December 31, 2012, 3:37 am
This is written by my colleague Zaidi Isham Ismail.
KUALA LUMPUR: FELDA Global Ventures Holdings Bhd (FGV) may sell its 20 per cent stake in Tradewinds (M) Bhd, worth an estimated RM551.5 million, to fund future land expansion.
FGV president and chief executive officer Datuk Sabri Ahmad said if the company decides to sell the stake, the proceeds will be used to fund upstream expansion, namely to buy more plantation land.
It is interesting to note that apart from being the largest crude palm oil producer in the world, FGV is also Malaysia’s Sugar King. In January 2010, FGV bought over Robert Kuok’s entire sugar business in Malaysia and a 20 per cent stake in Tradewinds (M) Bhd for RM1.8 billion.
"We will evaluate the situation and seek advice from investment banks. Then we will table the matter at the board of directors meeting next month," Sabri told Business Times over the weekend.
Sabri was commenting on Tan Sri Syed Mokhtar Al-Bukhary's plan to take Tradewinds private, of which, sources said, will be restructured into four separate entities - rubber, sugar, oil palm and rice.
Syed Mokhtar, a low-profile businessman and Malaysia's seventh richest man announced last week he is taking over Tradewinds by offering shareholders RM9.30 for every share he does not own in the company.
The whole deal is also expected to lead to the privatisation of Tradewinds Plantations Bhd and Padiberas Nasional Bhd (Bernas).It is expected to cost RM2.5 billion.
"I think it makes sense for FGV to sell the stake rather than keep it because at 20 per cent, FGV does not have management control over Tradewinds. With proceeds of over RM550 million, it is better for FGV to buy controlling stakes in many other companies," said a Tradewinds source, who declined to be named.
According to a news report last week, FGV is expected to reap a 188 per cent or RM390.2 million return on investment from its strategic acquisition in Tradewinds in January 2010. Should it decide to sell its entire stake in Tradewinds at RM9.30 a share, government-linked FGV stands to reap a windfall of RM551.5 million.
It was also reported from January 2010 to date, FGV has received net dividends amounting to RM46.3 million from its 20 per cent equity in Tradewinds.
FGV is one of Malaysia's largest plantation company and yet, it is a unique entity because it leases and manages 500,000ha of oil palm land for the country's 112,635 smallholders.
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Here's a short video on YouTube that explains how ice cream is made from palm oil. Non-dairy ice cream is suitable for those who are allergic to cow's milk.
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KUALA LUMPUR: PALM oil dropped to the lowest level in more than two weeks after a report that buyers in China, the largest consumer of cooking oil, built the biggest-ever stockpiles before the country tightened rules on imports.
The contract for March delivery fell as much as 1.5 per cent to RM2,382 a tonne on the Malaysia Derivatives Exchange, the lowest price for the most-active contract since December 21, and was at RM2,397 at 4:04 p.m. in Kuala Lumpur. Prices fell for the fourth straight day.
With effect from January 1, China imposed more stringent rules on edible oil imports to improve food-safety standards. Palm oil inventory at major ports in China climbed to a record 1.1 million tonnes as of Monday the China National Grain & Oils Information Center said in a report yesterday.
Malaysia's palm oil reserves reached an all-time high in November. Official data on holdings in December are scheduled on January 10.
"Demand from China may be lower in January," Benny Lee, market strategist at Jupiter Securities, said by phone in Kuala Lumpur. As total sales have also slowed, inventories in Malaysia may expand further, said Lee.
Stockpiles in Malaysia were 2.53 million tons in December compared to the record 2.56 million tonnes a month earlier, according to the median of estimates from six analysts and two plantation companies in a Bloomberg survey published on Monday.China's imports from Malaysia jumped 24 per cent to 866,340 tonnes in November and December last year from 698,000 tonnes in the same period in 2011, according to data from Societe Generale de Surveillance (SGS). Total shipments from Malaysia fell 7.9 per cent to 1.52 million tonnes in December, SGS said on December 31. Palm oil for May delivery lost 1.7 per cent to close at 6,844 yuan (RM3,343) a tonne on the Dalian Commodity Exchange. Soybean oil for May fell 0.3 per cent to end at 8,660 yuan a tonne.Soybeans for March delivery were little changed at $13.8725 a bushel on the Chicago Board of Trade. Soybean oil for delivery in March lost 0.1 per cent to 49.89 cents a pound.Meanwhile, palm oil exports from Indonesia may climb about 10 per cent to an all-time high this year as output gains to a record and sales of refined products increase, according to an industry group.Shipments may climb to 20 million tonnes from an estimated 18.2 million tonnes last year, according to the Indonesian Palm Oil Association or Gabungan Pengusaha Kelapa Sawit Indonesia (Gapki). Output will probably expand 5.7 per cent to 28 million tonnes.
