956, participants in its hugely successful land development schemes may well be members of any political parties making up the entire political spectrum in the country now.

That the political inclination of the settlers does not matter to Felda may well be the foundation upon which proponents of the IPO could start with if and when they decide to go to the ground, explaining their argument on why FGV should be listed.

Felda has a long history of which its settlers are proud. Starting as a group of rag-tag farmers in what was then a god-forsaken place called the Lurah Bilut land scheme, they have built a company with interests across the world.

More than half-a-century and scores of land schemes later, some of the following generations of Felda settlers have gone on to seek their fortunes elsewhere while many more stayed to own their plots of land. Their quality of life has improved to a level the early settlers could never have imagined.

As a company, Felda, too, has moved on from just buying and selling oil palm fruits to downstream activities and research and development. It has ventured overseas and into several sectors and has also collaborated with some of the bigger global names in the oleochemical, food and even the hospitality industries.

As Felda prospers, settlers, too, reap the gains as a majority of interest in the company is owned by Koperasi Permodalan Felda (KPF), a cooperative in which all settlers are members. In recent years, the cooperative has emerged as the most profitable in Malaysia.

More opportunity lies ahead for KPF. With the listing of FGV, doors will be opened for more collaboration between Felda and international players in the oleochemical, food and agriculture industries.

From the RM10 million set aside for its formation, Felda now wants to see the likes of Cargill and Archer Daniels Midland as its peers. If this comes to fruition, KPF and by extension the settlers, which by then would be holding a 35 per cent interest in the listed FGV, would stand to benefit handsomely.

Who knows what more opportunities can present themselves to KPF in the future, once it has even stronger financial muscle? Let's be reminded that the successful Dutch agriculture bank, Rabobank, is owned by a cooperative.

That should be the crowning glory for the early Felda settlers. From farmers who open up land with their bare hands, living in homes on high stilts for fear of wild animals, they are now presenting an opportunity for the next generations to be owners of global entities.

Let not the settlers and their future be made pawns in any political gambit.

Felda Global on track for April listing

2011-12-16T11:07:00.001+08:00

This is written by my colleague, Goh Thean Eu.

NILAI, Negeri Sembilan: Felda Global Ventures Holdings Sdn Bhd is on track to make its debut on Bursa Malaysia by early second quarter of next year, its president Datuk Sabri Ahmad said.

“We are on track. We have the bankers looking into it already. Hopefully, we can list it in April next year,” Sabri told a press conference at Felda Biotech Centre at Bandar Enstek, here, yesterday.

The company has appointed CIMB, Maybank, Morgan Stanley, JP Morgan and Deutsche Bank to arrange the mega listing.

While the actual size of the initial public offering (IPO) has yet to be announced, it is expected to be worth billions of ringgit, making Felda Global one of the country’s 25 most valuable companies.

The proposed listing has its fair share of compliments and criticism. Some welcomed it, saying it would enhance the attractiveness of the country’s capital market, attract foreign investors as well as provide an avenue for settlers to make additional income.

The sceptics contented that the settlers would risk losing their lands upon listing.

Sabri said the Felda group manages a vast 850,000-ha plantation landbank but the listing will only affect 350,000ha, which are owned by Felda. “The settlers, more than 110,000 of them, would not lose their land. The land will still be theirs,” Sabri added.

Six months ago, Felda embarked on an exercise to monetise its assets and listed sugar unit MSM Malaysia Holdings Bhd. It raised slightly over RM800 million from the MSM share sale, which saw the sugar company valued at about RM2.4 billion. Koperasi Permodalan Felda (KPF), which is owned by all Felda settlers, made a paper gain of RM300 million from the MSM IPO, from its 20 per cent stake.

Earlier, Sabri announced that Felda Agricultural Services Sdn Bhd had successfully created the world’s first marker for identifying oil palm susceptible to Ganoderma disease.

Ganoderma disease, commonly known as Basal Stem Rot disease, affects oil palm yields. Every year, between 30 and 70 per cent of oil palm yields is lost due to Ganoderma, with major implications to planters' income.

Sabri said the marker technology would take about another three to four years before it can be commercialised. It would be used to detect seed production trees that are prone to the disease. These trees are shifted out and then, eliminated.

Ta Ann looking at PNG expansion

2011-12-12T10:25:00.003+08:00

SIBU, Sarawak: TA ANN Holdings Bhd, having planted three quarters of its 45,000ha agricultural landbank in Sarawak, is looking to venture into Papua New Guinea.

Headquartered here, the group ventured into oil palm planting in 2000. Within 11 years, it has planted 75 per cent of its plantable landbank.

"We have planted about 35,000ha. We are thinking of venturing into Papua New Guinea. There is still a good margin potential as the land cost is much cheaper than in Indonesia," said group managing director and chief executive officer Datuk Wong Kuo Hea.

"Although oil palm yields of pioneer investors there are showing 30 tonnes of fresh fruit bunches per hectare in a year, we will still need to do a feasibility study.

"We need to assess the soil fertility, potential crop diseases and rainfall pattern," he told Business Times.

"If we go ahead with this venture, it will be developed phase-by-phase, over a span of 10 to 15 years. The eventual plot size will be around 100,000ha," he added.

Eight months ago, Ta Ann had forecast 380,000 tonnes of fresh fruit bunches at its Sarawak estates for the year. Incidentally, its trees started to fruit exceptionally well and the company is reaping bumper harvest. Now, Wong raises his expectation to 450,000 tonnes, 45 per cent more than 2010's harvest of 310,870 tonnes.

Ta Ann's profits for the third quarter ended September 2011 has jumped 51.7 per cent to RM47.93 million, buoyed by good harvest and high palm oil prices. The group now has RM200 million in cash reserves.

Wong said part of the money would be used to plant another 5,000ha with oil palms and fund its second mill, next year. "Just like the first one, this mill will be able to process 120 tonnes of fresh fruit bunches per hour. The mill should be ready by end 2012."

On Ta Ann's traditional business, Wong said the company would continue to invest substantially in forest plantations. "As our business expands, we need more plywood that are produced in a sustainable manner. We have invested in forest plantations to reduce the need to source from natural forests," Wong said.

It has been more than nine months since the earthquake and tsunami in Japan. While the plywood price has increased by 12 per cent to an average of US$650 (RM2,045) per cubic metre since the earthquake, Wong sees demand coming from the reconstruction next year. "Japan had a big stockpile of cheaper imports from China. So, we will only see demand from the reconstruction coming in next year," he said.

Eight months ago, Ta Ann announced a one-for-five bonus issue of up to 51.5 million shares of RM1 each. Asked if shareholders could look forward to another round of bonus issue in the coming months, Wong replied: "Well, bonus issue is one way to reward shareholders while improving share liquidity."

Importers decry 'unjustified fees'

2011-12-10T12:03:00.001+08:00

SERI KEMBANGAN, Selangor: LOCAL importers are estimated to have suffered about RM500 million in unjustified new fees and increment imposed by shipping companies in the past one year.

If left unchecked, this inflationary move by shipping lines could render many import-dependent businesses to lose out in competitiveness and raise the cost of living in the country.

Yesterday, at a press conference, 13 trade groups issued a joint statement protesting against container deposit and dubious charges by shipping companies.

With about three million containers carrying goods into Port Klang annually, importers estimate that for every RM100 increment in dubious fees per container charged by shipping lines, they are collectively burdened with an additional RM200 million unnecessary costs.

"We're disappointed with the Transport Ministry and Port Klang Authority for failing to check the list of dubious charges that shipping lines are charging at Port Klang," said Malaysia Hardware Machinery & Building Materials Dealers' Association (MHMBA) president Datuk Patrick Lim Khoon Heng.

"This has been dragging on for more than a year already. We've seen new fees and unjustified charges levied on us without any value-add in service. In the last 12 months, these dubious fees have totalled between RM200 and RM300 per container, Lim said.

"We've repeatedly requested the government to review the current unfair practices by shipping lines at Port Klang," he told reporters at a press conference here.

The group consists of MHMBA, Malaysia Steel & Metal Distributors' Association, Steel Wire Association of Malaysia, Building Materials Distributors Association of Malaysia, Malaysia Mould & Die Association, Malaysia Hardware Wholesaler Association, The Electrical & Electronics Association of Malaysia, Malaysian Indian Metal Traders and Recyclers Association, Malaysian Plastics Manufacturers Association, Malaysia Furniture Entrepreneur Association, Machinery and Equipment Manufacturers Association, Federation of Malaysian Foundry & Engineering Industries Association and the Palm Oil Refiners Assciation of Malaysia.

"We want to highlight that it is illegal for shipping lines to withhold delivery order (DO) after consignees have paid the relevant port charges," said Lim.

"We, once again, appeal to the Transport Ministry to issue a directive to all shipping lines calling at Port Klang to abide by this basic contract law," he added.

KLK set to grab bigger nitrile latex market share

2011-12-10T11:52:00.001+08:00

KUALA LUMPUR: Kuala Lumpur Kepong Bhd (KLK), which owns 19 per cent of Yule Catto & Co plc, is set to grab a bigger share of the world's nitrile latex supply as its unit continue to expand output.

London stock exchange listed-Yule Catto, which currently controls 40 per cent of the world's nitrile latex supply, is spending RM110 million to expand its factory in Pasir Gudang, Johor.

Global annual demand for nitrile latex is reportedly around 550,000 tonnes.

The world's six nitrile latex producers, including Yule Catto, are ramping up output to satisfy rising global demand for nitrile latex used in the manufacture of medical examination and industrial gloves.

Yule Catto is making its latest expansion in Malaysia through wholly-owned Synthomer Group.

Synthomer said in a statement that the expansion will continue to strengthen its presence in the synthetic nitrile glove market. Currently, the company runs 100,000-tonne a year nitrile latex plant in Pasir Gudang and another 130,000-tonne plant in Kluang. Earlier this year, it had already expanded its Kluang facility.

Synthomer Asia managing director Dr Brendan Catlow said that by 2013, Synthomer's combined capacity at Kluang and Pasir Gudang will be 300,000 tonnes per year.

TSH blazes a trail in Sabah oil palm sector

2011-12-10T11:42:00.002+08:00

TAWAU: With over RM40 million invested, the TSH Biotech Wakuba tissue culture laboratory in Sabah, is on track to produce 500,000 oil palm ramets this year, gradually increasing to 1.5 million ramets by 2015.

The Wakuba ramet is the result of 10 years of extensive research and development, with researchers collecting data as early as 2001.

The 70,000 sq ft laboratory, which produces high-quality oil palm using tissue culture technology, has 250 employees and technical expertise from the local community, including its head of biotechnology Dr Jinil Malaji.

Currently, all the biotechnology labs producing high-quality oil palm using tissue culture technology are operating in Peninsular Malaysia, and the Wakuba tissue culture laboratory is the only sizeable commercial lab in Sabah.

Chief Minister Datuk Seri Musa Aman who visited the lab yesterday commended TSH for their foresight over 10 years ago in addressing land scarcity challenges while improving planting material for better productivity and yields.

"Although many oil palm players have spoken of biotechnology in the Sabah oil palm sector, only a few have invested their resources in this untapped field," he said.

Impressed with the success of the lab, Musa was heartened that local oil palm players such as TSH had shown their commitment to the local economy and community.

"I am very pleased to see the commitment of TSH to not just technology advancement but also to supporting the local community," Musa said, congratulating TSH chairman Datuk Kelvin Tan for his visionary idea in setting up the Wakuba lab.

TSH Resources is taking huge strides in increasing oil palm productivity and yields not just in Sabah but also the rest of the country.

There are over 4.85 million hectares of oil palm plantations in Malaysia, out of which nearly 30 per cent are in Sabah. "Imagine how far we can go by deploying more tissue culture technology. The potential is enormous," Musa said.

Asian know-how can feed a hungry planet

2011-12-08T18:19:00.000+08:00

This is contributed by Eva Clayton, a former US lawmaker. She was participating at the United Nations climate change debate taking place in Durban, South Africa.

POLICYMAKERS from around the world have descended on Durban, South Africa, for the annual United Nations Climate Change Conference.

While it is appropriate that key policy makers involve themselves in the effort to reverse the ill effects of man-made climate change, it is increasingly apparent that amid the discussions of greenhouse gas emissions and ozone compromise, world leaders have lost sight of the daily battle for survival that is waged by an ever increasing number of people from poor and underdeveloped countries.

Climate change is indeed a global threat that must be addressed; but so, too, is hunger and poverty. What is needed is a coordinated approach that seeks to also address food security, economic growth and poverty reduction, while also combating climate change.

Tropical regions are home to some of the world’s most disadvantaged people. Millions of men and women in these areas lack reliable access to food, jobs, education and healthcare.

Recent famines and natural disasters in the tropics illustrate the need for robust and sustainable agriculture development. While the Durban climate talks are critically important, they will mean little if men and women in the global tropics go hungry.

This means we must focus on agriculture production as a driver of economic growth.

For a model, the delegates in Africa can take note of the experience of tropical Asia. Once-poor nations such as Malaysia, Indonesia, Thailand, the Philippines and others have harnessed technology and advanced agricultural techniques to feed their people and tap into export markets.

Asian nations now grow an abundance of papaya, coconut, banana, palm and other food staples. They increasingly feed their own people and, as importantly, trade across the region.

They are climbing the income and development ladder as a result, while showing concern for the climate and the environment.

Some far-sighted African policymakers and business leaders are confident Africa can do something similar. And they are working with experienced entrepreneurs from the Asia-Pacific region to act on this potential.

As former president of Ghana John Kufuor wrote this week, “commercial palm oil represents an exciting opportunity for Africa.

“It has the potential to provide significantly higher returns to smallholders than their current crops or become an inexpensive African-produced source of food, particularly when years of drought have left the continent reliant on vegetable oil imports to meet demand.”

President Kufuor is right; palm oil can play a vital role in Africa’s future as it has in Asia’s recent economic rise. The oil palm is native to the continent and thrives in sub-Saharan Africa’s moist, wet climate.

It is a high-calorie, nutritious product that will be a key component of any anti-hunger effort. The insight, technology and hard-won business savvy of Asian palm oil investors will help kick-start Africa’s nascent palm oil industry.

The continent is expected to more than double its population by 2030. It is one of the fastest growing regions in the world.

It is worth noting some of the greatest benefits of agriculture-led development can accrue to smallholders, particularly women farmers. Malaysia set the global standard in this regard when it implemented its innovative Federal Land Development Authority (Felda) programme to ensure that smallholders shared equitably in the rising prosperity that comes with plantation agriculture.

This path-breaking Malaysian programme inspired Liberia’s Outgrowers Scheme, an effort to support Liberia’s small farmers. Nigeria is also emulating Malaysia’s successful Felda programme.

Many of the delegates assembled in Africa note that climate change increases the risk of widespread hunger and famine as the social justice non-governmental organisation Oxfam pointed out in a new report. This is no doubt true.

But the climate need not change for hunger and famine to destroy the lives of millions of people. This sad state of affairs is with us today.

The discussion on hunger must be raised to the same level as the global conversation on climate. This is why food security must rise to the top of the development agenda discussed in South Africa and beyond.

A concerted effort by policymakers and the business community will make the days of global hunger a thing of the past.

Malaysia open to raising renewable energy quotas

2011-12-07T09:23:00.002+08:00

KUALA LUMPUR: THE government is open to raising quotas to generate renewable energy (RE) if consumers are willing to pay another 1 per cent RE levy on top of the current 1 per cent in the electricity bills.

Starting this month, consumers in Peninsular Malaysia and Sabah, whose electricity bills exceed RM77, will start paying the 1 per cent levy to subsidise RE producers.

Energy, Green Technology and Water Ministry secretary-general Datuk Loo Took Gee estimates Sustainable Energy Development Authority Malaysia (Seda) to collect up to RM250 million in levy by the end of 2012.

Due to limited funds, the feed-in tariff (FiT) quota allocation for RE producers is awarded on a first-come, first-serve basis. This prompted a rush in online applications to Seda.

Since December 1 2011, applications for the FiT allocation under the categories of biomass and solar photovoltaic (PV) projects were fully taken up. "There's so much interest in biomass and solar PV," said Seda chief operating officer Ali Askar Sher Mohamad.

Asked if the government may raise the quotas and allow for more RE producers to supply to the national grid, Loo said: "It all depends on the funding. If the (heavy energy) consumers (in Peninsular Malaysia and Sabah) are willing to pay an addition 1 per cent (to the current 1 per cent RE levy on their electricity bills), we're open to raising the quotas."

Loo and Ali were speaking to Business Times on the sidelines of the Solar Symposium 2011 held here yesterday.

When contacted in Durban, South Africa, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said international leaders are becoming more aware of the achievements and continuous efforts of Malaysian oil palm industry in contributing towards climate change mitigation initiatives.

He was speaking to a panel of experts on Climate Change Mitigation Through Sustainable Practices. The discussion was held on the sidelines of the 17th Conference of the Parties of the United Nations Framework Convention on Climate Change, better known as COP17.

In recognising the importance of greenhouse gas (GHG) reduction and climate change mitigation, the Malaysian Palm Oil Board carried out a life cycle assessment of palm oil and palm biodiesel production. Dompok said the study, which had been reviewed by an international independent expert panel and published in peer reviewed journals, found that one tonne of refined palm oil entails emission of about 1.1 tonne of carbon dioxide equivalent of GHG.

It is lower than the 1.7 tonnes of emission for soyabean oil and 1.35 tonnes for rapeseed oil. "The GHG emission of one tonne of palm oil is comparable if not better than those of other competing vegetable oils such as soyabean oil and rapeseed oil," he said.

Nevertheless, Dompok said the industry is striving to minimise emissions by trapping methane from palm oil mill effluent and converting it to RE for supply to the national grid.

JJ-Lurgi rides on rising regional demand

2011-12-05T06:29:00.003+08:00

PETALING JAYA, Selangor : JEBSEN & JESSEN (SEA) Pte Ltd (JJSEA) is in a sweet spot, having clinched an influx of jobs to build and upgrade oleochemical plants in Indonesia and Malaysia, following Indonesia's restructure of palm oil taxes.

Since August 2011, the Indonesian government has raised export taxes drastically to boost refining capacity and downstream activities. Crude palm oil (CPO) export tax was set at 22.5 per cent and refined palm olein tax, at 13 per cent.