"Export of refined products may be more than 60 per cent of total shipments in 2013, because the tariffs are lower than crude palm oil," Susanto, head of marketing at Gapki, told reporters in Jakarta yesterday. That would compare with 58 per cent in 2012, he said.
Demand for refined products especially from China, the world's biggest edible oil consumer, is promising and will continue to increase, he said. Indonesia exported about 3 million tonnes of palm oil to China in 2011, according to data from Gapki. Shipments in the first 10 months of 2012 reached 2.4 million tonnes, down about 2 per cent from a year earlier.
Indonesia needs to cut its export tax to avoid losing market share to Malaysia in countries such as India and Pakistan that typically buy more of the crude variety, Gapki secretary-general Joko Supriyono said.
Indonesia cut the export tax on crude palm to 7.5 per cent this month from 9 per cent in December, while Malaysia set the tariff at zero. The Indonesian duty for refined products such as palm-based biodiesel and refined, bleached and deodorised palm oil are set at zero for this month, according to data compiled by Bloomberg.
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January 10, 2013, 6:52 pm
The minimum wage law, which took effect on January 1, is meant to incentivise corporate Malaysia to be less reliant on cheap labour. However, the Malayan Agricultural Producers Association tells Ooi Tee Ching that planters will lose money and consumers, would face higher food bills, if palm oil prices were to fall below RM2,000 a tonne
KUALA LUMPUR: OIL palm planters, including smallholders, will bleed red ink if palm oil prices were to dip below RM2,000 per tonne, said Malayan Agricultural Producers Association (Mapa).
Following the introduction of the monthly RM900 minimum wage in Peninsular Malaysia, palm oil production costs have gone up to between RM1,200 and RM1,900 per tonne.
In an interview with Business Times, Mapa executive director Mohamad Audong explained that the higher cost of production is mainly due to costlier fertiliser, more expensive foreign worker recruitment fees, higher transportation cost and various taxes imposed by the federal and state governments.
"When the government set the monthly minimum wage at RM900, palm oil prices were trading at around RM3,000 per tonne," he said.
As the minimum wage law is currently enforced by the Human Resources Ministry, palm oil prices are averaging RM2,300 per tonne.
"If prices were to drop below RM2,000 per tonne, oil palm planters, including smallholders, will be in big trouble."
Planters who do not comply with the minimum wage risk a maximum fine of RM10,000 per worker. For continuous offenders, they will be fined RM1,000 per day and repeat offenders would face a RM20,000 fine or five years' jail or both.
Mohamad went on to highlight that as the government sought to propel Malaysia into a high income nation by introducing monthly minimum wages of RM900 in Peninsular Malaysia and RM800 in Sabah and Sarawak, it may have overlooked the possibility that planters could suffer severe profit erosion while consumers face higher food bills.
He explained that oil palm planters are price takers. A planter's earnings have always been at the mercy of pricing in the world's commodities markets. If palm oil prices were to plunge further, planters will definitely lose money.
"Don't forget, many of our planters borrow money from banks and issue bonds, of which bankers and insurance companies are subscribers."
Depending on the year of planting, Mapa calculated that palm oil production cost of these heavily-geared planters ranges between RM1,248 and RM2,975 per tonne.
"If palm oil prices were to fall further, some planters may face difficulties in repaying the banks. They'll then hire less hands and there'll be less harvest.
"With less cooking oil available, consumers will have to contend with inflationary food bills." Every year, the government pays more than RM1 billion in subsidy to keep cooking oil price at an affordable level of RM2.50 per kg.
"As you can see, the minimum wage policy works best if commodity prices are on the uptrend, not when prices are falling," he said.
Mapa represents 184 plantation companies in Peninsular Malaysia, with estates spanning across 700,000ha. These oil palm planters employ some 125,000 workers at the fields, of which 80 per cent are foreigners.
Last year, profits of plantation companies listed on the stock exchange declined by an average of 40 per cent as palm oil prices fell from a high of RM3,600 per tonne to a low of RM2,200 per tonne.
The loss of profits was also compounded by the RM200 monthly wage increment to workers of plantation companies since September 2011.
Mohamad noted the cost of getting food ingredients from farm to table have gone up but planters are not able to testify the same for productivity.
With the minimum wage law taking effect this year, daily wage has gone up from RM27 to RM34.62. Following this, Mapa estimates that plantation companies' profits are likely to shrink by another 10 per cent or so, provided that palm oil prices do not plunge further from the current RM2,300 per tonne.
UOBKayHian, in its latest recommendation to investors, downgraded the plantation sector to "underweight" from "overweight", citing that the new minimum wage will raise pressure on production costs and compress planters' operating margin.