This means CPO and crude palm kernel oil are cheaper for oleochemical producers there. What's more, oleochemicals exported from Indonesian shores are tax-free. As expected, the tax incentives have spurred investments in Indonesia's nascent oleochemical industry.

"We see big potential in process engineering, especially when high CPO tax in Indonesia has prompted many plantation companies to invest downstream," said JJSEA chairman Heinrich Jessen.

"The demand to put up more oleochemical plants has doubled from last year. Currently, our order book amounts to S$200 million (RM490 million) but there are still many projects under discussion, particularly in Indonesia," he told Business Times in an interview here recently.

Jessen likens the group's customers to long-term partners, whereby his staff are regularly scheduled to present technological updates to help clients lower their costs and improve product quality.

"In Malaysia, investors are de-bottlenecking and upgrading their fatty acids and fatty alcohol throughput to leverage on economies of scale," said Jessen, adding that his company undertakes these process engineering jobs via JJ-Lurgi Engineering Sdn Bhd.

This joint venture with Lurgi AG, a member of French conglomerate Air Liquide, has delivered more than 230 of these refineries, oleochemical and biofuel plants throughout Southeast Asia.

Indeed, JJ-Lurgi is in the right place and at the right time. The oleochemical industry is experiencing robust growth on increased global demand for eco-friendly soaps and detergents, which are viewed as a sustainable alternative to the petrochemical variants.

Aside from process engineering which brings in fat profits to JJSEA, the privately-held industrial conglomerate is also involved in cable technology, chemicals, communications, material handling and packaging.

Asked if there are potential mergers and acquisitions on the horizon, he replied, "Yes, we're keen on acquiring entities that complement our existing businesses. We've set aside RM600 million from our internal finances." Jessen, who is a member of the founding family, said: "We've always funded our own growth. It is a family business and we intend to keep it that way."

JJSEA, a 116-year-old conglomerate of Danish origins, is very much entrenched in Southeast Asia. Its businesses in Singapore, Indonesia, Malaysia, Thailand, Vietnam, and the Philippines comprise more than 50 subsidiaries and associates, employing some 3,300 staff.

Sustaining oleo's pole position

2011-12-01T11:27:00.002+08:00

Malaysia has been the world’s top oleochemicals producer for the last 15 years but is now facing stiff competition from Indonesia. With a 25 per cent market share, Malaysia is the global hub for basic oleochemicals. They are eventually turned into daily necessities like soap, shampoo, moisturiser, toothpaste, shaving cream and laundry detergent.

According to the Malaysian Palm Oil Board, the country exported RM9.06 billion worth of oleochemicals in the first 10 months of this year.

“With inflationary pressures from high feedstock prices, we’ll definitely surpass the RM10 billion mark by year-end,” Malaysian Oleochemical Manufacturers’ Group (MOMG) chairman Tan Kean Hua told Business Times in an interview in Kuala Lumpur.

But the industry’s biggest challenge is from its neighbour. The extremely high palm oil export taxes in Indonesia have distorted the playing level.

Tan explains that in August 2011, the Indonesian government had raised export taxes drastically to boost refining capacity and downstream activities.

Crude palm oil (CPO) export tax was set at 22.5 per cent and refined palm olein tax at 13 per cent. This means that CPO and crude palm kernel oil are cheaper for oleochemical producers there. What's more, oleochemicals exported from Indonesian shores are tax-free.

As expected the tax incentives have spurred investments in Indonesia's nascent oleochemical industry. Musim Mas, Indonesia's biggest oleochemical player with around 750,000 tonnes annual capacity in Medan, is said to be planning expansion.

Wilmar International and US-based Elevance Renewable Sciences too are setting up a 180,000-tonne per year bio-refinery in Surabaya, Indonesia, which is expandable up to 360,000.

"With cheaper feedstock available to the Indonesian oleochemical producers, we no longer compete on a level-playing field. Anyway, with one hand tied to our back, we still have to fight," said Tan.

In the early 1980s, the US, Europe and Japan were the major producers of oleochemicals or fatty acids, accounting for more than 90 per cent of the world's total production. But from 1985 onwards, there was a big shift from these developed countries to Southeast Asia due to the abundance of palm oil derived oleochemicals.

In Europe, with Croda and Cognis selling most of their oleochemical assets, Oleon Holding NV is now the largest there with a 500,000-tonne a year capacity. Oleon's parent is Sofiprotéol, the financial organisation of the French vegetable oils and proteins sector.

In 2006, half of Cognis' oleochemical business was sold to Golden Hope Plantations Sdn Bhd, which is now part of Sime Darby Bhd. Two years later, Cognis owners sold the remaining 50 per cent stake to Thailand's PTT Chemical International and renamed the entity Emery Oleochemicals. Last year, Cognis itself was bought up by German chemical giant BASF.

Currently, the world's oleochemicals exports are around 10 million tonnes, with more than half from Southeast Asia.

One of the reasons for Malaysia's pole position stems from its process engineers and chemists' technological capabilities to process palm oil and palm kernel oil into more than 100 types of downstream products.

There are 18 local oleochemical companies with a combined annual capacity of 2.6 million tonnes. Their plants make basic oleochemicals like fatty acids, fatty alcohols, esters and refined glycerine. These are then formulated to make toothpaste, soap, dish washing detergent, industrial lubricants and even food emulsifiers.

Malaysian companies are expanding, too.

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.

Currently, IOI Oleo Group is the leader in Malaysia with annual capacity of 950,000 tonnes.

KLK Oleo Group is the second biggest, with facilities churning out 780,000 tonnes.

KLK Oleo Group managing director A.K. Yeow said the company is investing in excess of RM600 million to build an integrated methyl ester sulphonate and fatty alcohol plant in Shah Alam, Selangor. “We’re also putting up a specialty fatty ester facility in Klang,” he said.

Emery Oleochemicals (M) Sdn Bhd operates a 300,000-tonne per year plant in Telok Panglima Garang, Selangor. It is investing more than RM400 million to go further downstream.

Emery Oleochemicals group chief executive officer Dr Kongkrapan Intarajang said, “Our plan is endorsed by Pemandu (Performance Management and Delivery Unit). One of our highlights is a 25,000 tonne-plant to produce biolubricants, green polymer additives and surfactants. It is now being commissioned”.

When asked on the industry outlook, Tan acknowledged that some quarters worry about Europe’s sovereign debt crisis eroding customers’ buying confidence. MOMG, however, remains optimistic. “We’re a cost-plus business, oleochemicals are a necessity. It is present in household cleaning products, toiletries, cosmetics, industrial and pharmaceutical items we use everyday,” he said. “Overall, there’s customer base expansion from emerging markets,” Tan added.

Palm tocotrienols under scope

2011-11-29T10:05:00.000+08:00

Malaysia started testing the benefits of palm oil vitamin E on humans, as early as 11 years ago. As the medical fraternity finds more evidence of this potent antioxidant having life-saving attributes, the Malaysian government decided to pump more money into such trials. OOI TEE CHING interviews the lead researchers.

HERE'S an interesting fact about vitamin E. It comes from palm oil and its Western counterparts namely soya, canola and sunflower.

But it is the ones that come from soyaoil and canola, known as tocopherols, that are the most commonly available form of vitamin E in the market. The other half of the vitamin E family is tocotrienols that come from palm oil and they are now beginning to gain recognition as the superior sibling.

Medical evidence shows that tocotrienols possess unique biological characteristics that protect body cells from damage and death. More importantly, early evidence shows that they may possess the warrior-like ability to zealously hunt down and kill cancerous cells.

It is this life-saving prospects from degenerative diseases that prompted the Malaysian government to boost funding for palm oil vitamin E clinical trials.

Performance Management & Delivery Unit's (Pemandu) director of palm oil National Key Economic Area (NKEA) John Low said palm oil is rich in tocotrienols, with up to 800mg in one kilogramme.

"This makes palm tocotrienols ideal for medical research. We're allocating RM20 million to test the benefits of this super vitamin E on humans," said the senior executive from the Prime Minister's Department.

Low was speaking to Business Times on the sidelines of the RM20 million grant award ceremony officiated by the Plantation Industries and Commodities Minister Tan Sri Bernard Dompok.

The clinical trials, to be carried out in Malaysia, the US and Australia, will determine the effects of tocotrienols on adults facing high risks of stroke, cancer, diabetes and children suffering from attention deficit hyperactive disorder (ADHD).

One of the grant recipients is Chandan Sen, who is professor of surgery at the Ohio State University Medical Center.

For the first time in the US, Sen and his team will embark on human trials after having studied stroke prevention effects of tocotrienols, using animal and cellular models in the last 13 years. So far, the studies have shown that tocotrienols help recovery from stroke by inducing growth of new brain arteries that bypass stroke-affected areas.

Following these positive results, Sen will embark on a two-year trial, starting 2012 to study the effects of palm tocotrienols on 100 volunteers with high risk of contracting stroke.

At the recent Palm Oil International Congress (Pipoc 2011) held in Kuala Lumpur, Sen attracted a lot of attention when he said tocotrienols are the most potent of all known nutritional ingredients in protecting brain cells.

On the same note, he cautioned that smoking and vitamin E may not go well hand-in- hand. "It is this detrimental combination that we are excluding smokers from the tocotrienol clinical trial," he said.

With more than 250 publications under his name, Sen is cited more than 900 times a year in scientific literature, particularly in those related to stroke.

While he sees promising prospects in consuming tocotrienols to reduce the risk of stroke, Sen stresses that vitamin supplementation is not meant to be magic bullets that can undo a lifetime of unhealthy habits. >"When consumed properly with a balanced diet of fruits and vegetables, getting adequate exercise and not smoking, palm tocotrienols can play an important role in maintaining and promoting overall brain health," he says.

Sen's trials will source tocotrienols from Carotech Bhd, a subsidiary of Ipoh-based Hovid Bhd. Some of the volunteers under the trial will consume Carotech's self-emulsifying vitamin E softgel capsules named "Tocomin SupraBio", which are designed for optimal absorption into the body.

Another grant recipient is Dr Fong Chee Wai of Davos Life Science, Singapore. Together with Professor Y.C. Wong of Hong Kong University, they head a team of clinicians to find out if gamma-delta tocotrienols are able to prevent and delay the disease progression in men suffering from metastatic castration refractory prostate cancer (CRPC).

When a patient is diagnosed with CRPC, it is like being served a death sentence. "Current chemotherapy drugs such as Docetaxel have limited effects on prostate cancer stem cells, although they are currently the first-line drug given to patients with advanced prostate cancer," Wong says.

But there is hope on the horizon. Animal model studies have shown that gamma-delta tocotrienols can effectively inhibit CRPC growth by targeting both ordinary cancer cells and cancer stem cells.

"With such compelling results from the animal studies, we hope to see similar effects in delaying the progression of CRPC and prolonging survival in the upcoming human trials," the professor says.

The two-year trial will involve 50 prostate cancer patients at the Universiti Malaya Medical Centre and Kuala Lumpur General Hospital. Parallel trials at the Queensland University of Technology in Australia will also see participation of another 50 patients.

KLK's Q4 profits jump 48pc on asset sale

2011-11-24T09:44:00.003+08:00

This is written by my colleague Rupinder Singh.

KUALA Lumpur Kepong Bhd (KLK) says its fourth-quarter net profit jumped 48 per cent, due mainly to gains from an asset sale and it has bumped up dividends. The plantation group reported a net profit of RM460.6 million for the quarter to September 30 2011, up from RM311 million in the same period last year.

It also announced a dividend of 70 sen per share for the fourth quarter, bringing the total payout for the year to 85 sen. This is better than 60 sen a share paid out in 2010.

"The current quarter's results were boosted by the non-recurring surplus of RM200.6 million arising from the disposal of an associate, Esterol Sdn Bhd, while last year's quarter had a writeback of RM76 million on the allowance for diminution in value of investment," the company told Bursa Malaysia yesterday.

The group said it would be difficult to forecast its profit for the current financial year ending September 2012, given uncertainties in the global market and the effects of the eurozone debt crisis.

"We are, however, confident that our plantations business fundamentals remain sound based on our commitment to improve efficiencies and productivity. The group anticipates satisfactory returns for the current year," it said.

For the final quarter, KLK's plantation sector recorded a slightly lower profit of RM447.5 million from RM454.4 million in the third quarter, due to lower commodity prices.

Meanwhile, the manufacturing sector incurred a loss of RM49.3 million compared with a profit of RM95.5 million in the previous quarter due to the eurozone sovereign debt crisis and weak global macro economic environment.

Its retailing business reported a lower loss of RM2.8 million compared with a RM7.8 million loss in the previous quarter.

For the 12-month period, net profit was up 55 per cent to RM1.57 bilion with improved performance from its plantations and manufacturing divisions.

Its plantation profit jumped 42 per cent to RM1.6 billion, driven by strong selling prices of commodities which had overshadowed the impact of higher production cost, it said.

The manufacturing sector achieved a 40 per cent increase in profit to RM201.9 million despite the loss suffered in the fourth quarter. KLK said the manufacturing division had benefited from added capacities coming onstream as well as a relatively strong business environment in the earlier part of the year.

The group also attributed the improved last quarter to the sale of associates, Esterol and Barry Callebaut Malaysia Sdn Bhd, which generated a total surplus of RM244 million.

Assam Laksa for that extra kick

2011-11-23T22:18:00.002+08:00

Swimming is fun! To go faster, I need to have stronger pulls and kick off from the wall real hard.

A friend suggested I try out kick-boxing. It turns out that Muay Thai can be very draining. But, after a while, I actually feel better. Yay! Stronger bones.

The coach, however, says I need to take in more protein to help muscle repair. I looked back at him. He rolled his eyes to the sky and said, "Assam Laksa ... it is low in fat, high in protein and has moderate amount of complex carbohydrates. Remember, eat up your vege ... cucumber and pineapple are good for you."

My thoughts wandered back to that assam laksa meal I had with Mr Tan and Mr Sim at Penang Island early this year when we attended a conference organised by Incorporated Society of Planters. Strangely, at that time, Mr Sim also reminded me to eat up my vegetables.

ASSAM LAKSA

6 fish fillet (mackerels)
8 cups of water
5 pieces of assam keping (peeled tamarind)
Laksa noodles

Spice Paste:

15 dried red chilies
5 fresh red chilies
8 small shallots
1 inch galangal
2 tablespoons belacan (shrimp paste)
1 stalk lemon grass

Tamarind Juice:

a fistful of Tamarind paste and seeds
2 cups of water

Seasonings:

1 teaspoon salt or to taste
2 tablespoons sugar or to taste

Garnishing:

1 cucumber
1 bunch of mint leaves
1 bunch of polygonum leaves (daun kesom)
1 bunga kantan/torch ginger flower (cut into small pieces)
1 red onion
1 lettuce
1 red chilli
1 small pineapple (cut into short strips)

Condiment:

Heh Ko/Prawn Paste

Method:

1. Clean the fish, remove scales and guts. Bring 8 cups of water to boil. Add in the fish and boil for 10 minutes. Transfer the cooked fish out into a bowl and let it cool. Strain the fish stock, add in the peeled tamarind and polygonum leaves. Let it simmer.

2. Separate the fish fillet and discard the bones. Put the fillet back into the stock, cover the lid and lower the heat.

3. Use a food processor to grind the spice paste. Heat up the wok and saute the spice paste in palm cooking oil for 5 minutes or until it smells aromatic. Transfer the spice paste into the boiling stock.

4. Extract the tamarind juice and add into the stock. Strain the tamarind juice and keep the seed. Repeat many times with 1/2 cup of water each time to make sure you extract all the essence from the tamarind. For seasoning, add salt and sugar to taste.

5. In a serving bowl, add in the laksa noodles and garnish with vegetables and pineapple pieces. Pour the fish broth into the bowl and serve immediately with a spoonful of Heh Ko/prawn paste.

Serves 3.

Oil palm sector on alert of bud rot disease threat

2011-11-21T09:35:00.000+08:00

KUALA LUMPUR: Malaysia’s oil palm industry is on alert for the bud rot disease that has killed millions of trees in South America. The disease is estimated to have wiped out some 50,000ha of oil palm estates in South America, said planters from Colombia, the world’s fifth largest oil palm producer in the world.

Although no cure has yet to be found, Malaysian planters should not panic, said Dr Ahmad Kushairi Din, Malaysian Palm Oil Board (MPOB) deputy director-general.

“We’re taking proactive measures from prevention to control, should there be any contamination. Our stringent quarantine controls have always been in place,” he told Business Times on the sidelines of an international seminar held here last Friday.

Malaysia is the world’s second largest palm oil producer and exports from this industry is forecast to hit RM80 billion this year, its second straight record year. The country will soon be sending a team of agronomists to South America to study the disease.

Kushairi, who is also International Society For Oil Palm Breeders president, explained that the bud rot disease is caused by a microbe called phytophthora palmivora. “Based on our initial study carried out more than 10 years ago, we find that the bud rot disease can spread very quickly because this pathogen is able to swim in the water. It thrives in a very humid and cloudy environment,” he said.

MPOB has also signed a research agreement with Cenipalma, the research institute of the Colombian Palm Oil Growers Association.

Colombia, the oil palm hub in South America, has 350,000ha planted with oil palms. It is the fifth largest oil palm country in the world after Indonesia, Malaysia, Thailand and Nigeria.

Jorge Corredor, a Colombian oil palm smallholder attending the seminar, revealed the bud rot disease had wiped out all 3,200ha of his oil palm estates in just two years.

“We tried sanitation, it didn’t work. Even the replanted Dolly Partons we sourced from Malaysia died. Until today, we have not found the cure,” he said.

Malaysia’s oil palms are affectionately called Dolly Partons by planters because the trees are short and produce very big fruit bunches compared to the original palms brought in from West Africa, a hundred years ago. In the last 50 years, our agronomists have been marrying the Dura and Psifera palms (DXP) to get the Dolly Parton hybrids that bear voluptuous fruit bunches.

Corredor said the bud rot disease is not just in Colombia as it has spread to Panama, Suriname, Brazil and Ecuador. "So many of our mills have closed down and many people have lost their jobs. My country and your country is situated along the tropical belt of the globe, we share the same weather. I'm telling you, this bud rot disease is a serious threat."

"I have nothing to gain from talking about what has happened to the oil palm industry in my country. This is something I would not wish upon planters in other countries. This is potentially a global problem," Corredor said. He thinks that the world could face a shortage of cooking oil if the disease finds it way to Southeast Asia.

KLK eyes more plantations overseas

2011-11-19T10:13:00.002+08:00

KUALA LUMPUR: Top 20 heavyweight Kuala Lumpur Kepong Bhd (KLK) is exploring opportunities overseas to grow its oil palm and rubber plantation landbank to 300,000 hectares from over 250,000, currently. Chief executive officer Tan Sri Lee Oi Hian said the company is looking at Africa, South America and southeast Asian countries where it has yet to set foot in.

“Internal studies have been done. Currently, we are evaluating them,” he told a media briefing here yesterday. Lee said KLK has not set any time frame and is waiting for the right time to make further moves.

The company has also set a target to increase its fresh fruit bunch (FFB) production by 8 to 10 per cent of the current 3.3 million tonnes, over the next two years.

This could be achieved based on the age profiles of its existing plantations, the increase in harvested areas and improved productivity through good agricultural practices, he said. To support the growth in FFB production, Lee said, the company plans to build another palm oil mill in East Kalimantan, Indonesia, on top of the three new mills currently under construction. To date, the company has eight palm oil mills in Indonesia.

On the oleochemical division, Lee said KLK has set aside around RM700 million to build oleochemical facilities, including another fatty alcohol plant and research and development facilities, in Malaysia. These are expected to be ready in two years, he added.

He said KLK's team of engineers and chemists are formulating a comprehensive product portfolio to take advantage of the rising global demand for oleochemicals. “Malaysia is still a small market for oleochemicals. The key users are overseas and so, it’ll be export-driven,” he said. Currently, the oleochemicals division contribute to 17 per cent of the group’s profits.

On the properties division, KLK planned to have four to five launches in the next eight months within the Sungai Buloh area, he said. --Bernama

IOI Q1 profit falls 48pc to RM258.1m

2011-11-19T09:28:00.002+08:00

Kuala Lumpur: IOI Corp Bhd's first quarter profit ended September 30 plunged 48 per cent to RM258.10 million, despite its plantation business doing better from a year ago.

In its filing to the stock exchange yesterday, IOI explained the lower profit was due mainly to paper loss in foreign exchange contracts and borrowings amounting to RM271.7 million. It also saw lower earnings from its oleochemicals, specialty fats and property development businesses.

IOI's plantation segment profit jumped 56 per cent to RM557.1 million from RM356.4 million, thanks to 11 per cent more harvest of fresh fruit bunches at higher palm oil prices.

Average palm oil price realised in the quarter was RM3,149 per tonne, 21 per cent more than RM2,598 per tonne recorded a year ago.

The group's oleochemical and specialty fats operations, however, saw lower profits of RM33.2 million on slower sales at lower margins. Nevertheless, the group intends to move further downstream. In the next two years, it is investing RM130 million to build a new fatty ester and specialty oleo derivative plant with a capacity of 20,000 tonnes per year, at its Prai Industrial Complex in Penang.

During the quarter, profits from property sales only amounted to RM116.6 million, 31 per cent less than RM168.2 million a year ago.

On its outlook for the current year ending June 2012, IOI said the global economic growth is showing signs of a slowdown. "Though challenging, we remain optimistic on strong plantation earnings," it added.

Apply for ISPO cert from Jan 2012

2011-11-18T10:54:00.001+08:00

KUALA LUMPUR: Malaysian oil palm planters in Indonesia, whose estates are mandated to be certified under the Indonesia Sustainable Palm Oil (ISPO), can start applying from January 2012.

"This year, we've been busy laying down the legal mechanisms for ISPO. Next year, we'll start enforcing the ISPO," said Indonesia Palm Oil Commission chairman Rosediana Suharto.

The ISPO reflects compliance with all existing laws of four ministries namely; Ministry of Agriculture, State Ministry for the Environment, the Minstry of Forestry and the National Land Agency.

"The ISPO is meant to streamline the enforcement channels of various government agencies," Rosediana told Business Times at the sidelines of the Palm Oil International Congress (Pipoc 2011) here yesterday. Rosediana said oil palm planters have until end-2014 to fully comply with the ISPO.

Currently, a number of oil palm plantations in Indonesia hold certifications from the Roundtable on Sustainable Palm Oil (RSPO). Malaysian firms, of which estates are RSPO-certified, do not automatically qualify for ISPO but "they will be given due consideration and accorded flexibility".

The RSPO was initially hailed as a forum where stakeholders of diverse interests are considered as equal partners. Somehow, over the years, the roundtable of equal duties and rights became lop-sided. The RSPO has tipped in favour of environmental and animal rights activists.

Western green activists and their affiliates in Indonesia reportedly argue that "the ISPO is of lower standards than RSPO" and questioned whether it will be internationally accepted.

In response, Rosediana said, "The word 'sustainable' does not belong to any one organisation. The interpretation of the word 'sustainable' is not confined to that dictated by RSPO. We're doing this for our country. We're doing this for our environment. Unlike some organisations, we're not doing this for money. There's no membership fees and we'll ensure that the auditors comply with government regulations."

More funds for palm oil vitamin E clinical trials

2011-11-17T09:30:00.001+08:00

KUALA LUMPUR: The government has more than doubled funding to test the benefits of palm oil derived vitamin E on humans.

Starting next year, the government, via Malaysian Palm Oil Board, will work together with teams of doctors in Malaysia, Singapore, the US and Australia to find out the effectiveness of palm oil vitamin E in preventing degenerative diseases.

"The human trials are going to cost us RM20 million. Six principal investigators will determine the effects of tocotrienols on stroke, cancer, diabetes and children who suffer from attention deficit hyperactive disorder (ADHD)," said Plantation Industries and Commodities Minister Tan Sri Bernard Dompok.

Most people think vitamin E only comes in a single form, but there are actually eight -- four tocopherols and four tocotrienols. Over the last 30 years, scientific studies have shown that tocotrienols, is a far more potent antioxidant than tocopherols.

Tocopherols are sourced from oilseeds such as soya oil, canola and sunflower, while tocotrienols are only available in high concentration in palm oil and rice bran oil.

Tocotrienols are able to help in body cell regeneration and more importantly, it can seek and kill cancerous cells. It is these unique biological activities in tocotrienols that show a promising future in finding cures for degenerative diseases like stroke and cancer.

"Although we're the biggest tocotrienol producer and exporter in the world, we need to carry out more scientific studies to gain a deeper understanding of the health benefits of this super vitamin E," Dompok said. A kilogramme of palm oil vitamin E sells for US$500 (RM1,585). Every year, Malaysia exports some RM50 million worth of palm oil health supplements, mainly to Europe, the US, Canada and Japan.

"This shortlisting of six principal investigators for these clinical trials took considerable time as we needed to be thorough and stringent. We want these trials to produce health supplements that will be approved by the US Food and Drug Administration and the European Medicines Agency," the minister told reporters in a press conference held in conjunction to Palm Oil International Congress (Pipoc 2011) here yesterday.

This funding boost for usage of tocotrienols in human trials is part of The Performance Management & Delivery Unit's (Pemandu) drive to expedite value addition of the palm oil downstream activities.

The recipients of the RM20 million fund are Professor Bharat B. Aggarwal of Anderson Cancer Centre in the US, Professor Chandan Sen of Ohio State University in the US, Dr Fong Chee Wai of Davos Life Science, Professor Yip Cheng Har of Universiti Malaya Medical Centre, Professor Yuen Kah Hay of Universiti Sains Malaysia and Dr Tan May Loong of Penang Medical College.

Palm oil exports set to hit all-time high of RM80b

2011-11-16T09:47:00.002+08:00

KUALA LUMPUR: Malaysia's palm oil exports for this year is set to hit an all-time record of RM80 billion, thanks to higher average palm oil prices and sustained demand for the edible oil from emerging economies.

In the first 10 months, the Malaysian Palm Oil Board (MPOB) reported that the country had shipped out RM66.78 billion worth of palm oil products. "This was buoyed by crude palm oil (CPO) price averaging above RM3,000 per tonne," MPOB chairman Datuk Seri Shahrir Samad said.

The current record was achieved in 2008 when palm oil shipment topped RM65 billion. CPO price averaged at RM2,800 per tonne then.

Malaysia's biggest palm oil client is China. During his second official visit to Malaysia in April 2011, China Premier Wen Jiabao promised Prime Minister Datuk Seri Najib Razak that his country will continue to buy big quantities of Malaysian palm oil. As the largest vegetable oil consumer in the world, China makes up 15 per cent of global palm oil consumption. Palm oil is the second most consumed there, after soyaoil.

In the last few years, Shahrir noted that China has started to import more soyabeans instead of soyaoil. This is because the Chinese government wants more crushing activities domestically and more soya meal to feed its pig, cattle, dairy and poultry farms. "Although we see this situation prevailing, we're not too worried. China has a big appetite for palm oil," he said.

Shahrir was speaking to reporters after the opening of the Palm Oil International Congress (Pipoc 2011) by Plantation Industry and Commodities Minister Tan Sri Bernard Dompok here yesterday.

In the first 10 months of this year, China bought 3.34 million tonnes of palm oil, about 13.5 per cent more than the same period last year.

"Also, India has bought 1.35 million tonnes, 33.6 per cent more from the same 10 months of last year," Shahrir added.

With economic activity in the US still flat-lining, Christine Lagarde, head of the International Monetary Fund, last week warned that Europe's debt crisis risked plunging the global economy into a "lost decade". Despite such gloomy global economic prospects, Dompok remains hopeful that Malaysia's commodity exports like palm oil and rubber will continue to help spur our nation's economy to expand by a further 6 per cent, as estimated by Bank Negara.

On another matter, all licensed seed producers have announced that starting 2012, they will raise the price of oil palm seeds by 30 per cent to RM2.35 each from the current RM1.85. They attributed the price hike to burgeoning labour cost.

Since September 2011, oil palm plantation firms have been paying a minimum wage of RM650 per month to plantation workers, with an additional productivity-linked RM200 incentive. It is estimated that this 10 per cent wage hike for employees is costing the industry an additional RM300 million per year. The arrears of wages and ex-gratia payment translate into an additional RM364 million.

On the whole, the implementation of the new wage and extra remuneration is inflating oil palm planting and palm oil production costs in Malaysia.

The Home Ministry, too, has increased overall foreign worker levy by RM50, meaning employers in the plantation industry need to pay a higher levy of RM590 per worker.

In view of these inflationary pressures on the oil palm industry, Dompok was asked if the government is looking to raise the replanting budget for smallholders. He said: "I think, for the time-being, RM7,000 per hectare will suffice."

Early this year, the government had estimated that from 2011 to 2013, some RM3 billion would go to smallholders to replant 375,000 hectares. There are 161,000 independent smallholders in Malaysia. With 600,000 hectares, they account for 12.8 per cent of the country's planted area.

Independent smallholders with 40 hectares or less are entitled to a one-off replanting payment of RM7,000 per hectare. In addition, monthly payments of RM500, for two years, will be accorded to each household that solely depends on oil palm planting.

New heavyweight landscape on Bursa Malaysia

2011-11-12T20:49:00.001+08:00

This is written by my editor.

Over the last 10 years, the landscape of Malaysia's biggest companies has changed significantly. Looking at the top 10 list, we now have much bigger companies. In terms of total size, the heavyweights have almost tripled their value to nearly RM450 billion.

There are other interesting observations. Investors appear to have more love for businesses like banking and there are new players like Petronas Chemicals Holdings Bhd. Here are the main features and what they probably mean.

1. THE LEADER IS NOW MAYBANK. Ten years ago, Telekom Malaysia Bhd (TM) was the most valuable company, but today it is Malayan Banking Bhd with a market value of almost RM62 billion.

It has tripled its worth over the period. Its pole position reflects a regional expansion strategy that continues paying dividends.

What is more interesting is that the former leader is out of the top 10 and is now ranked 22nd. The main reason for this is the fact that the growing mobile telecommunications business was spun off under Axiata Group Bhd, leaving TM with the fixed-line and Internet service operations. Its offspring, Axiata, is ranked sixth.

2. IT'S NOT YOU, IT'S ME. Investors are loving banks today and breaking up with utilities like TM and Tenaga Nasional Bhd (TNB). The passion for banking could be down to economic growth in Malaysia and Southeast Asia as lenders are seen as proxies to economies. The young population of Southeast Asian countries also means that more aspiring young professionals will borrow to buy cars and homes.

TM's decline has been explained above and as for TNB, it needs to have more certainty over power prices that are controlled by the government.

3. MONEY DOES GROW ON TREES.

They may talk and sing to their oil palm trees, but if that means creating valuable businesses, investors are glad to pay for their stocks.

IOI Corp Bhd and Sime Darby Bhd are in the top 10 today, thanks to growing demand for cooking oil and soap, among others. Erratic weather patterns mean that supply disruptions could be a regular feature, keeping palm oil prices high.

What's more as another big planter, Felda Global Ventures, will make its debut on the stock market next year and it seems unfazed by the spectre of a recession in 2012.

4. THE NEW KIDS ON THE BLOCK ARE NOT KIDS. Half of the top 10 list have changed. Gone are names like British American Tobacco and MISC and we now have companies like Axiata and Maxis. The new names are worthy heavyweights, reflecting investors' appetite for growth in mobile telecoms, petrochemicals and plantations.

While technology can be disruptive to companies like TM, it is also a boon to mobile operators with a regional footprint and vision to adapt to the changing needs of the modern consumer.

5. ENTREPRENEURS CREATE A LOT OF VALUE. There are four companies that are not government-linked in the new top 10 list compared with three some 10 years ago. What this means is that we do have world-class entrepreneurs running companies that can stack up against GLCs. They have created much value over the last 10 years.

IOI Corp for instance, has seen its market value surge a massive 15 times to RM32 billion. Gaming and power group Genting Bhd's market value is up six times to almost RM40 billion.

Ex-servicemen get fruitful return from golden crop

2011-11-07T08:45:00.006+08:00

IJOK, Selangor: Did you know that for every oil palm seed sold by Applied Agricultural Resources Sdn Bhd (AAR), half of the profits go to soldier pensioners?

"We jointly own AAR with Kuala Lumpur Kepong Bhd (KLK). It has been 25 years and we're very happy with our marriage," said Boustead Holdings Bhd deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin.

Boustead is the flagship investment arm of the Armed Forces Pension Fund or Lembaga Tabung Angkatan Tentera (LTAT).

"AAR is a synergistic and profitable partnership with KLK that is working well for us. We wouldn't want it any other way. The team at AAR are doing a good job," he told Business Times in an interview here.

Since 1982, Lodin has helmed LTAT. More than a decade later, when the military pension fund took control of Boustead, he was also entrusted with the same duty to reap decent returns for shareholders.

Boustead makes an annual profit of between RM450 million and RM700 million.

Out of its six core businesses, plantation is the biggest earnings contributor, followed by shipbuilding and property development. Boustead has a total plantation landbank of some 100,000 hectares, of which three quarters is planted with oil palms while the remainder is still greenfields.

One of the contributing factors to Boustead earning big money from oil palm planting is the supply of high-yielding hybrid seeds, meticulously bred and cloned by AAR scientists.

Malaysia is in the forefront of oil palm breeding. Through research and development, seed producers in the country are able to increase yield and improve disease resistance. Since 1986, AAR has been one of the 10 licensed seed producers in the country, contributing to the replanting of unproductive trees so as to raise the national oil palm yield.

According to Malaysian Palm Oil Board, some 45 million germinated seeds have already been planted by farmers in the first eight months of this year. Most of the replanting of old trees have been carried out in Sabah and Peninsular Malaysia while new plantings are undertaken in Sarawak.

What separates AAR from its bigger and financially stronger rivals - like Felda Agricultural Services Sdn Bhd and Sime Darby Seeds & Agricultural Services Sdn Bhd - are its super-oily fruits and smaller-sized oil palm trees that allow for high-density planting.

Lodin introduced AAR's very high oil yielding semi-clonal hybrid called "AA Hybrida 1S". Compared with the industry standard, the dwarf-like AA Hybrida 1S has more, albeit smaller, fruit bunches.

"One of the problems of big bunches is that the inner fruitlets do not have space to develop fully. In smaller bunches, however, the inner fruitlets have a greater chance to develop and ripen more evenly. Therefore, for the same weight, smaller bunches yield more oil," he said, adding that the AA Hybrida 1S is 'the cream of the cream' and can yield 20 per cent more oil than the previous generation of oil palm hybrids.

AAR scientists are able to produce such good results because they adopt the semi-clonal strategy to step up seed production while maintaining key qualities like the dwarf stature of the tree and high oil yield in the fruit bunches.

At the tissue culture laboratory, these scientists carry out cloning where shoots of the chosen oil palm trees are spliced, cultured and grown in test tubes. These shoots grow up to be identical to the 'parent' tree.

"Over the years, we have invested heavily in oil palm breeding and cloning. This has enabled us to improve the seeds for higher yields," Lodin said. "Our semi-clonal seed production technology ensures clients get consistent quality in every seed they buy from AAR."

As the world's largest oil palm tissue culture laboratory, the facility at Tuan Mee estate is able to produce 1.5 million clonal palms in a year.

Lodin went on to explain that at prime fruit bearing age, the AA Hybrida 1S, planted in fertile soil and showered with consistent rainfall, is capable of producing more than 35 tonnes of fresh fruit bunches with 23 per cent oil extraction rate. That works out to be about nine tonnes of oil per hectare in a year or more than two times higher than the country's average yield.

Another compelling feature of the AA Hybrida 1S is its dwarf stature, which allows for higher density planting. "Clients who buy our seeds can plant up 148 trees in one hectare compared with the current standard of 136. That'll translate to about 10 per cent more oil per hectare," he said.

Just like many are not aware of the extra edge that AAR's seeds offer, there is still not much publicity of the fact that LTAT has consistently outperformed other government-linked funds, such as the Employees Provident Fund.

Over the last 38 years, LTAT has paid out annual dividends at an impressive rate of 10.5 per cent. In the last 10 years, the payout ratio to soldier pensioners averaged at more than 13 per cent. "I'm driven to unlock value in our assets to bring about good returns. That is what I monitor very closely," said the humble fund manager.