Meanwhile, MCA president Datuk Seri Dr Chua Soi Lek, having proposed that transportation and housing costs for foreign workers be included in their wages at the National Economic Council earlier this week, said he will instruct four MCA ministers to also raise this issue in the next Cabinet meeting with Prime Minister Datuk Seri Najib Tun Razak.
He said these costs, including the annual RM1,250 levy, should be regarded as part of the minimum salary so as to ease employers' burden.
In a recent statement, Malaysian Employers Federation executive director Shamsuddin Bardan concurred that the RM1,250 annual levy on foreign workers should be shifted back to the employees in view of the minimum wage policy.
As it is now, oil palm planters are already providing free housing, water, electricity and healthcare for its workers in the estates.
In response, Mohamad said planters welcome the proposal but noted it would take a long while for it to take effect, even if all parties agree to it.
"Even if the National Economic Council were to agree to the proposal, it would still need the agreement from the National Wages Consultative Council. Following that, it will also take a few more months for the government to re-gazette the new way of calculating minimum wages."
When contacted, a National Union of Plantation Workers spokesperson said the minimum wage policy is being enforced by the government and "it is most appropriate that the Human Resources Ministry comment on this matter".
Human Resources Minister Datuk Seri Dr S. Subramaniam could not be reached for comment as he is on overseas travel.
----------------------------------------------------------------------------------Lessening employers' minimum wage burden
KUALA LUMPUR: The government will assess the severity of manufacturers' burden following the implementation of the minimum wage law, said Deputy Plantation Industries and Commodities Minister Datuk Hamzah Zainuddin.
Effective January 1, employers must pay a minimum wage of RM900 a month in Peninsular Malaysia and RM800 a month in Sabah, Sarawak and Labuan.
Hamzah noted that having a national minimum wage in Malaysia is a new development and as such, there are bound to be some teething issues.
"Timber and furniture exporters are not opposing the minimum wage law. The dissatisfaction is more of the way the salary is being packaged," he said. "They appeal that subsidies (including transportation and accommodation) be deducted from the RM900 minimum wage."
Timber manufacturers and exporters had also proposed that the government annual levy of RM1,250 be borne by the foreign worker.
"We will forward their appeals to the Human Resources Ministry," he told reporters after chairing a dialogue session with furniture and timber panelling exporters here yesterday. Also present were officials from the Home Affairs Ministry and Ministry of International Trade and Industry.
While the government wants to encourage mechanisation and automation wherever possible, Hamzah said the government endeavours to ease the manufacturers' burden.
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January 11, 2013, 7:09 pm
KUALA LUMPUR: THE government is unlikely to backdate the implementation even if the Cabinet agrees to a proposal to include several costs and the RM1,250 annual levy into the minimum wages.
Effective January 1, employers must pay a minimum wage of RM900 a month in Peninsular Malaysia and RM800 a month in Sabah, Sarawak and Labuan.
Human Resources Minister Datuk Seri Dr S. Subramaniam noted that having a national minimum wage in Malaysia is a new development and as such, there are bound to be some difficulties.
He noted the government is determined to transform the economy to be less reliant on cheap labour. "At the same time, we also take note of employers' burden."
All along, employers from the manufacturing and plantation sectors are already providing free housing, water, electricity and healthcare for its workers.
In view of the minimum wage law coming into force, employers from the manufacturing and plantation sectors have appealed that the subsidies that they have been providing for their workers be included in the minimum wage.
"With this in mind, the Cabinet will decide on what is to be included in the calculation of minimum wages next Wednesday," he told reporters after the launch of the 150th birth anniversary of Swami Vivekananda celebrations here yesterday.
Asked if there is a need for the government to re-gazette the new way of calculating minimum wages, Subramaniam replied, "no, there is no need to".
To another query if the Cabinet would backdate its decision should it agree to the proposals put forth by employers, the Human Resources minister shook his head and said, "unlikely".
Asked if this essentially means daily-waged workers who had received RM34.62 a day since 1st January get to keep their salary, he nodded in agreement.
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January 14, 2013, 11:56 pm
KUALA LUMPUR: Oil palm planters in Sarawak will be forced to cut jobs if employers' burden is not eased as the minimum wage law came into force two weeks ago.
Effective January 1, employers must pay a minimum wage of RM900 a month in Peninsular Malaysia and RM800 a month in Sabah, Sarawak and Labuan.
This essentially means the basic daily wage in Sarawak has gone up from RM18 to RM31.
"Of course, everyone wants higher salary, but what about business survival? That's a 70 per cent jump in labour cost. How can we stomach that?" Ta Ann Holdings Bhd group managing director and chief executive officer Datuk Wong Kuo Hea asked.
"If the situation does not improve, we'll have to cut jobs. We have no choice," he said.
When met at a Malaysian Palm Oil Board's seminar in Kuala Lumpur yesterday, he said as the government sought to propel Malaysia into a high income nation by introducing monthly minimum wages, it may have overlooked the possibility of locals being discriminated.
"Picture this... a Malaysian gets the same basic wage of RM800, but the foreign worker enjoy free housing, water, electricity and transport. So, for the same minimum wage, a local gets less benefit," Wong said.
All along, employers from the plantation sector is already providing free housing, water, electricity and healthcare for its workers at the estates.
In view of the minimum wage law coming into force, planters have appealed for these subsidies be included in the minimum wage to rebalance the interests of local workers.
Last week, at the National Economic Council meeting, MCA president Datuk Seri Dr Chua Soi Lek lent his support that transportation and housing costs for foreign workers be included in their wages.
He also said he had instructed four MCA ministers to raise the issue in tomorrow's Cabinet meeting with Prime Minister Datuk Seri Najib Razak.
Wong said these costs, including the annual RM1,135 (timber) and RM695 (plantation) levy in Sarawak, should be regarded as part of the minimum salary so as to ease employers' burden.
In a telephone interview with Business Times from Kuching, Sarawak Oil Palm Plantation Owners' Association (Soppoa) chairman Datuk Abdul Hamed Sepawi estimated that the proposed relief would translate to a 30 per cent increment in labour cost for oil palm planters in Sarawak, instead of the current 70 per cent drastic jump.
Hamed highlighted the cost of getting food ingredients from farm to table have gone up, but planters are not able to testify the same for productivity.
This is because oil palm planters are price takers of the world's commodity markets. "We're not in a position to pass on additional costs to clients," he said. A planter's earnings have always been at the mercy of pricing in the world's commodities markets.
If palm oil prices were to plunge below RM2,000 per tonne, Hamed said planters will definitely lose money. "Many of our members borrow money from banks and issue bonds, of which bankers and insurance companies are subscribers," he said.
Depending on the year of planting, Soppoa calculated that palm oil production cost of these heavily-geared planters ranges between RM1,200 and RM3,000 per tonne. "If palm oil prices were to fall further from the current RM2,300 per tonne, some planters may face difficulties in repaying the banks.
"They'll then hire less hands and there'll be less harvest. With less cooking oil available, consumers will have to contend with inflationary food bills," said Hamed. Every year, the government pays more than RM1 billion in subsidy to keep cooking oil price at an affordable level of RM2.50 per kg.
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January 15, 2013, 12:14 am
This is written by my colleague Sharen Kaur.
KUALA LUMPUR: THE government will maintain the current zero export tax on crude palm oil (CPO) for February as the base price is still below RM2,250 a tonne, says Plantation Industries and Commodities Minister Tan Sri Bernard Dompok.
"There will be another month of tax-free CPO if the price does not reach RM2,250 a tonne," he told reporters here yesterday, after officiating at the opening the Palm Oil Review and Outlook Seminar 2013.
Effective January 1 2013, the export taxes on CPO are between 4.5 per cent and 8.5 per cent, down from the previous average of 23 per cent. It is being fixed on a monthly basis.
The new tax structure is meant to facilitate refiners market cooking oil, oleochemicals, specialty fats and biodiesel at competitive prices to the global marketplace.
On news that Indonesia, the world's largest palm oil producer, was considering reducing export taxes too, Dompok said it was a positive strategy for the industry.
"Malaysia and Indonesia are the two biggest producers of palm oil and any move by them will have an impact on the economy and CPO prices. We will continue to engage with our counterparts in Indonesia on this.
"During a meeting in Thailand, we both agreed that there are a lot of good things that can be done through cooperation on supply management and price stabilisation," he said.
Meanwhile, Dompok said the government is upbeat that implementation of the 10 per cent palm biodiesel blending (B10 programme) for the non-subsidised sector will help ease the current record high palm oil stock.
Last week, the Malaysian Palm Oil Board reported that the December 2012 palm oil stock had increased 2.41 per cent to 2.63 million tonnes from November.
"We expect the full implementation of the B10 programme by the end of this year. This will help ease the palm oil stock to a more comfortable level of below two million tonnes.
"The government has spent over RM50 million to set up blending facilities and most of them would be operational by the end of this year. We expect about one million tonnes of CPO to be taken off the market," Dompok said.
The minister is bullish on growth in the palm oil industry in the current year, citing improvements in the global economy. "I think the industry can only improve. Malaysia has more than 160 food items using palm oil. We can do better," Dompok said.
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January 18, 2013, 12:55 am
This is written by my colleague Zaidi Ismail.
KUALA LUMPUR: The RM5.2 billion privatisation of KFC Holdings (M) Bhd and its parent QSR Brands Bhd will be completed on Monday, subsequently paving the way for the de-listing of both firms.