"We strive to do our best for 'the soldier boys'. As custodian of their pensions, it is our duty to bring in the best return for their money," Lodin said. Without missing a beat, he expressed gratitude and good fortune of having capable, dedicated and loyal lieutenants who make his job easier.

Plan to woo more China investments

2011-11-04T10:48:00.001+08:00

SERI KEMBANGAN, Selangor: Malaysia is committed to attracting more investments from China, Deputy Prime Minister Tan Sri Muhyiddin Mohd Yassin says.

Currently, for every US dollar (RM3.15) pledged to Malaysia's economy, Malaysian businessmen pump in US$12 (RM37.80) into the middle kingdom's economy. "I would like to see the narrowing of investment gap in the years to come," Muhyiddin said.

According to the Statistics Department, Malaysia has nearly US$6 billion ( RM18.9 billion) worth of investments in China in the first eight months of 2011, while China has invested only about US$500 million (RM1.6 billion) in Malaysia.

Minister of International Trade and Industry Datuk Seri Mustapa Mohamed, meanwhile, said: "We will organise more trade missions to China, at least twice a year, to woo businesses in different provinces to invest in Malaysia," said Minister of International Trade and Industry (MITI) Datuk Seri Mustapa Mohamed.

He said a Malaysia-China Economic Cooperation Working Group has been set up to identify bilateral cooperation projects in nine areas including halal, industrial park, tourism, wholesale and retail. The group, made up of senior government officials from both countries, will draw up a five-year development programme by mid-2012, Mustapa said.

Both Muhyiddin and Mustapa were speaking at the third edition of the World Chinese Economic Forum here yesterday.

The deputy prime minister acknowledged that China is Malaysia's biggest export market, while Malaysia is China's largest trading partner in Asean.

"During China Premier Wen Jiabao's visit to Malaysia in April 2011, our leaders spoke of strengthening trade ties," he said.

By 2015, Muhyiddin expects trade between Malaysia and China to double and surpass US$100 billion (RM315 billion).

One of Malaysia's significant exports to China is palm oil, which is mainly refined into cooking oil for everyday use. During his second official visit to Malaysia then, Wen promised Prime Minister Datuk Seri Najib Razak that China will continue to buy big quantities of Malaysian palm oil.

In the first nine months of this year, China bought 2.95 million tonnes of palm oil, 9 per cent more than the same period last year.

Two weeks ago, at the China-Asean Expo held in the southern city of Nanning, Najib met up with Wen again. Both leaders pledged warmer trade ties. One of the significant joint projects included the establishment of the Malaysia-China Qinzhou Industrial Park.

KLK is Asean's No.1 paint binders supplier

2011-10-31T10:11:00.003+08:00

KUALA LUMPUR: Kuala Lumpur Kepong Bhd, the biggest shareholder in London Stock Exchange-listed Yule Catto & Co plc, has set its sights to become Asia's biggest paint binders supplier in the mid-term.

It is now southeast Asia's largest supplier of paint binders, following the British firm's £10 million (RM49.4 million) purchase of Quality Polymer Sdn Bhd from Nippon Paint Malaysia. Quality Polymer is now placed under Yule Catto's 70 per cent unit Revertex Malaysia Sdn Bhd. Yule Catto is also the owner of the Synthomer Group, of which Revertex is a key part.

Paint is essentially made up of pigments, binders and solvents. A pigment gives the paint its colour and is mixed into a solvent. The binder, which form the bulk of the paint, binds the pigment to the solvent to form a very thick liquid so that it can properly coat a surface.

In an interview with Business Times here, Synthomer Asia managing director Dr Brendan Catlow said: "The Quality Polymer purchase is just the beginning of our plans to expand across Asia.

"We aim to have more than 50 per cent of our sales from emerging markets by 2015. The only way to achieve this target is via major investments and acquisitions," he said.

On the size of Synthomer's war chest, Catlow declined to specify but said: "We have a very strong balance sheet."

On details of the recently-concluded Quality Polymer purchase, Catlow said: "We've been in talks with Nippon Paint for over a year before we finally agreed on the price. This acquisition is all about growth, not cost reduction. There's no voluntary separation scheme." Quality Polymer, which employs 30 staff at its Pasir Gudang factory in Johor, chalks up an annual sales of some £10 million.

With the addition of Quality Polymer's 15,000-tonne facility, Catlow said Synthomer's paint binders capacity in Asia now totals over 65,000 tonnes a year. "Our binders are used in eight of top 10 global paint brands. In view of the increasing demand for paint binders in southeast Asia, we're planning to set aside more investments to raise capacity at the Pasir Gudang facility. This will be carried out next year," he said.

According to the World Paint & Coatings Industry Association, the 10 most popular paint brands are AkzoNobel, PPG Industries Inc, Sherwin-Williams Co, DuPont Coatings & Color Technologies Group, ICI Paints, BASF Coatings AG, RPM International Inc, SigmaKalon Group BV, SACAL, Valspar Corp, and Nippon Paint Co.

Synthomer is not a newcomer to Malaysia, having been in business here for 75 years.

Apart from making paint binders, it is also the world's number one supplier of nitrile latex, catering to the needs of the top 10 rubber glovemakers in southeast Asia.

Describing Synthomer's business, Catlow said: "Our polymers are used in a wide range of industries to create and enhance everyday consumer products. "Whether you're reading a book, opening a pack of breakfast cereals, painting your kitchen, labelling an envelope, laying a carpet, tiling a bathroom, using hairspray or simply driving your car, you could be using a product that has been improved by our scientists," he added.

Labelling bill unfair, Aussies told

2011-10-30T08:41:00.001+08:00

This is written by my colleague Roy See Wei Zhi.

KUALA LUMPUR: The Food Standards Amendment (Truth in Labelling -- Palm Oil) Bill 2010, if passed by the Australian House of Representatives, would undermine the country's palm oil exports to Australia -- a central pillar of the Malaysian economy.

Malaysian Palm Oil Council (MPOC) chief executive officer Tan Sri Dr Yusof Basiron testified at the Australian House Standing Committee on Economics, highlighting the importance of the industry to the Malaysian economy and how the bill would have detrimental effect on various sectors if passed.

In August, Yusof said the bill directly targeted the Malaysian palm oil industry, which would affect almost 100 per cent of all palm oil products exported to Australia. Incidentally, these exports account for 9.3 per cent of Malaysia's gross domestic product.

The bill had also previously been expanded to non-food palm oil products, which meant that it was no longer a "food labelling" bill. Yusof said the bill was discriminatory because it singled out palm oil and not other vegetable-based oils.

The discrimination would directly affect the livelihood of almost one million Malaysians who were involved in the growing, harvesting, packing and logistics of palm oil products.

Yusof argued that the singling of Malaysian palm oil products from other food products also violated several principles of the World Trade Organisation as well as terms of the Asean-Australia-New Zealand free trade agreement.

The bill would undo the efforts taken over many years to bring Australian and Malaysian trade relations and bilateral ties closer.

Yusof said the bill would also have adverse effects on Australian consumers as there were costs associated with the label changing exercise, estimated at between A$5,000 (RM15,000) and A$15,000 per product.

The products affected in the Australian market by the label change are numbered in the thousands.

Yusof said claims by environmental groups that the oil palm industry had a huge negative impact on the natural environment were without basis.

The bill was the work of environmental non-governmental organisations with the aim of gaining a monopoly on the palm oil supply chain by promoting their own certification scheme for "sustainable" palm oil.

Also, claims by Australian forest conservation groups that Malaysia had been practising rampant deforestation for oil palm plantations were hypocritical and unsubstantiated.

Ironically, the United Nations' Food and Agricultural Organisation reported that Australia's rate of deforestation was at a rate five times greater than Malaysia.

Concluding his presentation, Yusof said the labelling exercise which discouraged palm oil product consumption would undermine conservation efforts in Malaysia, such as the Malaysian Palm Oil Wildlife Conservation Fund, as it supported the enforcement of environmental laws, wildlife sanctuaries and reserves.

The full report can be accessed at www.theoilpalm.org, an online resource initiative by the MPOC.

Najib hails Canberra move

2011-10-28T11:42:00.001+08:00

This is written by my editor Datuk Nuraina Samad, who is reporting from Perth, Australia.

MALAYSIA has welcomed the decision by the Australian government not to support a legislative proposal for the compulsory labelling of Malaysian palm oil.

Prime Minister Datuk Seri Najib Razak said yesterday this was a decision that “extremely pleases” Malaysia, in particular the palm oil industry.

“I have expressed my thanks to Prime Minister Julia Gillard for this,” he told Malaysian journalists after delivering his keynote address, “Building Infrastructure for the 21st Century” at the Commonwealth Business Forum at the Burswood Entertainment Complex.

Najib, who is here for the four-day Commonwealth Heads of Government Meeting, had earlier in the morning held bilateral talks with Gillard.

It was reported that Gillard’s government would oppose the bill, which was deemed to be in violation of the country’s obligation to the World Trade Organisation. The bill, however, has the support of the Liberal-National party coalition.

The prime minister said the Free Trade Agreement talks with Australia were ongoing and expected to be concluded next March. “This is a big plus for us. That is why it is important to have cooperative arrangement because it spills over into other sectors as well and is positive in terms of assisting them in terms of goodwill between two gover nments.” The bill requires new labels on food products containing palm oil to identify the ingredients and carry a certification attesting to environmentally sustainable practices.

Malaysia has presented a strong case against the bill called the Food Standards Amendment (Truth in Labelling - Palm Oil) Bill 2010, arguing that it is in violation of WTO provisions.

The Australian Senate passed the bill in June, but before the Lower House of the Australian Parliament’s debate, there will be a hearing at the committee level.

Malaysian Palm Oil Council chief executive officer Tan Sri Dr Yusof Basiron said such compulsory labelling of palm oil would affect the imports of food products and was a discriminatory use of the labelling law against the interests of palm oil.

Bilateral trade last year was valued at US$10.63 billion (RM32.31 billion), with exports valued at US$7.46 billion (RM22.67 billion), while imports from Australia were valued at US$3.17 billion (RM9.63 billion). Australia is Malaysia’s 11th largest trading partner. It is also Malaysia’s eighth largest export destination and 12th largest import source.

Najib, who was accompanied by his wife, Datin Seri Rosmah Mansor, would join 52 world leaders at the opening of the biennial meeting by Queen Elizabeth II at the Perth Convention and Exhibition Centre.

IOI maintains stand on deal turned sour

2011-10-28T11:17:00.000+08:00

This is written by my colleague June Ramlee.

KUALA LUMPUR: IOI Corp Bhd, which stands to lose an RM83 million deposit to Dutaland Bhd from a deal turned sour, yesterday insisted that the latter had breached their sale and purchase agreement.

Dutaland, however, maintained that it had not acted in breach of the agreement relating to a piece of plantation land.

IOI previously announced that it had terminated the agreement to buy 11,977.91ha of oil palm plantation land in Sabah from Dutaland for RM830 million. IOI then said the cancellation was "due to non-compliance of certain terms and conditions".

On July 28, 2011, IOI's unit Sri Mayvin Plantation Sdn Bhd had signed the deal with Dutaland's unit Pertama Land and Development Sdn Bhd. Yesterday in a filing to Bursa Malaysia, IOI maintained that Dutaland, among others, had failed to continue upkeeping and maintaining the properties. It also claimed that there were discrepancies in the particulars relating to the properties, and that Sri Mayvin had communicated the alleged breaches to Pertama Land.

Dutaland, in its latest filing to the stock exchange, said Pertama Land had consistently maintained that it was not in breach of the agreement as alleged. There had also "been non-compliance on the part of Pertama Land under the agreement as alleged or at all by Sri Mayvin", it added.

Meanwhile, analysts said there will be a minimal impact on IOI's overall earnings if it loses its RM83 million deposit from the deal inked with Dutaland Bhd a few months ago. This is because IOI is a cash-rich company with profits of close to RM2 billion to RM3 billion a year.

Losing the RM83 million deposit on that deal would not make a big difference as the potential loss will only lower its earnings by three to four per cent, said several analysts when contacted by the Business Times yesterday.

"It's too early to say (if the deposit will not be returned) but if they can prove that it is non-compliance, then they should be able to get their money back. But if they lose their deposit, then there would be minimal impact on the company as it makes RM2 billion in profits in a year, so it won't hurt much," said one analyst.

It will not be the first time IOI will lose its deposit. In 2008, the company had forfeited its deposit of RM73.4 million after it walked away from buying Menara Citibank.

Analysts, however, said the Citibank and the Dutaland deals cannot be equated, given that the company had decided to walk away from the former deal.

Dutaland earlier said it was seeking legal advice and had notified OSK Trustees Bhd not to remit to Sri Mayvin the deposit of RM83 million being the 10 per cent deposit paid by Sri Mayvin under the agreement and any interest accrued.

Millers turn greenhouse gas to green energy

2011-10-24T10:08:00.002+08:00

Sludge ponds emit greenhouse gases like methane after palm oil is extracted from fresh fruit bunches at the mills. OOI TEE CHING tells how palm oil millers capture this gas and turn it into clean energy by investing in biogas plants. These anaerobic digesters behave like our intestines, containing friendly bacteria that feed on organic matter to produce flammable gas and solid waste.

PALM oil millers in Malaysia are leading the way in "greening" the palm oil supply chain by capturing greenhouse gas before it enters the atmosphere and turning it into green energy and organic fertiliser.

Under the Palm Oil National Key Economic Area of the Economic Transformation Programme (ETP), the country is targeting 500 biogas plants by 2020. This initiative is expected to generate about RM2.9 billion in gross national income and create 2,000 jobs by 2020.

Malaysia's growing green jobs sector is vital in our ability to create jobs and compete globally in the new economy. By leveraging on home-grown green technologies, millers trap methane from the sludge and channel it to gas engines to generate electricity.

The government encourages the oil palm industry to operate more sustainably. Since January 2010, the Ministry of Energy, Green Technology and Water has pledged to facilitate RM1.5 billion worth of cheap loans via local banks for the provision and use of green technologies.

With these incentives, the Malaysian Palm Oil Board's engineering and processing research division director, Dr Lim Weng Soon, is confident that the country is on track to achieve the target. "There are currently 46 biogas plants in operation, 22 under construction and a further 46 in planning stage."

In a recent media visit to United Plantations Bhd's estate in Jendarata, Perak, vice-chairman/executive director (corporate affairs) Datuk Carl Bek-Nielsen said the benefits of this waste-to-energy project is extensive and varied.

Since the sludge is converted into biogas and fertiliser, there is no chance of it entering water bodies and polluting them.

While the organic fertiliser is ploughed back into the fields, greenhouse gas extracted from the biogas plants is fed into a combined steam and power plant at the mill to generate electricity for the surrounding community in this estate.

Bek-Nielsen said when biogas plants are being used to generate electricity for the estate's own use, leftover biomass from the mills can now be sold as solid fuel to others in the manufacturing sector for as high as RM180 a tonne.

Indeed, such waste-to-energy projects are gaining momentum among palm oil millers because the projects are not only kind to the environment, but also easy on the wallet. "It's also about economic motivation," Bek-Nielsen said. "While everyone wants to do the right thing, there need to be an extra incentive on top of the motivation of putting up plants that emit less pollution."

"Currently, we have three biogas plants in the country and they help a lot in terms of cost-savings. Although we've invested RM20 million to set up three biogas plants, the impact that we receive is really worth it. We've been able to reduce our annual fossil fuel usage by 25 per cent," he added.

KL-Jakarta talks to include CPO tax waiver

2011-10-20T17:27:00.000+08:00

KUALA LUMPUR: Prime Minister Datuk Seri Najib Razak and Indonesian President Susilo Bambang Yudhoyono are expected to discuss the waiver of crude palm oil (CPO) taxes in both countries.

If both leaders were to agree to this proposal during their bilateral meeting in Lombok, Bali today, oil palm planters in Malaysia and Indonesia, particularly some six million smallholders, will benefit from higher palm oil prices.

Current high CPO taxes in Malaysia and Indonesia have caused refiners to slash prices in order to compete, and this, in turn, has lowered the CPO prices.

Since February, the global benchmark pricing for palm oil on Bursa Malaysia's Derivatives Market has dropped by more than 25 per cent. Yesterday, the third month palm oil futures closed at RM2,892 per tonne.

"The leaders will deliberate on the proposal to lift the high CPO taxes on both sides. It is on the agenda," a reliable source told Business Times. Oil palm planters in Malaysia and Indonesia supply more than 85 per cent of the world's palm oil. "There are about 1.5 million smallholders in Malaysia and triple that in Indonesia. If the CPO taxes are lifted, higher prices will make many planters happy," the source said.

The scheduled talks between the two leaders is a follow-up to the 11th Joint Commission for Bilateral Cooperation meeting between Malaysia and Indonesia in Kuala Lumpur last week.

Malaysia is the world's second largest palm oil producer, harvesting about 17 million tonnes of CPO a year. This, however, is not enough to feed some 20 refineries here. As a result, they need to import a large amount of CPO from Indonesia. But with the high CPO taxes, supply from Indonesia has become limited and expensive for Malaysian refineries.

Palm Oil Refiners Association of Malaysia chief executive officer Mohammad Jaaffar Ahmad reportedly said high CPO taxes had been detrimental to Malaysian refiners but benefitting refiners in Indonesia, with a price advantage of between US$72 and US$129 (RM223.6 and RM400) per tonne for processed palm oil exports.

He also highlighted that since 2008, Malaysia's annual refining capacity has dropped by almost 300,000 tonnes.

When contacted, the Indonesian Palm Oil Producers Association or Gabungan Pengusaha Kelapa Sawit Indonesia (Gapki) said it is re-iterating its call to the Indonesian government to revise the CPO export tax.

"The progressive tax is hurting producers and reducing competitiveness. Smallholders have no incentive to invest in the replanting and maintenance of their oil palm estates. We want the government to re-evaluate the ruling," said Gapki executive director Fadhil Hasan.

"We have been paying very high taxes whenever there was an increase in international palm oil prices," he told Business Times.

Currently, the Indonesian CPO export tax is set at 22.5 per cent while the maximum export tax on refined, bleached and deodorised palm oil is capped at 13 per cent.