QSR Brands managing director Datuk Ahmad Zaki Zahid said KFC and QSR shareholders will be paid on January 23 and January 25, respectively.
“The RM5.2 billion privatisation cost is being paid by Johor Corp Bhd (JCorp), the Employees Provident Fund (EPF) and CVC Capital Partners,” Ahmad Zaki told reporters here yesterday at the launch of Pizza Hut’s latest offering, the Golden Harmony Feast.
He, however, declined to comment on how much each party will get from the privatisation exercise as well as the delisting date.
UK-based CVC Capital Partners in December 2011 had teamed up with JCorp and the EPF in a massive RM5.2 billion buyout offer for KFC and QSR, which was approved by the shareholders of both listed firms.
KFC and parent QSR Brands will be taken private by Massive Equity Sdn Bhd at RM4 for each KFC share and RM6.80 for each QSR share, which also include RM1 for each KFC warrant and RM3.79 for each QSR warrant.
Massive Equity is a special-purpose vehicle owned by the companies' ultimate parent JCorp, private equity firm CVC Capital Partners and the EPF.
JCorp and CVC made the buyout offer in December 2011 with the EPF joining in the bid later in May.
The privatisation of both companies is the largest private equity deal in Southeast Asia. Stocks of both companies have been suspended since January 4 to facilitate the capital repayment.
Ahmad Zaki said QSR Brands, which is the franchisee for Pizza Hut, plans to spend RM35 million to open 45 new Pizza Hut restaurants and upgrade 12 existing ones nationwide this year.
He said with the expansion plan, Pizza Hut will have a total of 300 branches by year-end. He also said the restaurant owner and operator is also upgrading its online order and delivery system that had started last year. It is expected to be completed and operational by the second quarter of this year.
"We hope to receive online orders up to 30 per cent of total orders from 12 per cent, at present," said Ahmad Zaki.
Pizza Hut has allocated RM1.3 million to promote the Golden Harmony Feast, in conjunction with the Chinese New Year next month. This meal comprises a Golden Crab Claw pizza, a Golden Platter and the Fizz Golden Passion drink.
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January 22, 2013, 7:18 pm
As calls to stop planting oil palms on peat soil resurface, lawmakers tell OOI TEE CHING that timely communication of facts and figures of peat agriculture is imperative for the good of Malaysia's economy.
LAST week, opposition leader Datuk Seri Anwar Ibrahim outlined Pakatan Rakyat's policy in taking care of oil palm planters' interests, should the opposition come into power at the federal level.
In his bid to win the hearts of oil palm planters, which make up a significant vote bank, Anwar unwittingly struck a raw nerve when he lobbied Malaysia to stop planting oil palms on peat soil, pending studies on carbon emissions and sequestration.
When met at Putrajaya yesterday, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok, who is also Penampang Member of Parliament, rejected Anwar's lobby.
"This is not acceptable. Anwar's lobby for a moratorium seems to be echoing that of western environment non-governmental organisations' (WENGOs) mantra," he told Business Times after officiating at the close of "Branding of Malaysian Palm Oil" workshop yesterday.
Time and again, WENGOs like Greenpeace and Wetlands International, and their local affiliates, have claimed that oil palm planting on peatland causes tremendous pollution in the form of greenhouse gas (GHG) emission when water is drained from the soil.
These groups, however, fail to provide any credible scientific evidence to support their allegations.
"For Anwar to lobby a move that echoes the WENGOs' shows that he is not guided by logic. How can planting oil palms be highly polluting when these trees, like any other forest species, produce oxygen for us to breathe?" he asked.
"Sarawak is Malaysia's final frontier in oil palm planting. If Anwar is a responsible lawmaker serving the best interest of the rakyat, he should go to Sarawak and see how the oil palms, nurtured with good agricultural practices, are thriving on peatland," Dompok said.
The minister also said GHG emission is not really an issue as Malaysia is a net carbon sink country with more than 80 per cent of tree cover provided by permanent forests and plantation crops, including oil palms, rubber, cocoa and coconuts.
Dompok then sought tighter support from media practitioners to convey the facts and figures of sustainable practices by oil palm planters to quash baseless claims by irresponsible people who have vested interests to lobby against oil palm planting in Sarawak's 1.6 million hectare of peatland.
In a separate telephone interview from Sarawak, Kapit Member of Parliament, Datuk Alexander Linggi, concurred with Dompok that it is of national economic interest that progress studies of sustainable peatland farming is communicated to the relevant channels and done in a timely manner so that investors understand how best to optimise what is available in Sarawak.
Linggi spoke of higher economic potential of oil palm planting compared with other cash crops. "Nobody criticises pineapple planting on peatland. So, why are there unfair attacks from environment activists when my people want to plant oil palms?" he asked.
"The oil palm is an economic security crop for Sarawak and the country," he said, in reference to Malaysia's annual US$20 billion (RM60.8 billion) palm oil exports which support some two million jobs and livelihoods along the sprawling value chain.
Johor Bahru Member of Parliament Tan Sri Shahrir Abdul Samad, who is also chairman of the Malaysia Palm Oil Board, noted that zero burning, good water management and palm nutrition are imperative when planting oil palms in peat soil.
"The intensity of drains depends on the topography of the field and planting density but the primary objective is to keep the water levels at 50 cm to 75 cm from the surface at most times," he said.
This is achieved through a series of stops, weirs and water-gates. Periodic flushing of the acidic and excessive storm water during the rainy season is also carried out, he added.
Shahrir highlighted that in Peninsular Malaysia, oil palms planted on peat soil by United Plantations Bhd is being carried out in an environmentally sustainable manner, even after three generations.
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January 23, 2013, 7:20 pm
KUALA LUMPUR: SIME Darby Bhd, which saw a strong demand for its first US dollar-denominated islamic bond, has priced the US$800 million (RM2.43 billion) two-tranche sukuk at record low yields, setting new benchmarks.
The sukuk was oversubscribed by more than 10 times, with orders amounting to more than US$8 billion, said the country's largest conglomerate.
It priced its inaugural US$400 million five-year sukuk issue at 2.053 per cent a year, and its US$400 million 10-year issue at 3.29 per cent a year.
It achieved the lowest ever coupon rate by any corporate issuer globally in the US dollar sukuk market, reflecting the strong demand for both offerings.
The transaction was closely watched as Sime Darby is the first Malaysian issuer and the first sukuk issuer globally in 2013 to tap the international US dollar debt capital markets.
The issues, which are part of a US$1.5 billion multi-currency sukuk programme that Sime Darby established earlier this month, will be listed in both Malaysia and Singapore.
"I think demand for the issues will remain strong. It's a rare sector as most issuances are in the banking sector. Plus, demand always outstrips supply in the sukuk space," a chief investment officer who helps manage fixed income funds told Business Times.
The sukuk programme was accorded an "A" rating by both Fitch Ratings and Standard & Poor's Ratings Services, and "A3" by Moody's Investors Services.
Sime Darby, which is among the top three largest plantation firms in the world, plans to use the net proceeds from the issues to finance the group's capital expenditure, working capital requirements and general corporate purposes.
By geography, the five-year issue attracted 184 orders across Asia (83 per cent) and the Middle East/Europe, while the 10-year issue attracted 192 orders across Asia (57 per cent) and Middle East/Europe.
"We are extremely pleased with our debut issuance and the robust investor response we have received.
"The confidence the market has placed in us is clear testament to the strength of the group, especially in the longer term," said its president and group chief executive officer Datuk Mohd Bakke Salleh in a press release yesterday.
He said the transaction also represented the lowest ever US dollar coupon in sukuk format by an Asian issuer, and the lowest ever by a Malaysian borrower in the US dollar market, in both the five-year and 10-year tenures.
Citi, HSBC, Maybank and Standard Chartered were the banks involved in the transactions.
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January 27, 2013, 5:04 pm
MEF talks on behalf of oil palm planters in Peninsular Malaysia, Sabah and Sarawak.
Planters, especially smallholders who depend on contractors hiring foreign workers to harvest fresh fruit bunches, are feeling the brunt of the minimum wage policy. This is because their income has dwindled as palm oil in the futures market continue to trade at a low price band of between RM2,200 and RM2,500 per tonne, in the last five months.
PETALING JAYA: Food inflation and higher outflow of money are the consequences of the implementation of the minimum wage law, which came into force four weeks ago.
From January 1, employers must pay a minimum wage of RM900 a month in Peninsular Malaysia and RM800 a month in Sabah, Sarawak and Labuan.
In an interview with Business Times here recently, Malaysia Employers Federation (MEF) executive director Shamsuddin Bardan estimated that foreign workers, on average, send back some RM700 each month, which is half of their take-home pay that include overtime claims.
"With a conservative estimate of two million foreign workers here, that works out to be RM1.4 billion flowing out of Malaysia to their home countries every month.
"Starting this year, with the blanket implementation of the minimum wage law, the outflow of money from Malaysia is likely to swell to RM2.1 billion every month," he said.
The government's decision to introduce the monthly minimum wage, as part of its efforts to propel Malaysia into a high-income nation, may also result in higher food bills.
Right now, employers in food and beverage businesses have yet to feel the brunt of the minimum wage law.
"Come July 1, they will no longer be exempted. Small entrepreneurs such as restaurant hawkers, wet market and stall operators will then seek to pass on the extra cost by raising food prices. That is when we will experience costlier teh tarik and roti canai," Shamsuddin said.