Despite the Indonesian government justifying the high CPO export tax as to encourage the development of palm oil processing industry in the country, the reality is far from that. Fadhil noted that the significant tax gap between CPO and its derivative products seemed to be incentivising rampant smuggling of CPO.

Renewable energy tariff bidding from Dec

2011-10-18T09:50:00.001+08:00

KUALA LUMPUR: Renewable energy (RE) producers will not automatically receive payment under the feed-in tariff (FiT) from December 2011.

Nevertheless, consumers in Peninsular Malaysia and Sabah, whose monthly electricity bills exceed RM77, will have to start paying an additional 1 per cent levy to subsidise RE producers from December 2011.

The FiT essentially guarantees RE producers a premium selling price over that generated from depleting and finite sources such as oil, gas and coal.

Power generated from sustainable sources that will benefit from FiT includes that of oil palm biomass, biogas, small hydro and solar.

Energy, Green Technology and Water minister Datuk Seri Peter Chin said, "RE producers need to go online and bid for the RE quota and the relevant FiT rate. "This is because the FiT rate differs for different RE technologies and installed capacities."

Chin said this is the first time a government agency is facilitating FiT bidding via the Internet. "This is to ensure a transparent application process. The online FiT application system is available from December 2011," he told reporters after witnessing the signing of memorandum of understanding between Flexo-research Malaysia and Flexoresearch Thailand here yesterday.

RE producers have to apply for licence from Sustainable Energy Development Authority (Seda) via http://seda.gov.my/.

Chin said during the application for a FiT approval, an eligible producer will be required to submit the work plan for their RE installation/plant. Once the Feed-in-Approval is granted, Seda will closely monitor each RE installation/plant until commencement date is achieved.

This close monitoring is to prevent the applicant from monopolising the RE quota. This monitoring is important as once a FiT application has been approved, a portion of the RE fund will automatically be allocated to the approved applicant.

The minister said the RE quota is revised accordingly to take into account the reduced RE Fund availability.

To avoid any monopolisation of the RE quota, Chin said Seda's online system will track the RE installation/plant's milestones via the submitted work plan. If any delays are detected, a notice will be sent to the applicant to request for an explanation for the delay. If the applicant fails to respond satisfactorily, then the application will be revoked.

When that happens, the fund committed to the applicant will be released, and this will return the allocated quota to the system. "This is to prevent any abuse of the FiT system and to allow other interested parties to apply for the FiT," Chin added.

Planters disappointed over lack of tax relief

2011-10-15T17:41:00.001+08:00

KUALA LUMPUR: Oil palm plantation companies are disappointed at the total lack of tax relief for the industry in the recently-announced 2012 Budget.

In making things worse, the already heavily-taxed sector has been slapped with an additional 1 per cent Employees Provident Fund (EPF) contribution.

"We're deeply disappointed at the total lack of tax relief for planters.

"Already, the oil palm sector is most heavily-taxed in the country and we're still made to subsidise cooking oil," said Malaysian Estate Owners Association (MEOA) president Boon Weng Siew.

"The higher EPF contribution is adding to the burden," he told Business Times in an interview here recently.

Cooking oil subsidy in Malaysia is being funded by a windfall profit levy imposed on oil palm estate bigger than 40 hectares. Smallholders and Felda settlers are exempted.

From May 2007 to September 2011, MEOA estimated that estates had paid more than RM4 billion to subsidise the price of cooking oil, which is capped at RM2.50 a kg against the open market price of more than RM4.70 a kg in Thailand, Singapore and the Philippines.

"We expected favourable response from the Finance Ministry to review the windfall profit levy but were disappointed that there was no mention of it in the 2012 Budget," said Boon.

Earlier this year, MEOA, Malaysian Palm Oil Association (MPOA), East Malaysia Planters' Association (EMPA) and the Sarawak Oil Palm Plantation Owners' Association (SOPPOA) jointly appealed to Prime Minister Datuk Seri Najib Razak for a review of the windfall tax.

The levy is seen to be unfair and inequitable because it is imposed on assumed profit and not on actual profit when the price of CPO exceeds RM2,500 a tonne for Peninsular Malaysia and RM3,000 a tonne for Sabah and Sarawak. Plantation companies' profits vary according to the age of the palms.

Newly-developed plantation or green fields and areas under replanting, do not make any profit in the initial year of harvest of fresh fruit bunches. "From the fourth to the seventh year, the proceeds from fresh fruit bunches sales are hardly adequate to recover planting and maintenance costs of around RM12,000 a ha," said Boon.

Oil palm planters are proposing a gradual abolition of the windfall profit levy, commencing with the exemption of estates having oil palms aged seven years and below. This can tie in with a gradual reduction of the cooking oil subsidy like that on other necessities, such as petrol, diesel, rice and sugar.

They urged the government to review the cooking oil subsidy, which is benefitting restaurant operators, traders and people across the border more than the the hardcore poor as reflected in the frequent media reports of cooking oil shortage in the country.

This is in spite of the huge quantity of 70,000 tonnes of cooking oil being subsidised monthly against the total estimated household consumption of only 40,000 tonnes a month.

The price of palm-based cooking oil should be allowed to float in the open market, they argued.

Cooking oil vouchers can be issued to hardcore poor households to mitigate the impact on them. "Removing cooking oil subsidy should be viewed in a positive light because it will prompt wise consumption of oils and fats. This is in line with the advice of the Health Ministry," said Boon.

As lawmakers in the country prepare for their next debate session, MEOA is appealing to members of Parliament to consider abolishing the windfall tax as provided under Windfall Profit Levy Act 1998. "Alternatively, lawmakers may want to consider imposing it across the board to cover all industries based on actual profit, say a threshold of 20 per cent return on investment instead of singling out the palm oil industry to impose the levy," he added.

Excited over Felda listing

2011-10-14T09:57:00.000+08:00

This is written by my editor Francis Fernandez.

KUALA LUMPUR: "I earned RM8 a day working in a Felda settlement in Palong, Negri Sembilan," said a visibly excited Zakaria Arshad. He is excited because after years of planning, Felda is almost on its final leg of being listed on the Main Market of Bursa Malaysia.

The listing could possibly create the world's largest publicly-traded plantation company, with a staggering plantation size of 850,000ha. This even dwarfs Sime Darby Bhd's land bank of 647,373ha in Malaysia and Indonesia.

Being listed should help it come out of the shadows, as up to now, investors have always been focused on the listed Sime Darby. This is despite Felda boasting an annual crude palm oil (CPO) production of about three million tonnes as opposed to Sime Darby's 2.4 million tonnes.

Zakaria will be more than pleased than the rest in seeing Felda listed, as he currently heads one of the units which might be bundled into the listed entity.

He is the chief executive officer of Delima Oil Products Sdn Bhd, a unit of Felda Holdings Bhd.

A listed Felda will incorporate assets of Felda Global Ventures Holdings Sdn Bhd and Felda Holdings, collectively known as Felda Global Group, the cash-generating units of the Federal Land and Development Authority (Felda).

Zakaria, who graduated in 1984 from University Sains Malaysia, also had his first big break in the job market with Felda. "I started working in Felda as an executive soon after graduating, with a starting salary of RM1,000, while the yearly increments those days were about RM75 a year," said Zakaria, who now heads a company with an annual revenue of about RM800 million a year.

"As a second-generation Felda settler, I am excited about the listing, as it will benefit the settlers and the country," he told a group of journalists at his office yesterday.

"I support the listing as it provides a new income stream for the settlers, said Zakaria, adding that as a Felda corporate man, the listing will help open up opportunities for Delima Oil. "Proceeds from the initial public offer (IPO) will help Delima Oil as we need between RM100 million and RM200 million capital expenditure to expand."

Zakaria explains that Delima Oil's sole factory in Pasir Gudang, Johor, is running at full capacity with two full shifts, churning out some 1,000 tonnes a day.

He is banking on the money from the IPO to help expand Delima Oil's product range. "Currently, we only have three products, but we intend to have as many as 18 products as well as expand into the non-food segment, such as healthcare," said Zakaria.

Established in October 2000, Delima Oil is one of the country's largest cooking oil producers, producing the cooking oil under the brand Saji. Some 80 per cent of its products are for the home market, with the balance exported to Southeast Asian countries as well as to China.

Zakaria says the IPO will help Delima Oil expand overseas faster. "Size allows us to compete, but efficiency and sound management are the key to ensure our continuous progress," he said. As such, Zakaria feels that the planned listing of Felda is a natural progression for the settler.

Felda Global to hire banks for IPO next week

2011-10-14T09:43:00.001+08:00

This is written by my boss Francis Fernandez.

Kuala Lumpur: Felda Global Ventures Holdings Sdn Bhd plans to hire investment banks by as early as next week to help arrange its initial public offering, said its group president cum chief executive officer Datuk Sabri Ahmad.

"We will hire them as soon as possible, perhaps by next week," Sabri said at his office here yesterday.

The company plans to hire as many as two Malaysian investment banks. "We will also be hiring one or two foreign merchant bankers." Sabri said the banks are being selected via a closed-tender exercise. Interest on the Felda Global listing work is high, with the planned IPO already being touted as one of the biggest in Malaysia.

He declined to comment on speculation that CIMB and Maybank Investment Bank, the pair that handled MSM Malaysia Holdings Bhd's IPO for Felda, will be selected for the planned Felda Global IPO. The selected bankers will help Felda organise roadshows at home and abroad to drum up interest.

Felda Global is the commercial arm of the Federal Land Development Authority (Felda), the world's largest estate owner. It has been tasked with helping rural settlers to develop plantations of agricultural commodities such as oil palm and rubber.

On the size of the IPO, Sabri said the numbers are being crunched, and restructuring activities are being held "to unlock the value". "It will definitely be bigger than the MSM Malaysia Holdings Bhd IPO," said Sabri.

Felda raised slightly more than RM800 million from the MSM share sale, which saw the sugar company valued at about RM2.4 billion.

Koperasi Permodalan Felda, which is owned by the settlers, made a paper gain of RM300 million from the MSM IPO from its 20 per cent stake.

Sabri said as part of the restructuring exercise, Felda Global and Felda Holdings Bhd will be merged into a single entity. "This will help us unlock value for our stakeholders," said Sabri, adding that the eventual structure of the listed entity will be somewhat similar to that of Sime Darby Bhd and IOI Corp Bhd.

Both Sime and IOI have built specific units to focus on upstream and downstream activities.

A listed Felda will have about 850,000ha of plantation land. "In terms of acreage we will be bigger than Sime. We are also competitive in terms of plantation yields and our mill output is the best in the industry," said Sabri.

Malaysia to maintain B5 diesel price

2011-10-10T15:32:00.000+08:00

KUALA LUMPUR: The government has assured that it would continue to keep B5 diesel pricing at the pump at RM1.80 per litre by absorbing the difference from world oil price.

B5 is a blend of 95 per cent regular diesel with five per cent palm biodiesel. "Right now, B5 is being subsidised at the pump in the central region of the country. We've allocated RM23.65 million in B5 subsidies from June to December 2011," said Plantation Industries and Commodities Minister Tan Sri Bernard Dompok.

The rollout of B5 in Kuala Lumpur involves 247 service stations. About one million litres of palm oil biodiesel are being used each month. "This will contribute to a saving of close to 12.4 million litre of fossil diesel per year in Kuala Lumpur," Dompok told reporters last week after launching the fourth phase of B5 implementation at a service station along Jalan Kuching, Kuala Lumpur.

Previous central region launches covered Malacca, Negri Sembilan and Putrajaya.

On top of the B5 subsidies, the government has also allocated RM42 million to fund in-line blending facilities at six petroleum depots owned by five oil companies, namely Petronas, Shell, Esso, Chevron and Boustead Petroleum Marketing.

Felda Global joins the march of big IPOs

2011-10-10T15:29:00.000+08:00

KUALA LUMPUR: The planned listing of Felda Global Ventures Holdings Bhd (Felda Global) would mean that 2012 will be the fourth straight year Malaysia has offered investors major initial public offerings (IPOs).

Felda Global is the commercial arm of government-owned Federal Land Development Authority (Felda). It is the owner and manager of over 850,000ha of plantation land and its listing should create the world's largest listed plantation entity by land.

Drumming up interest in the local stock market has been a feature of the government under Prime Minister Datuk Seri Najib Razak since he came into office in 2008.

Malaysia's biggest mobile phone operator by subscribers, Maxis Bhd, returned to the market in 2009, followed by the country's biggest IPO, Petronas Chemicals Group Bhd.

Petronas Chemicals raised RM12.8 billion in 2010 and immediately made it to the country's top 10 list of companies by market value. The company is the petrochemicals unit of Petronas, Malaysia's multinational oil and gas corporation. Prior to Petronas Chemicals, Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) was also listed in the same year. MHB, a rig and shipbuilder, is also ultimately owned by Petronas.

This was then followed by the listing of MSM Malaysia Holdings Bhd this year, the sugar refiner that belongs to Felda Global. "This listing (of Felda Global) will create yet another blue chip in the plantation sector and add to our niche offerings, attracting larger international portfolio funds to the Malaysian market," Bursa Malaysia chief executive officer Datuk Tajuddin Atan said in his response to the 2012 Budget announcement on Friday.

CPO buyers switch to KL after Jakarta tax change

2011-10-08T11:44:00.000+08:00

KUALA LUMPUR: Foreign buyers sold back at least 200,000 tonnes of Indonesian crude palm oil (CPO) to refiners since mid-September when Jakarta slashed export taxes on the processed grade and made minor cuts for duties on the crude grade, traders said yesterday.

The buyers - including trading houses and processors - have switched over to Malaysian CPO from plantations who have not finished their tax-free export quota on the grade, traders from Indonesia and Malaysia said.

Malaysia, the world's No. 2 producer, imposes very high export taxes on CPO to protect its refining industry but has allowed for firms such as Felda, Sime Darby and IOI Corp to export the grade without any duties.

The market feared the Malaysian export quota would squeeze global CPO supplies further as top producer Indonesia cut its refined palm oil export tax to jump-start its processors, leaving less of the crude grade for shipment.

"At first I thought the quota was going to be a stumbling block, but it seems the Malaysian palm oil companies still have it. My seller says don't worry, you can buy, we can sell," said a Malaysian trader with a key palm oil processor. "Just watch Malaysian crude palm oil exports in October. It will jump a lot because a lot of people are selling Indonesian crude palm oil back and buying Malaysian crude," the trader added.

The higher demand for CPO will cut into rising stock and possibly lift benchmark Malaysian palm oil futures that have fallen more than 25 per cent this year on fears of another global recession.

The government sets the annual quota, and this year it was pegged at 3.3 million tonnes. In the first nine months of 2011, Malaysian CPO exports stood at nearly 2.5 million tonnes, according to data from Societe Generale de Surveillance, and leaving at least 800,000 tonnes available.

"The quota always gets exceeded and these palm oil companies will ask the go-vernment to raise the quota, which is always granted," said a second Malaysian trader.

"This year especially, with the new Indonesian export tax coming into, it is bound to go higher," he added.

Commodities Minister Tan Sri Bernard Dompok said in August that the government had a "flexible view" to the tax-free crude palm oil export quota in order to keep the industry market driven, as the grade is in high demand in Rotterdam.

Buyers are selling back Indonesian CPO to refiners mostly in Sumatera and Java island at the same price the cargoes were contracted at.

The buyers, including Western trading houses and processors, make enquiries with Malaysian firms who will offer local CPO that is now at US$890 (RM2,812) a tonne, a 7 per cent discount to Indonesian FOB export grade.

"Once you add in some profit margins, Malaysian palm oil for export grade is about US$15 (RM47) chea-per compared to Indonesian palm oil," said a trader with a Malaysian plantation firm with a tax free export quota. - Reuters

Planters: Let millers go full capacity

2011-10-07T08:36:00.001+08:00

KUALA LUMPUR: Planters in Sarawak, who are experiencing bumper harvests, are appealing to the Malaysian Palm Oil Board (MPOB) to allow millers to run their plants at full capacity.

"We are losing hundreds of million ringgit in the form of rotting fruits," said Sarawak Oil Palm Plantation Owners Association (Soppoa).

"We have members who own mills designed to process 90 tonnes of fresh fruit bunches (FFB) per hour but MPOB only allows them to run at 60 tonnes per hour. When we run the mill at the design capacity, we are compounded by MPOB. Upon appeal, MPOB later licensed the mills to run at 75 tonnes per hour.

"Why can't MPOB straight away approve the running of our mills according to the design capacity? Why are millers made to pay compound after compound and submit in appeal after appeal?" Soppoa vice-president Paul Wong asked.

"Right now, there are lorries filled with fresh fruit bunches waiting to be processed, many of which are sourced from smallholders. We appeal to MPOB not to compound millers when they run at full capacity. It is not fair to penalise millers when they are doing their best to help smallholders contribute to the country's palm oil exports," he said in a telephone interview from Miri.

Last year, Sarawak harvested 2.2 million tonnes of palm oil. A 10 per cent average of uncollected fruits at a conservative pricing of RM2,800 crude palm oil (CPO) price translates into some RM600 million loss in export opportunity from Sarawak.

As at December 2010, Sarawak's oil palm planted area stood at 0.9 million hectare, of which close to 10 per cent of the hectarage is owned by about 7,500 smallholders.

Earlier this year, Soppoa forecast 15 per cent output growth to 2.5 million tonnes of CPO, as more oil palms mature and bear more fruits. "We appeal to the decision- makers at MPOB to look at this problem in totality. For the country to achieve 18.3 million tonnes in CPO output, it is pertinent for Sarawak to be able to achieve the 2.5-million-tonnes target," Wong said.

The MPOB is the regulator of the palm oil industry.

Meanwhile, MPOB director-general Datuk Dr Choo Yuen May, when commenting on the issue yesterday, said: "We will investigate this matter, I will get my officers to get to the bottom of this bottleneck problem."

Choo was speaking at the launch of the fourth phase of B5 implementation by Plantation Industries and Commodities Minister Tan Sri Bernard Dompok at a BHPetrol service station here. B5 is a fuel blend of regular diesel (95 per cent) and palm biodiesel (5 per cent).

Noble Group to list agriculture business

2011-10-06T15:00:00.000+08:00

SINGAPORE: Singapore-listed commodities firm Noble Group is seeking to list its agriculture business, which accounts for a third of its earnings and may have a value of more than US$5 billion (RM15.9 billion).