Another side effect of the blanket implementation of the minimum wage law is that local workers' interests are being undermined. "A Malaysian gets the same basic wage of RM900 but a foreign worker enjoys free housing, water, electricity and transport. For the same minimum wage, a local does not enjoy these benefits," he said.
In view of this, the MEF is appealing to the government that such subsidies and benefits as provided by employers be included in the minimum wage to rebalance the interests of local workers.
Members of the Malaysia Corrugated Carton Manufacturers' Association (MCCMA), which are predominantly small and medium enterprises, have seen half of their profits shaved off as a result of the minimum wage law.
"We are at a crossroad. How are we going to survive? Those who are not financially strong will have no choice but to close shop and relocate to a more competitive and business-friendly environment like Myanmar," MCCMA chairman Henry Low reportedly said.
Similarly, the Malaysian Rubber Glove Manufacturers Association (Margma) said in a statement the minimum wage law had forced glovemakers to increase glove pricing by up to 7 per cent.
"The direct cost on labour will add another US$1.25 (RM3.80) per 1,000 pieces of gloves. We hope our overseas customers will be able to accept the costlier pricing," said Margma president Lim Kwee Shyan.
Shamsuddin said if the government allows employers to factor amenities costs into the minimum wage, the money will be spent in Malaysia instead of being repatriated to the foreign workers' home countries.
Apart from easing employers' burden, the move will have a multiplier effect on Malaysia's economy as it will generate higher domestic demand for house rentals, food and beverages, and public transportation, he said.
Shamsuddin noted that since April 2009, employers have been made to pay foreign workers' levy to the government. "The government imposes foreign worker levy as a form of income tax it is entitled to collect. Since local workers pay income tax, it is only right that foreign workers do the same, too," he said.
Separately, the Malaysian Trades Union Congress (MTUC) Sarawak Division secretary Andrew Lo, in a statement, said "the proposal to include amenities costs would encourage unscrupulous employers to continue to employ more foreign workers at huge social, security and cost to the country." The MTUC is the umbrella body representing workers in the private sector.
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January 28, 2013, 6:48 pm
KUALA LUMPUR: Mexico's decision to exempt import duties on various types of vegetable oils opens up greater opportunities for Malaysian exporters venturing into the market, says Malaysia External Trade Development Corporation (Matrade).
The exemption, to be effective March 1, covers vegetable oils such as soyabean oil and fractions, palm oil and its fractions, safflower oil and its fractions, coconut oil, palm kernel or babassu oil and its fractions, as well as fats and oils, animal or vegetable and their fractions.
Matrade's trade commissioner in Mexico, Remee Yaakub, advised Malaysian firms planning to enter the Mexican market to capitalise and strategise effectively as they have to compete with regional players.
"Malaysian companies may collaborate with local partners to introduce products through new product launches. With palm oil included in the exemption, they may introduce the health benefits of palm oil and market their products through an assertive awareness promotion," Remee said in a statement. ---Bernama
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January 30, 2013, 1:55 am
This is written by my colleague Zaidi Ismail.
KUALA LUMPUR: MALAYSIA must implement the use of B10 biofuel now to help lift weak crude palm oil (CPO) prices as well as reduce national stockpile.The B10 is a mixture of 90 per cent diesel and 10 per cent palm methyl ester, which can trim carbon emissions in the environment as well as reduce dependency on fossil fuels.
Felda Global Ventures Holdings Bhd (FGV) president and chief executive officer Datuk Sabri Ahmad said the government must start using B10 because current low CPO prices may weaken further by October, if no positive measures are taken soon.
October, November and December are traditionally high production months for oil palms, which may put a dent on CPO prices. The commodity is currently hovering at RM2,400 a tonne compared with an average of above RM3,000 last year.
"Once B10 is implemented, it can take out one million tonnes out of the 2.6 million stockpile. "This will help stabilise CPO prices which are currently on a downtrend," Sabri said during a visit to the New Straits Times Press headquarters here yesterday.
Malaysia mooted the use of B5 (95 per cent diesel and 5.0 per cent palm oil) in 2006 and was supposed to implement its use nationwide by end of last year.
But to date, the green oil has yet to be used on a large scale due to the high cost of production, heavy subsidies incurred by the government, as well as poor demand from export markets.
In June 2012, the Plantation Industries and Commodities Ministry announced revival of the plan and to ramp it up to B10.
Currently, the ministry is in consultations with various parties to revive the programme, which covers the central region such as Putrajaya, Malacca and Negri Sembilan, Kuala Lumpur and Selangor. It will power up government vehicles before being sold at petrol stations nationwide. Sabri said industry players are currently undertaking a study on how it can assist the government to implement the B10.