The company, which wants to list the business on the Singapore Exchange, said late Tuesday the process will be subject to market conditions. JPMorgan is advising Noble on the planned listing, two sources with knowledge of the deal said yesterday.

JPMorgan and Noble declined to comment on who is advising the company or the size of the deal. Shares of Hong Kong-based Noble jumped as much as 5.8 per cent yesterday, their biggest intra-day jump since August 31.

Noble, which counts sovereign wealth funds China Investment Corp and Korean Investment Corp among its shareholders, has a market value of about US$6 billion. Its shares have suffered this year from a selloff in companies that trade industrial commodities.

"We believe a spinoff makes sense to further avoid the structural de-rating that has defined the commodities trading sector this year," UBS analyst Andreas Bokkenheuser said in a note to clients.

Nomura said the equity value of the business could be more than US$5 billion and even at current valuations, it should have a value of US$3.3 billion. "We believe it may be good for valuations, as agri-assets and traders/processors generally command a higher valuation as compared to non-agri portfolio," it said in a note.

Noble has a price-to-earnings ratio of around 8, below rival Olam's 10.8, which benefits from a premium due to its focus on largely agriculture commodities. Noble's agriculture business is primarily made up of soyabean crushing in Argentina, Brazil and China, sugarcane mills in Brazil as well as other businesses such as cotton, coffee, cocoa and other grains.

Noble shares have been hurt this year because the company trades a lot of cyclical commodities such as iron ore and aluminium. Its shares had fallen about 44 per cent, more than the 21 per cent drop in the Singapore market, based on Tuesday's close. - Reuters

Unico asked to consider listing

2011-10-06T14:53:00.000+08:00

KUALA LUMPUR: A group representing minority shareholders of Unico Holdings Bhd yesterday urged its board of directors to consider listing the company on Bursa Malaysia to give better returns to all its shareholders.

Alternatively, the board could consider a reverse takeover of a company on Bursa Malaysia," said K.K. Chow, a spokesman for the minority shareholders, at a press conference here. "The time is now ripe for Unico to consider such an exercise as there are many listed companies that need capital or business injection," he said, adding that a merchant bank could be called to provide independent advice on the viability of such a proposal.

Chow, who is also a minority shareholder of Unico, said the company's directors should discharge their responsibility that they publicly announced three years ago to list Unico instead of using the company's funds for property development, which may have an element of risk.

He stressed that listing the company would provide shareholders with better returns and to realise their investments made some 20 years ago.

Chow claimed that the shares of Unico were estimated to worth about RM3.50 a share currently but shareholders had no means to sell their shares at that level because of the company's non-listed status except to sell them back to the company at a lower value of around RM1.80 per share.

Asked whether it would be possible to requisition an extraordinary general meeting to get the directors to initiate the listing proposal, he said it could be an arduous task. - Bernama

Indonesian group quits sustainable palm oil body

2011-10-04T11:17:00.001+08:00

JAKARTA: The Indonesian Palm Oil Association (Gapki) has withdrawn its membership from the Roundtable on Sustainable Palm Oil (RSPO), after the world's top producing country forged ahead with its own sustainability scheme, both groups said yesterday.

The RSPO is an industry body of consumers, green groups and plantation firms that aims to promote use of sustainable palm oil products and many major European palm oil buyers say the RSPO will continue to be the international sustainability benchmark.

Many palm oil producers have criticised the RSPO for being too much in favour of green groups, and both Malaysia and Indonesia are pushing on with their own schemes.

Fadhil Hasan, executive director of Gapki said, " ... we decided to resign from RSPO because we already have ISPO," he said. "We sent the letter of resignation on Thursday last week."

Unlike the RSPO, the Indonesia Sustainable Palm Oil (ISPO) will punish by law those found to be breaking ISPO rules, a ministry official said last November.

The RSPO, on its website, said it regretted Gapki's withdrawal. "However, we accept its decision as the RSPO is a voluntary membership- based organisation." - Reuters

Global economic gloom to weigh on palm oil

2011-09-27T10:29:00.000+08:00

MUMBAI: A brewing economic crisis in the developed world will weigh on palm oil prices that have lost 21 per cent this year on high output, although the market could rally again on Asian demand and erratic weather, industry analysts said.

Investor concerns that eurozone and US debt crisis may develop into a full-blown recession and slow commodity demand will be a key driver for palm oil this year, analysts at an industry meeting here said.

"The delicate economic situation in the developed world leads me to believe there will be several short periods between now and the middle of 2012 when markets will be extremely volatile," Dorab Mistry, a leading analyst, said yesterday.

"Given all that, I do not believe markets have bottomed out yet," said Mistry, who is also the head of vegetable oil trading with India's Godrej at the end of the three-day Globoil conference.

Mistry said palm oil will fall from current RM2,990 levels to trade in a range of RM2,800 to RM3,100 until mid-November, due partly to the hot US weather market concerns on soya coming to an end.

His views were echoed by Thomas Mielke, head of Hamburg-based research house Oil World, who said palm oil futures could fall in the next three months to RM2,850 on the brewing financial crisis and strong output.

Palm oil production in Indonesia and Malaysia, which accounts for 90 per cent of the world's supply, has been strong after two years of erratic weather and higher maturing acreage.

But a possible resurgence in the La Nina weather phenomenon could hurt output and drive prices to RM4,000 levels by the second quarter of next year, Mistry said.

La Nina triggers heavy rains that can stall harvesting rounds in top producers Indonesia and Malaysia. Six months down the line, output usually gets cut due to poor pollination affecting palm fruit development.

Mielke pointed to vegetable oil prices rising again in the first half of next year as bio fuel mandates in Argentina, Brazil and the US swallow up more vegetable oil supplies at a time when palm oil output slows from a bumper 2011.

"We have to understand soyabean oil supplies are going to trim in 2012, 2013 due to ambitious bio diesel programmes," he said, adding about 22 million tonnes of vegetable oils globally were used for biofuel.

Analysts and traders are counting on demand from developing economies led by India and China - the world largest edible oil buyers with their billion plus populations to support prices of palm oil.

"Demand is rising in India and consumption growth would be there in coming years," said Dinesh Shahra, managing director, Ruchi Soya Industries , India's biggest edible oil importer.

"Disposable income is rising. We need to import more edible oils in 2011/12 despite having good domestic oilseeds crop," he added.

At the conference, industry forecasts of Indian edible oil imports in the new marketing year from Nov. 2011 ranged between 8.5 million and 9.2 million tonnes, after orders fell for the first time in five years in the current year.

India could face a shortage in imported edible oils as its top supplier Indonesia has slashed its export taxes in favour of refined palm oils but does not have the refining capacity to meet India's monthly demand of 600,000 tonnes. But the South Asian nation has started buying more refined palm oils, raising fears domestic processors will lose a large chunk of their business.

Food Minister K.V. Thomas, who has been the most vocal about the tax move, offered no cues when he attended the conference as whether the government will raise the import tariff values for refined palm oils.

"I suppose these things take time," said an Indian trader who took part in the conference. - Reuters

Bad Teacher - Car Wash

2011-09-16T08:36:00.002+08:00

Car shampoo are made from oleochemicals, which use palm kernel oil as its main ingredient. Chemical engineers work on oleochemicals to formulate car shampoo that are gentle on the skin and at the same time, kind to nature.

Here's the car wash scene in the movie "Bad Teacher" starring Cameron Diaz. Enjoy!

Palm oil exports tipped to touch record RM80b

2011-09-15T11:18:00.001+08:00

Kuala Lumpur: Malaysia's palm oil exports forecast for this year is raised again to RM80 billion, which will be a new record, thanks to higher average palm oil prices and improved global demand.

The current record was in 2008 when palm oil shipment topped RM65 billion as the crude palm oil (CPO) price averaged RM2,800 per tonne then.

"Global demand for palm oil continues to be strong. India and China have been buying more palm oil. Africa has also placed more orders for Malaysian palm oil," said Malaysian Palm Oil Council chairman Datuk Lee Yeow Chor.

Stronger commodity exports have helped the country offset weaker shipments of electronics, traditionally the major contributor to overall exports.

According to the Malaysian Palm Oil Board (MPOB), the country has achieved RM52.46 billion in palm oil exports in the first eight months of this year.

Two months ago, Plantation Industry and Commodities Minister Tan Sri Bernard Dompok forecast that this year's palm oil exports could top RM70 billion.

In the first eight months of this year, palm oil futures prices were averaging at RM3,200 per tonne, higher than last year's RM2,700 per tonne. "We should do better than last year's RM60 billion as crude palm oil prices are still relatively high," Lee told reporters after speaking at Forbes Global CEO Conference on Tuesday.

"Although we've milled 12.01 million tonnes of crude palm oil in the first eight months, 8 per cent more than the same period last year, prices are averaging at around RM3,200 per tonne. Also, since palm oil is trading at a significant discount of more than US$200 per tonne (RM616) to soya oil, demand for palm oil should pick up in the months to come," he said.

Asked if a new target of RM80 billion is achievable, Lee replied, "based on all the factors outlined, I would say yes".

He reiterated MPOB's 18.3 million tonnes CPO output forecast for this year. This is good news for palm oil consuming countries worldwide because Malaysia, which supplies almost half of the palm oil, has experienced falling output in the last two years.

In presenting his view on "fuel and sustenance for a green economy" at the conference, Lee explained how Malaysia has more than 400 mills that can convert waste to steam and electricity. The government, in reducing fossil fuel dependence, has called for more production of renewable energy and provided incentives in the form of feed-in tariffs that will kick off in December 2011.

"Palm oil mills that are fuelled by biomass and biogas are already co-generating steam and power. Some of us are even supplying this green energy to the national grid to leverage on the feed-in tariffs," he said.

When asked on green products the palm oil sector makes, Lee highlighted that the oleochemical industry produces biodegradable detergent and plastics. "The key ingredients that our oleochemical industry supply to detergent and surfactants manufacturers are biodegradable. It does not harm living organisms in our rivers and lakes," he said.

Lee then cited Oil World's data, showing how the oil palm tree is the world's most efficient oil crop because one can harvest five tonnes of oil per hectare. This is 10 times more productive than soya oil planted in the US and five times more than rapeseed oil, Europe's main oil crop.

A'lian gov against palm oil labeling

2011-09-13T23:20:00.000+08:00

This is written by my colleague Zaidi Ismail.

PUTRAJAYA: The Australian government does not support a Bill being proposed by some of its lawmakers to label palm oil on food ingredients.

In a statement yesterday, Australia's Trade Minister Dr Craig Emerson said the Bill is anti-trade in nature and could jeopardise trade relations between Australia, Malaysia and Indonesia. Currently, Indonesia and Malaysia are the world's top two palm oil producers, respectively.

"This bill will also burden food producers which have to fork out A$150 million (RM471 million) a year to label the food items as well as cause a trade war between the three countries," said Emerson.

Australia's opposition parties are trying to pass a law called "Food Standards Amendment (Truth in Labelling - Palm Oil) Bill 2011. It is now at the Australian parliament at the House of Representatives before it may be passed as late as April 2012. The law requires food manufactures to prominently highlight palm oil in a negative connotation on the food label, if it contains palm oil.

Malaysia and Indonesia are enraged because the law is discriminatory, in that it does not require other edible oils such as rapeseed, soyabean and other oils to do the same. This way, non-governmental organisations can single out food companies that use palm oil and campaign against them by saying that planting oil palms destroy the habitat of orang utans.

Meanwhile, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said Malaysia is still continuing the crusade by organising several more oil palm seminars in Australian cities over the next few months.

"This Bill is discriminatory and if passed as law, we will take it up at the next option which is to bring it up at the World Trade Organisation level," he said.

On another note, Dompok said the B5 biodiesel (a blend of 95 per cent diesel, 5 per cent palm methyl esther) will be available at all petrol stations nationwide by early next year.

Launched in stages since June this year, biodiesel is now only available in the central region and used mainly by government vehicles. "Oil companies are making preparations right now to set up the facilities and I don't think it will take them a year to set up the infrastructure."

Yay! Yay! Sang Har Meen

2011-09-12T12:12:00.003+08:00

This one, I like very much. Check it out at Fatty Crabs Restaurant, Taman Seputeh in Kuala Lumpur. Alternatively, you could try out the recipe below.

SANG HAR MEEN (or Freshwater Prawns And Fried Wantan Noodles)

Ingredients

6 extra large freshwater prawns
3 pieces fresh egg wantan noodles
100g Chinese white cabbage (wong nga pak), sliced
2 stalks spring onions, cut into 4cm lengths

2-3 tbsp palm cooking oil
1 tsp sesame oil
1 tsp chopped garlic
1 tbsp finely sliced young ginger
1¾-2 tbsp cooking wine
400ml water or stock

Seasoning (combine):
1½ tbsp oyster sauce
2 tbsp chicken stock
1/8 tsp salt
1/4 tsp sugar
1/8 tsp pepper

Thickening (combine):
1½ tbsp corn flour
2 tsp water
1 egg, beaten lightly

Method:-
1. Cut the freshwater prawns into halves. Sprinkle lightly with a little salt and pepper. Par-boil the prawns in boiling water until they turn red and are cooked. Dish out and set aside.

2. Loosen the wantan noodles and place on a steaming tray and steam over rapid boiling water for 2 minutes. Remove and cool. Loosen the noodles and deep-fry in batches in hot oil for 20 seconds until crispy and golden. Remove with a wire-mesh ladle and place on a serving dish. Arrange the prawns on top of the noodles.

3. Heat palm cooking oil and sesame oil in a wok, fry garlic until lightly golden then add ginger. Add in the cooking wine and fry the garlic and ginger until fragrant. Add the Chinese cabbage, water and seasoning and bring to a simmering boil for 4-5 minutes.

4. Thicken the sauce then lower the flame and stir in the egg. Pour the sauce over the noodles and serve immediately.

Serves 3.

KL Kepong to relocate S'pore plant to Selangor

2011-09-09T12:36:00.003+08:00

This is written by my colleague Presenna Nambiar.

KUALA LUMPUR: Kuala Lumpur Kepong Bhd (KLK) will relocate its tocotrienol (Vitamin E) extraction plant in Singapore to Selangor, as part of a RM706 million investment scheme to expand its oleochemical offerings.

It's wholly-owned Vitamin E extraction unit Davos Life Science Pte Ltd is currently operating froom Tuas South Street in Singapore. The plan is to relocate it to KLK's existing refinery in Pulau Indah, Selangor.

KLK yesterday announced four projects to beef up and diversify its oleochemical capacity. The first project is an integrated methyl ester sulphonate and fatty alcohol plant, key ingredients used in the making of toiletries, bio-degradable detergent and moisturiser. The second is a plant to produce specialty fatty ester while the third is to extract high grade tocotrienol isomers, used in the cosmetics and pharmaceutical industries. The fourth project is to develop a world-class research and development centre at its Shah Alam facility.

The RM706 million investments will be part-funded by a RM134 million grant accorded by the Malaysian Palm Oil Board. Overall, KLK will use internally generated funds to finance these expansion and innovations in the next two years.

"Typically we expect about 15 per cent returns on investment in a plant before we embark on a project like this," KLK chief executive officer Tan Sri Lee Oi Hian said at a press conference after the 7th Economic Transformation Programme update by Prime Minister Datuk Seri Najib Abdul Razak yesterday.

KLK is contributing to the development of the downstream sector of the palm oil industry under the Palm Oil and Rubber NKEA (National Key Economic Area) - Developing Oleo Derivatives. They are part of the eight new initiatives under the Economic Transformation Programme announced by the Prime Minister yesterday.

Oil palm seeds to cost 30pc more

2011-09-05T10:30:00.000+08:00

Sungai Buloh, SELANGOR: The price of oil palm seeds, now at RM1.85 each, will be raised by 30 per cent to RM2.35 starting January next year. Business Times also understands that the higher grade semi-clonal seeds will be priced 45 per cent more at RM2.70.

"Over the years, we have invested heavily in oil palm breeding. This has enabled us to improve the seeds for higher yields. Most of the major seed producers in the country have also made similar price increases for 2012. It has been RM1.85 per seed since 2007," said Applied Agricultural Resources Sdn Bhd's (AAR) director of research Dr Kee Khan Kiang.

AAR, which advises more than 350,000ha of oil palm and rubber estates in Malaysia and Indonesia, is an associate company of Boustead Holdings Bhd and Kuala Lumpur Kepong Bhd, two highly successful public-listed companies.

Kee, in an interview at his office, said the decision to raise the price of oil palm seeds was due to cost rises.

"With the recent hike in labour wages and foreign worker levy, fertiliser cost, electricity tariff and packaging material cost, we have no choice, but to raise seed pricings," he said.

This is because starting this month, plantation firms will pay a minimum wage of RM650 per month to plantation workers, with an additional productivity-linked RM200 incentive. It is estimated that this 10 per cent wage hike for employees would cost the industry an additional RM300 million per year. The arrears of wages and ex-gratia payment would further incur an additional RM364 million.

On the whole, the implementation of this new wage and extra remuneration will double Malayan Agricultural Producers Association (Mapa) members' oil palm production costs to RM2.2 billion from RM1.1 billion. AAR's parent companies are Mapa members.

"We've tried to absorb these costs, but at the same time, we need to take care of our shareholders' interest," he added.

To add salt to the wound, the Home Ministry has increased overall foreign worker levy by RM50, meaning employers in the plantation industry need to pay a higher levy of RM590 per worker.

"Whatever that is impacting plantation companies has a chain reaction on seed producers like us. We're equally hurt by these inflated costs," said Kee.

Major seed producers like Felda Agricultural Services Sdn Bhd, Sime Darby Seeds & Agricultural Services Sdn Bhd and AAR are facing burgeoning labour cost.

Since 1986, AAR has been one of the 10 licensed seed producers in the country, contributing to the replanting of unproductive trees so as to raise the national oil palm yield.

According to Malaysian Palm Oil Board, some 40 million germinated seeds have already been planted by farmers in the first seven months of this year. Most of the replanting of old trees have been carried out in Sabah and Peninsular Malaysia while new plantings are undertaken in Sarawak.

Kee said, AAR is hoping to sell 8.5 million oil palm seeds this year, having sold 7.2 million last year. "We already have confirmed bookings for 8.6 million seeds in hand with deposits paid. Orders are still pouring in, but unfortunately, we cannot meet the demand for this year," he said.

The disincentives of subsidies

2011-09-03T12:04:00.000+08:00

This is written by my boss.

A FEW years ago, there was a meeting between an energy association with a group of business executives. The association was trying to convince the executives to use more efficient motors, which are the things that move elevators and escalators.

Since these equipment virtually run during whole office hours and even 12 hours for shopping malls, using more efficient motors would translate to savings on electricity bills. But the meeting was rather boring as many would rather continue using existing motors that are cheap.

On top of that, electricity is also cheap, so why bother changing, some of them said, in private of course.

As long as power is cheap and subsidised, owners of office building and malls would still make money. The worst case scenario is that power prices jump and demand for efficient and more expensive motors also jumps.

This is hypothetical. But what Tenaga Nasional Bhd (TNB) said a few weeks ago came close to a worst case scenario for the country.

It said power plants were close to breaking point because of a gas shortage.

The lack of gas pushed TNB to squeeze all it can from coal-fired plants and hydroelectric ones. It also subjected gas plants to run on distillates for much longer than they should.

What was scary was that scheduled maintenance for certain coal plants were not done because doing so may take out much needed capacity from the national grid. In certain cases, special waivers had to be sought to do away with maintenance work.

TNB also used more water in its hydro plants to cover demand. Water levels at the Kenyir dam is at historical lows because of this.

This is bad because hydro plants are used to cover spikes in demand due to its quick response time. If it continues to draw too much water, it may not have enough in the future to handle these spikes.

As for gas plants, TNB has been buying so much distillates from oil companies that Malaysia literally ran out of the thing one day in June.

It was such a good customer that Shell decided to treat TNB management to lunch, according to chief executive officer Datuk Seri Che Khalib Mohamad Noh.

The shortage of gas has been well documented for a few years as the power sector and heavy industries that use gas complained about supply. The result now is higher gas and electricity prices.

But why was gas supply running low? Because the price of gas it sold was fixed at rates lower than the market price, Petronas as the supplier had no incentive to invest.

Common sense would dictate, why invest in a business that's not making money. This means it had no desire to look for new supplies or upgrade old facilities.

Petronas admitted as much in its August 23 press release.

"These subsidised gas prices have resulted in minimal investments in the exploration and development of gas projects by oil and gas players, constraining growth in supply capacity. Compounding this tight situation, Malaysia's offshore production facilities have been running at full capacity, exerting tremendous pressure on gas production systems and resulting in the unavailability of margin to absorb fluctuations in gas demand as well as to cater to unanticipated situations."

It is not just power plants that are running flat out, Petronas' gas facilities are also running at full steam.

The funny thing is, the industry knew years ago that something like this would happen.

"As way back in 2007, we worked with the government, TNB and end-users. We told them that if there is something to break, it's going to be massive and true enough, it's this year," Petronas CEO Datuk Shamsul Azhar Abbas told a media briefing last week.

To cap it all off, Petronas announced a fast-track RM15 billion project to look for more gas offshore Peninsular Malaysia. This involves digging into smaller and deeper fields.

What this episode highlights is the danger of subsidies. Not only can it be a burden to government finances, like petrol subsidies, it could even have bigger implications, like the neglect of investments in gas supply.

The cost of it is also great because it involves our reputation at a time when we want more investments, be it local or foreign. Investors will think twice when they think that energy supply is inconsistent.

Palm oil labelling smacks of hypocrisy

2011-09-02T12:30:00.001+08:00

This is written by Dr Ahmad Ibrahim, a fellow of the Academy of Sciences Malaysia.

TRADE between Malaysia and Australia has always been good. Australia supplies beef to Malaysia. Malaysia sells palm oil, rubber and electronic items.

There are obvious reasons why Malaysia-Australia trade relations have been healthy. One is their proximity. The other has to do with the historic links between their business communities.

The strong link was built through many years of educational tie-ups between the two countries. Many Malaysians are products of Australian universities. In fact, many of Malaysia's leading heart specialists and surgeons had their training in Australia.

I myself graduated from Monash University way back when Malaysia used to beat Australia at football. In those days, Australia did not have a good football team. Its popular sports had always been Australian-rules football, or "footie". Soccer became popular only when immigrants from Europe popularised the game in the 1970s.

Australia has always been a destination for immigrants. The pommies who came from Britain were the earliest. They were mostly evicted to Australia. Australia then was the equivalent of our Pulau Jerejak. Nowadays, like Australia, Pulau Jerejak has also become a tourist destination.

Palm oil has for years been one of Malaysia's major exports to Australia. Many Australians love palm oil because of its bland taste. It does not have the fishy taste of soya oil.

Lately, the use of palm oil grew even more because of new nutritional evidence linking heart disease to trans-fats in margarine and shortening. These are not present in margarine made from palm oil. Trans-fats are mainly found in margarine made from partially solidifed sunflower or soya oils.

It often costs much less to make margarine using palm oil because palm oil is naturally semi-solid. Furthermore, because of its balanced composition, plus the lower levels of polyunsaturates, its use in high heat frying is just unbelievably stable.

Many would vouch for the fact that palm oil is the world's best oil for frying. Ask any instant noodle manufacturer in China, Japan, Korea and even Australia. They will tell you that palm oil is superior under high heat.

However, though palm oil is popular among many Australians, there are a few who have developed a dislike for it. They resort to all kinds of claims against palm oil to gain sympathetic financial support to run their outfits. The others who have harboured hate for palm oil are those who view palm oil as threatening their business. Still, others despise palm oil because it comes from Asia.

Despite the proclamation that Australia wants to be close to Asia, there are a few in Australia who prefer otherwise. For this group, their attempt to discredit palm oil goes as far back as the late 1980s and early 1990s. I remember one episode then. There was this maker of potato chips that printed derogatory remarks about palm oil on its labels.

It stated that palm oil was bad for the heart. And its chips were not fried in palm oil. They were, therefore, supposed to be healthier.

But such practices have since stopped. Why? Because there is now overwhelming science-backed evidence that palm oil is healthy and nutritious. Studies confirmed that palm oil can even challenge olive oil. These are not studies done by Malaysians. The positive results on palm oil came out of research done by independent scientists in the United States.

Now that there is no more credible claim against palm oil on grounds of poor nutrition, enemies of palm oil in Australia have cooked up another storm. This time they link palm oil to deforestation. And disappearing orang utans.

Despite all the evidence available to the contrary, this has not stopped some legislators there proposing a new labelling ruling on palm oil. They have proposed that all products that use palm oil must indicate so on the labels. The intention is to discourage consumers from choosing products containing palm oil. If consumers refrain from such products, then demand for palm oil will go down.

This they argue will reduce deforestation and help with the global carbon balance. At least, tropical rainforests will help absorb the massive greenhouse gas emissions from Australia's big mining industries.

What the people in Australia do not realise is that it is the uncontrolled emissions from Australia's big corporations that are doing more harm to the carbon balance than palm oil.

The Australian government has tried to cap such emissions through a kind of carbon tax. But this has generated a lot of opposition from big businesses there. Why? Because any such move would be at the expense of their bottom line. In fact, the issue has become very political. It may even lead to the defeat of the present government.

Instead of dealing with their internal carbon problem, some legislators have chosen to pick on palm oil. This would hopefully shift people's attention away from the carbon tax controversy. It is not only against the very spirit of the World Trade Organisation but also hypocrisy at its best.

The view is misguided and the Australian people should know about this. The palm oil industry has appealed to the good sense of legislators, who are better informed. They should stop the new ruling.

Malaysian commodities can withstand slowdown

2011-08-29T11:02:00.000+08:00

PUTRAJAYA: Malaysian commodities such as palm oil, tin and rubber play such a central role in the global economy that their prices are likely to hold up even in a global slowdown, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said last Thursday.

Chinese imports of palm oil are set to rise next month as buyers are stocking up, he said. Financial markets have fallen in recent days on concerns that an unfolding debt crisis in the US and Europe will stall global economic growth and slow demand for commodities.

"There will be some impact, but Malaysian commodities are key to this global market. Without rubber the auto industry cannot move, and the same be said with palm oil for the food sector and tin for manufacturing," Dompok said in an interview.

"In fact, we see palm oil demand increasing in September as Chinese importers stock up ahead of the mid-autumn festival and a week-long national holiday in October," he said.

Palm oil prices are currently hovering around RM2,950 to RM3,000 - levels that Dompok expects will persist for this year. Benchmark Malaysian palm oil futures tumbled almost 2 per cent last Thursday after Indonesia changed its export tax structure for palm oil, making shipments from the world's No.1 producer more competitive.

Malaysia, the second-largest producer of the edible oil, has a strict export quota for crude palm oil (CPO), because the government wants to encourage the development of high-value refined products and oleochemicals. Producers that do not have a licence to sell CPO overseas are often highly taxed. Exports of refined products enjoy tax-free status.

Malaysia's CPO exports have risen above 250,000 tonnes a month for the past three months, fuelling speculation that its annual three million tonne quota will be breached.

"We can be flexible (on export quotas) as we want to keep the industry market-driven, bearing in mind that CPO is in high demand in Rotterdam," Dompok said.

He ruled out scrapping the quota on CPO exports, a view shared by market players in Malaysia who are concerned about losing market share to Indonesia, which has slashed its export taxes for refined products.

"The race is on to develop high-end refined products," said a dealer with an international trading house in Kuala Lumpur. "Malaysia understands the need to bend to market pressures with CPO demand in Europe and India, but it is aware that Indonesia wants to catch up in the refining sector with the recent export tax changes."

Malaysia has developed its palm oil sector at the expense of the rubber industry, which has fallen to third place among the world's largest suppliers.

Flagging output as farmers switch to lucrative palm oil has forced Malaysia's large rubber products industry to import. Dompok said efforts were under way to ramp up rubber production with a replanting programme and to expand current acreage by 14 per cent over the next five years to 1.17 million hectares.

"We are taking a long-term view on commodities, whether its rubber or palm oil," Dompok said. "Although the current economic growth issues and their impact on prices are immediate concerns, we have to think far, far ahead on growing the industries." - Reuters

Penans to be resettled in 20,000ha forests

2011-08-27T12:02:00.002+08:00

This is written by my colleague Lian Cheng.

KUCHING:Two forest reserves of 10,000ha each is being proposed to be given to the Penan community who have been affected by the Murum hydroelectric project (HEP).

The upper Pelieran Forest Reserve has been proposed to be given to 183 Penan families who are to be resettled at Melalun, about 10km away from the HEP site. At present, these families are residing at Long Menapa (39 families), Long Luar (52), Long Tangau (28) and Long Singu (64).

The Danum Forest Reserve has been proposed to be given to Penans from Long Malim Penan (46 families), Long Malim Badeng Kenyah (35) and Long Wat (83) who will be relocated to Tegulang.

"It takes a generation for the Penans to learn to be settled farmers. We cannot drag them straight into the 21st century. The forest reserves will serve as a transition for those who have yet to adapt to modern living," said Land Development Minister Tan Sri Dr James Masing in an interview yesterday.

"It has been proposed that they should be given the forest reserves so that the older generation can continue with their traditional lifestyle there. With that, all 347 Penan families will have options. In addition to the forest reserves, it has also been proposed that each affected Penan family be given 15ha of land for them to generate income."

Masing, who is Bakun Resettlement Committee chairman, is also the chairman of the Murum Resettlement Committee.

"All decisions have been reached after consulting the Penan community. It has never been the government's intention to shortchange the Penans. Previously, we were ignorant of the problems that might crop up. We have erred in our judgment and we do not want to repeat our mistakes."

He said the government was not only looking for the best way to solve the problems of the Penans affected by the Murum HEP, it was also visiting the 1,500 Penan families affected by Bakun HEP who were settled at Sungai Asap.

"We understand the 3ha given to each family is not enough to sustain their livelihood. Therefore, the government has decided to give them additional land for them to generate more income. I will seek RM76 million to buy a piece of land, measuring 3,000ha, which will be given to these families," Masing said.

Govt to increase foreign worker levy by RM50 from Sep 2011

2011-08-27T11:49:00.001+08:00

PUTRAJAYA: The government will increase the levy for foreign workers by RM50 effective September 1, Home Ministry Secretary-General Tan Sri Mahmood Adam announced today.

Mahmood said the increase was among initiatives proposed by the foreign workers laboratory in managing foreign workers, and that the decision was made after a careful evaluation, including taking into account the last increase in 2005.

However, new foreign worker applications received by the Home Ministry before September 1, would be charged the old levy, along with those who extended their temporary work visit pass. "The new rate is valid for temporary work visit pass applications that expires on or after September 1. New applications and extension of old temporary work pass included," said Mahmood in a statement yesterday.

He said from September 1, the levy for agricultural sector and maids would be RM410, plantation (RM590), factories and construction workers (RM1,250) and service sector (RM1,850).

Mahmood said the new levy for Sabah, Sarawak and Labuan would be comparatively cheaper since the levy charged for construction and factory workers is (RM1,010) and RM1,490 for the service sector.

Meanwhile, Mahmood said that as of yesterday, 2,248,940 legal and illegal foreign workers had registered themselves through Immigration offices and managing companies set up nationwide. From the total, 1,242,813 were made up of illegal workers who were registered through the 6P amnesty programme. -- Bernama

Europe slowdown hits palm oil exports

2011-08-25T14:55:00.002+08:00

This is written by Faisal Maliki Baskoro and published in Jakarta Globe.

JAKARTA: Indonesia may fall short of attaining its palm oil export target this year, should a slowing European economy drag down demand, the head of the country’s palm group said.

The Indonesian Palm Oil Producers Association (Gapki) had set its palm oil export target at 18 million tons this year, or 15 per cent higher than last year’s 15.6 million tons. However, its chairman Fadhil Hasan expressed concern about demand from its biggest buyers.

A worker unloads crude palm oil at Tanjung Priok port in North Jakarta. Indonesia may fall short of attaining its palm oil export target this year, should a slowing European economy drag down demand. (JG Photo/Safir Makki)

“If Europe continues to slow down, we may see exports drop slightly below our estimate, to 17 million tons,” he said. “The US economic slowdown will not have an adverse effect as our exports there are very small. But Europe is our second-biggest market as it buys 20 per cent of our palm oil exports,” he added.

He said that in the first half of this year, Indonesia sold 8.2 million tons of palm oil to overseas markets, 10 percent more than the 7.47 million tons sold during the first half of last year.

Despite Europe’s slow recovery, and activists smear campaigns on the supposed environmental impact of oil palm plantations, Fadhil said that Europe imported 1.6 million tons in the first half, 11 per cent higher than the same period last year.

Exports to India, the biggest buyer, are estimated at 6 million tons this year, while China, the third-largest market, is expected to import 2.5 million tons. Shipments to the United States are estimated at around 130,000 tons this year.

He said that demand for palm oil would remain strong in those countries, in line with their large populations. “Overall, we’re expecting export values to reach at least Rp180 trillion [US$21.1 billion],” Fadhil said. Last year, export by value jumped 60 per cent to US$16.4 billion.

Meanwhile, he predicts production will rise to 25 million tons this year, 5.9 per cent higher from 23.6 million tons in 2010.

Fadhil also said that the association would keep looking for new export markets. He cited Eastern Europe, Africa, and Latin America as potential markets. He said the shipping tax adjustment would assist in encouraging further exports.

“The government recently introduced a cut in palm oil export tax, to between 15 and 20 per cent. We believe that this will make Indonesia more competitive and increase exports,” he said.

Crude palm oil (CPO) prices, now at around US$1,075 per ton, are expected to continue to decrease in line with the decline in crude oil prices, and the coming harvesting season, he said. CPO sold for US$1,100 per ton in June.

Franky Widjaja, a deputy at the Indonesia Chamber of Commerce, said that the government could do better in improving Indonesia’s palm oil industry. “The industry could use better access to energy sources, raw materials, skilled labor, and infrastructure. Government and business players could also join hands in research and development,” he said. Franky’s family owns Sinar Mas Group, the biggest local CPO producer.

Indonesia’s US$700 billion economy is forecast to expand by 6.7 per cent next year from an estimated 6.5 per cent this year. Exports account for 29 per cent of Indonesia’s gross domestic product, while private consumption accounts for about two thirds.

IOI Corp's Q4 nets RM548m profit

2011-08-25T11:25:00.000+08:00

KUALA LUMPUR: IOI Corp Bhd's (IOI Corp) fourth-quarter net profit was flat despite revenue having increased by 41.4 per cent. Its plantation and property segments contributed higher profit but its resource-based manufacturing segment operating profit was down 37.6 per cent.

The plantation firm's net profit for its final quarter ended June 30 was up 0.1 per cent to RM547.8 million compared with RM547.05 million a year ago.

The manufacturing segment reported an operating profit of RM84.6 million for last quarter compared with RM135.7 million a year ago due to lower sales as well as lower margins from oleochemicals and refineries.

Group revenue for the final three months surged 41.4 per cent in the quarter to RM4.3 billion from RM3.06 billion previously, IOI Corp said in its results announcement yesterday.

For the 12 months ended June 30, IOI Corp's net profit rose 9.2 per cent to RM2.22 billion from RM2.04 billion, while revenue increased 28.8 per cent to RM16.15 billion from RM12.54 billion.

Earnings per share were 8.54 sen compared with 8.57 sen, while net assets per share was RM1.87. The company declared a tax-exempt second interim single-tier dividend of 9 sen per 10 each, to be paid on October 7 this year.

On its current year prospects, IOI Corp said the global economic growth had recently shown signs of slowing down. This would make the new financial year a challenging period for business corporations. "The group is optimistic that it will perform satisfactorily in the new financial year," IOI Corp added.

Aussie govt to oppose palm oil labelling Bill

2011-08-25T11:09:00.001+08:00

MELBOURNE: The Australian Government will oppose a Liberal-National Party coalition-supported anti-trade Private Member's Bill on compulsory palm oil labelling as it would breach Australia's obligations under the World Trade Organisation (WTO).

Trade Minister Dr Craig Emerson told Parliament on Tuesday, the Bill, sponsored by independent Senator Nick Xenophon and the Australian Greens, was likely to pass the House of Representatives with the support of the coalition.

Emerson said the Bill passed the Senate following the personal intervention of coalition leader Tony Abbott, who is widely tipped to be Australia's next prime minister.

"Coalition members of the relevant Senate inquiry joined with Labor senators in recommending against the Bill, but their position was reversed following Abbott's personal intervention," he said.

He said all of Abbott's instincts were interventionist and protectionist. "This latest anti-trade move by the coalition comes hard on the heels of the Shadow Agriculture Minister's Bill seeking to overturn a WTO ruling that New Zealand apples be allowed into Australia subject to scientifically-based quarantine conditions," he said.

Emerson said the government refused to deal with the coalition on the apples Bill and would not negotiate with Abbott, who is also Opposition leader, on the palm oil Bill.

"Abbott wants to load up food processing companies with a A$150 million (RM468 million) cost burden and risk a trade war with Malaysia and Indonesia," he said. He said Abbott's personal support for yet another anti-trade, anti-business Bill showed how reckless he was on economic and trade policy.

Both Malaysia and Indonesia had warned they would take action against Australia at the WTO if the Bill were passed. -- Bernama

2nd appeal against Aussie Bill

2011-08-19T11:55:00.001+08:00

This is written by my colleague Rupa Damodaran.

KUALA LUMPUR: The Malaysian palm oil industry yesterday made a second appeal to the Australian Parliament not to go ahead with its proposed palm oil labelling Bill.

The legislation will not only undermine a central pillar of the Malaysian economy but would also be a sharp reversal from years of liberalised trade between both economies.

Malaysian Palm Oil Council CEO Tan Sri Yusof Basiron said the Bill would threaten the future of the industry, not just palm oil producers. "It will punish our farmers with an indirect trade barrier, even though the alleged deforestation or orang-utan habitat destruction - the mitigation of which is the prime objective of this Bill - are nothing but non-government organisation (NGO) myths," he said.

He was making a presentation before a public hearing of the Australian House Standing Committee on Economics to provide testimony and answer questions regarding the Food Standards Amendment (Truth in Labelling - Palm Oil) Bill 2010.

Palm oil has raised hundreds of thousands of small producers from poverty and provides them and their families a sound future, education and a better standard of living.

This is the second time Yusof is presenting Malaysia's case to the Australian legislators.

In April, Malaysia successfully raised its objection to the legislation, saying it is based on misleading claims and aimed at harming its largest agricultural export - palm oil. Although the Community Affairs Legislative Committee recommended that the Bill not be passed, the Australian Senate chose to go ahead, and it is now being brought to the House of Representatives before it is passed as a law.

Malaysia recently completed a high-level ministerial, parliamentary and industry visit to Australia, led by Plantation Industries and Commodities Minister Tan Sri Bernard Dompok, to Victoria and the New South Wales to address the many misconceptions being spread about the palm oil industry.

"We believe, regretfully, that this Bill is targeted at Malaysian palm oil, because of the two major countries capable of supplying palm oil, Australia chooses to import almost 100 per cent of its palm oil from Malaysia."

He also noted that the Bill has been significantly expanded to include any food and non-food products containing or made with the use of palm oil or any of its by-products, making it no longer appropriate to be considered a "food labelling" Bill.

Yusof told the committee that the proposed law violates several principles of the WTO as well as terms of the Asean-Australia-New Zealand Free Trade Agreement. "Claims of the imminent extinction of the orang-utan are without merit and also ignore efforts in Malaysia to preserve the lives and habitats of the country's 16,000 orangutans, through the establishment of wildlife sanctuaries, megawildlife preserves and rehabilitation centres for displaced orang-utans."

KL Kepong Q3 profit leaps 78pc

2011-08-17T20:37:00.002+08:00

KUALA LUMPUR: Kuala Lumpur Kepong Bhd's (KLK) third quarter profit ended June 2011 leapt 78 per cent to RM432.76 million from a year ago, thanks to stronger contribution from its oil palm division, oleochemical operations and sale of its cocoa business.

Group revenue rose to RM2.95 billion from RM1.83 billion before.

In a filing to the stock exchange yesterday, KLK said its plantations profit for the quarter climbed 73 per cent to RM454.4 million, underpinned by higher average palm oil price of RM3,085 per tonne, palm kernel oil of RM2,375. Rubber was sold at RM16.15 per kg.

The group's manufacturing profits jumped 68 per cent to RM95.5 million, underpinned by buoyant fatty alcohol performance of the oleochemical division.

For the quarter, KLK sold off its 50 per cent stake in Esterol Sdn Bhd for RM234.7 million. The Klang-based food emulsifier manufacturer was a joint venture with Kerry Group BV, Netherlands.

KLK exited the cocoa business and gained RM43.4 million from the sale of its 40 per cent remaining stake in Barry Callebaut Malaysia Sdn Bhd.

The effective tax rates for the current quarter are lower than the statutory tax rate. This is mainly due to non-taxable income received and the utilisation of previously unrecognised tax losses and capital allowances by select subsidiaries.

KLK is hopeful that the current financial year ending September 30 2011 will be favourable on higher palm oil output and stronger earnings from its oleochemical division.

L'Occitane ups stakes in units

2011-08-10T08:18:00.002+08:00

HONG KONG: L'Occitane International SA said yesterday it had bought the 49.9 per cent stakes it did not already own in L'Occitane Suisse SA and in L'Occitane (Korea) Ltd from Clarins BV, as it aims to expand its markets.

The French cosmetics maker also said it had taken over the distribution of its products in Malaysia through the purchase of L'Occitane Malaysia Sdn Bhd from Clarins Sdn Bhd. - Reuters

-------------------------------------------------

The news article below was written by Emma An and published on 26th June 2011 in China Daily.

HONG KONG: L'Occitane International SA, the French cosmetics and skincare products maker, said on Monday its full-year net profit rose 22 per cent as more stores were opened and sales grew in most of the markets where it has a presence.

In its second annual results announcement since its Hong Kong listing in April 2010, L'Occitane recorded a 22 per cent year-on-year increase in net profit to €99.5 million (US$142 million) for the year ended March 31 on sales of €772.3 million, 26.1 per cent more than the previous year.

The board proposed to pay a dividend of €0.0135 per share, corresponding to a payout ratio of 20 per cent.

During the financial year, L'Occitane increased the total number of retail locations to 1,828 from 1,541, a year ago, with a net addition of 131 of its own stores. Among new stores, more than 60 per cent were in BRIC (Brazil, Russia, India and China) countries, including 24 on the mainland, said Andre Hoffmann, L'Occitane's managing director and executive director.

"We intend to continue with our ambitious store opening plan not only in emerging markets but also fast growing developed countries," said Hoffmann at a media briefing.

While committed to further expanding its footprint in emerging markets including China, India and Brazil, the French beauty brand will accelerate store openings in developed markets such as Germany, Spain and Italy, where sales leapt by 27 per cent, 30 per cent and 68 per cent, respectively in the year to March.

For the mainland, where L'Occitane currently owns 71 retail stores, the company plans 30 store openings in the 12 months through March 2012.

Despite making up only 4 per cent of its global sales for 2011, the mainland seems poised to overtake Japan as L'Occitane's top market with its stunning growth rate, and Hoffmann acknowledged that this "could happen" despite the "big gap today".

Sales on the mainland soared 46 per cent in the year to March 2011, fueled by new store openings and brisk same-store sales growth, which, at 8.3 per cent, was higher than most developed markets. "The growth outlook for China is fantastic, and we don't see that changing in the near term," said Hoffmann.

In Japan, which generated a quarter of L'Occitane's overall sales, net sales rose 11 per cent, while same-store sales increased 1.8 per cent.

The outlook for its number one market Japan will remain unclear due to the March catastrophe, which caused disruptions to L'Occitane's business in the country in the two weeks following the event, according to Hoffmann.

But a large part of the momentum will still come within Asia Pacific. Of the 549 stores the company plans to open during the coming five years, slightly under a third will be in Asia Pacific. He said that the company is happy with what it has achieved in Hong Kong, where L'Occitane ran 22 stores as of March 2011.

Despite being both a heated and saturated market, as Hoffmann noted, Hong Kong led L'Occitane's same-store sales growth globally with a 20 per cent gain, boosted in large measure by the growing number of mainland tourists visiting Hong Kong and spending money here.

In a research note, JPMorgan analyst Elsa Yang wrote that a good set of results together with further visibility of the company's Japan market will continue to drive the share price. The stock has lost 13 per cent this year, compared with a 4.3 per cent decline for the benchmark Hang Seng Index. L'Occitane's shares slipped 0.9 per cent to HK$18.62 at the close of Monday trading in Hong Kong.

Plantation workers get Raya cheer

2011-08-10T08:16:00.000+08:00

This is written by my colleague Zaidi Ismail.

KUALA LUMPUR: Hari Raya has come early for some 157,270 plantation workers in Malaysia. From September 1, they will get a 10 per cent pay increase and are guaranteed a minimum monthly pay of RM850, the Malayan Agricultural Producers Association (Mapa) said in a statement.

Mapa hopes that this would help alleviate the hardship and burden of plantation employees due to the rising cost of living.

Normally, plantation employers who are not members of Mapa would voluntarily follow the payment scheme adopted by Mapa. Therefore, it expects the scheme to further benefit, either directly or indirectly, another 70,000 plantation employees, Mapa president Tan Sri Dr Mohd Noor Ismail said.

The 10 per cent revision of wages for all employees would cost the plantation sector an additional RM300 million per year or from RM1.9 billion to RM2.2 billion per year. The arrears of wages and ex-gratia payment would further cost the plantation sector an additional RM364 million, Mapa said.

It also cleared the air over a misconception that plantation employees are earning less than RM350 per month.

Separately, Genting Plantations Bhd, the plantation arm of Genting Group, is giving all of its more than 12,000 estate and oil mill workers and non-executive staff a RM200 pay increase a month, effective September 1.

In a statement yesterday, Genting said the increase is in conjunction with Mapa's scheme.

Analysts: CPO prices likely to decline further

2011-08-10T08:04:00.000+08:00

KUALA LUMPUR: Analysts estimate crude palm oil prices to fall further on heightened global economic uncertainties and higher palm oil output, in the second half of the year.

In its notes to investors, MIDF Research reduced its palm oil price forecast to RM3,200 per tonne from an earlier RM3,400.

It downgraded Kuala Lumpur Kepong Bhd, Kulim Bhd and Sarawak Oil Palms Bhd on limited potential upside in its share prices but recommended a "buy" call on defensive stocks of high dividend yield like TH Plantations Bhd.

Another research house, UOB KayHian, maintained its assumptions that the vegetable oil will average at between RM2,900 and RM2,700 per tonne. "All Malaysia-based plantation companies under our coverage posted strong production growth in the second quarter of this year, especially those with larger exposure in Sabah. IJM Plantations Bhd, with 100 per cent Sabah exposure, is likely to post the strongest quarter-on-quarter earnings growth," UOB KayHian said.

"Other Sabah-concentrated planters, such as Genting Plantations Bhd and IOI Corp Bhd, also recorded strong quarter-on-quarter production growth," it added.

Last Friday, Standard & Poor's downgrade of the long-term US credit rating to "AA-plus". Fear over the US credit ratings downgrade and a worsening debt crisis in Europe triggered a broad sell-off across equities and commodities, except for gold. The Reuters-Jefferies CRB index, the 19-commodity benchmark, fell nearly 4.5 per cent last week, its steepest drop since a rout in early May fuelled by concerns of a stalling global economic recovery.

In Kuala Lumpur, palm oil futures had plunged by more than RM180 or 6 per cent in the last three trading days.

Yesterday, the third month benchmark crude palm oil futures on the Malaysian Derivatives Exchange continued to fall to close at RM2,920 per tonne. This level is 23 per cent lower than this year's high of RM3,780 per tonne traded in January.

HDM Futures, in its notes to traders, said the palm oil futures market is vulnerable to more declines, with prices seen at a support level of RM2,890 per tonne.

A day before news broke out on the US becoming a less reliable debtor, palm oil traders had already anticipated price softening. Palm Oil Refiners Association of Malaysia (Poram) chairman Wan Mohd Zain Wan Ismail reportedly said palm oil prices are likely to soften by 8 per cent to RM2,800 per tonne on higher output in next three months.

"We are expecting softening in palm oil prices ... production is rising and is set to peak in September and October," he said at the sidelines of a vegetable oils conference in Mumbai, India.

According to the Malaysian Palm Oil Board, oil palm planters harvested and squeezed 8.59 million tonnes of crude palm oil, in the first half of this year. That was 8 per cent more than the same six months, a year ago.

Commodities to fall but 'no panic'

2011-08-08T14:39:00.001+08:00

SINGAPORE: Commodities, except gold, will likely fall when markets open today due to a US ratings downgrade and a worsening debt crisis in Europe, but panic shall be avoided.

Bullion should benefit from renewed risk-aversion while outlook for demand for oil, base metals and grains deteriorates.

Strong economic growth in China - the world's top copper consumer, No. 2 oil user and major buyer of grains - as well as tight global supplies for some raw materials, including coal and iron ore, will provide certain support and some investors may see weakness as a buying opportunity.

"It should be an orderly decline, nothing to panic about. The important thing now is that confidence doesn't slip too far," said Citigroup analyst David Thurtell.

Standard & Poor's cut the long-term US credit rating to "AA-plus" on Friday, a move that over time could ripple through markets by pushing up borrowing costs and making it more difficult to secure a lasting recovery.

The cut in ratings for the world's largest economy and a spreading crisis in Europe prompted global policymakers to hold an emergency conference call yesterday to discuss the debt crises in the US and Europe.

"I would expect price action to be choppy and volatile and downward pressure on prices are likely to remain until a more certain trajectory to economic growth is ascertained," said Amrita Sen from Barclays.

The US dollar may weaken and Treasury yields rise after S&P's move, though any selling is likely to be tempered by the escalating crisis in the euro zone.

Olivier Jakob from Petromatrix said a potential steep fall in equities could drag commodities down as some hedge funds will be facing margin calls.

"However if the US dollar debases further that could have a short-term positive impact on oil due to the computerised trading on the dollar fluctuation. But given that the rest of the world (China, Europe) are facing their own financial problems we do not think that any support from a weaker dollar will have a long and lasting impact on the oil prices".

The Reuters-Jefferies CRB index, the 19-commodity benchmark, fell nearly 4.5 per cent last week, its steepest drop since a rout in early May fuelled by concerns about a stalling global economic recovery.

London copper should lead base metals lower and grains may also retreat while gold could retest new peaks.

Gold hit an all-time high of US$1,681.67 (RM4,995) an ounce on Thursday, its 10th record in 18 sessions.

"The initial reaction will be a high degree of uncertainty and thus volatility since investors will not know where to turn for safety," said Mark Mobius, executive chairman of Templeton Emerging Markets group which oversees US$50 billion (RM150.5 billion) in emerging market assets.

"During the sub-prime crisis safety was in US dollars and US Treasuries. Now that anchor to the global community is deteriorating," he said in an email.

However, with China's economy, the world's second largest, continuing to expand strongly, "commodities could be a bit of a haven on a China play," said Citigroup's Thurtell.

"China has not excessively borrowed, they've got a pretty good fiscal position, they've got very high foreign exchange reserves, so China's got the ability to keep growing and that's the bottom line in commodity markets," he said. - Reuters

Malaysia to send reps to Aussie panel hearing

2011-08-08T14:31:00.000+08:00

PENAMPANG: Malaysia will send representatives to Australia for a committee hearing to be held before the Bill that requires palm oil labelling, is debated at Australia's Parliamentary level.

This would be another effort in correcting the misconceptions towards Malaysia's palm oil practices, following Plantation Industries and Commodities Minister Tan Sri Bernard Dompok's recent visit to the land down under.

"As we know the Australian Senate has passed the Food Standards Amendment (Truth in Labeling - Palm Oil Bill) ... But before the Lower House of the Australian Parliament's debate, there will be a hearing at the committee level.

We are sending representatives and the hearing this time will be on the economic aspects and what we will explain to the Australians is that the oil palm industry has lifted a lot of Malaysians out of the poverty trap, especially in rural areas, with not less than 600,000 people directly or indirectly employed in the plantation industry," he told reporters after launching a district level 1Malaysia futsal competition here yesterday.

He said Australians should be aware that smallholders represented 40 per cent of the industry, which meant if this commodity should be labelled as something unsafe to consume, it would affect the source of livelihood for a lot of people in Malaysia.

Dompok led a delegation to Australia in July to promote several commodities, including rubber and timber, but special focus was given towards lobbying Australians against the Parliamentary move that could threaten Malaysia's palm oil industry.

Asked on when the committee hearing would be held, he said Australian Parliament had set an August 15 deadline for those wanting to present a case and hearing would be fixed hereafter.

"The Malaysian team will consist of people on the ground, experts that have done research on palm oil and will have a chance to present themselves and defend their submissions before the Parliamentarians," he added.

Dompok has also asked the Malaysian Palm Oil Board to hold seminars and workshops in Australia in order for locals to participate and understand more about Malaysia's palm oil industry.

He said although Australia has stated three grounds as reasons to pass the Bill, they were all unfounded due to misconceptions.

"They cited depletion of forests (environmental grounds), displacement of orang utans and that palm oil was harmful on health grounds ... but it is a known fact that Malaysia is committed to preserving at least 50 per cent of total land as forests, and today we have 55.3 per cent as forest reserves.

"And, to say we have destroyed orang utans' habitat due to forest cutting is also not true ... orang utan population is mostly in the east coast of Sabah and smaller numbers yet in Sarawak, where both states have sanctuaries for these primates ... While the health issue of palm oil has been addressed in the past and is no longer an issue," Dompok explained.

In fact, he said the misconceptions towards Malaysia's palm oil practices and the treatment of its wildlife has spread to other countries, which has led to the international community coming to wrong conclusions.

"I have previously visited a zoo in Netherlands, where they had a lot of negative materials pasted around the zoo on how orang utans were kept in Malaysia and how palm oil cultivation was leading to forest depletion.

"When I spoke to some of the zoo staff, they did not know that there were still abundant orang utans in Malaysia. This shows complete ignorance and it is being furthermore fed by (international) NGOs. I told them that they should come and see for themselves in Malaysia," he added. - Bernama