This year, Sabri said FGV, which is the world's largest producer of CPO, expects to maintain its performance. FGV made a lower pre-tax profit of RM900 million in the third quarter ended September 2012 compared with RM1.5 billion a year ago, due to lower CPO prices.
Having raised RM4.4 billion from its initial public offering in June last year, FGV plans to use a portion of the proceeds to buy agriculture land in Myanmar and Mindanao in the Philippines to plant rubber and oil palm trees.
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February 1, 2013, 12:46 am
KUALA LUMPUR: The government yesterday announced that the levy on foreign workers will be borne by them and will no longer be paid by their Malaysian employers.
Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said the move would take effect immediately on new foreign workers as well as foreign workers seeking to renew their working passes, wage passes or social visit passes.
He said the ministry's move was to aid employers in reducing their financial burden, following the implementation of the minimum wage policy, which made it mandatory for them to increase their employees' wage.
"This move was aimed especially at small- and medium-sized enterprise employers," he said yesterday.
"The decision to make foreign employees pay their own levy will not burden them as the levy rate only cost them between RM34.16 and RM154.16 monthly," said Husni, adding that this was in comparison with the increased wages enjoyed across the board of between RM300 and RM500.
He reiterated that the implementation of the minimum wage policy had also entitled workers, including foreigners, to enjoy other perks such as increased overtime payments, which would bring their overall average pay to between RM1,200 and RM1,500.
The levy collection was introduced in 1992 and paid for by the employees themselves. The charges were imposed on the workers because of the expenses borne by the government for providing general facilities, namely healthcare, roads and other amenities enjoyed by the foreign workers with Malaysians.
In April 2009, the government reverted the levy. The decision was made to control wage payment for the increasing number of workers back then, which had increased by that time.
"However, through various measures to improve the system, mainly the Registration, Legalisation, Pardons, Monitoring, Enforcement and Deportation (6P) Programme, the management of these workers were revealed to be in order and well monitored."
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February 3, 2013, 7:29 am
KUALA LUMPUR: MEWAH Group, Malaysia's second biggest palm oil refiner, has revived the installation of its RM200 million refinery in Lahad Datu following the government's decision to restructure crude palm oil (CPO) tax.
Effective January 1, the export tax on CPO has been lowered to between 4.5 per cent and 8.5 per cent, from the previous average of 23 per cent. It is being fixed on a monthly basis.
The CPO tax re-structure has, to a certain extent, allowed refiners in Malaysia to market cooking oil, oleochemicals, specialty fats and biodiesel at competitive prices in the global marketplace.
Singapore stock exchange-listed's Mewah International Inc's planned Lahad Datu refinery had been left idle for more than a year.
Back in October 2011, the Indonesian government created an unlevel playing field when it widened the export tax gap between crude and refined palm oil there.
As the second biggest player in Malaysia after Wilmar Group, Mewah Group has the capacity to process 2.8 million tonnes of palm oil a year.
"Now that Malaysian government has finally responded by restructuring the CPO tax to make it favourable for refiners here, the Lahad Datu plant is being revived," a source said.
"It's quite a sizeable refinery, at 2,000 tonnes per day. When it is commissioned towards the end of the year, Mewah's total annual refining capacity in Malaysia will swell from 2.8 million to 3.3 million tonnes," the source said when met at the ICIS Asian Oleochemicals Conference here yesterday.
The two-day conference is being organised by UK-based Reed Business Information. Also present at the conference were KLK Oleochemicals Group managing director A.K. Yeow and Khoo Kiak Kern, managing director of Desmet Ballestra Southeast Asia.
Desmet Ballestra, the global leader in edible oils technology, has gained much business as downstream investors in Indonesia and Malaysia put up more refineries and upgrade existing oleochemicals, specialty fats and biodiesel plants.
"The job orders for refineries in Indonesia are super-sized. We are talking about those that are capable of churning out 2,000 tonnes of oil per day, so as to reap economies of scale," said Khoo.
"Similarly, the new oleochemical plants are much bigger, some of which designed to produce 500 tonnes a day."
Energy efficiency and water-saving features are also incorporated into the new plant designs, Khoo added.
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February 3, 2013, 7:38 am
HONG KONG (Bloomberg) -- WHEN billionaire Robert Kuok introduced a luxury hotel brand in 1971, he named it Shangri-La, after the fictional utopia in which inhabitants enjoy unheard-of longevity.
Ensconced in his executive suite 32 floors above Hong Kong's Victoria Harbor - the room decorated with a pair of elephant tusks gifted by the late Tunku Abdul Rahman, the first prime minister of Malaysia - the world's 38th-richest person appears to have defied the aging process himself.
Kuok has accumulated a fortune of US$19.2 billion (RM59.52 billion) as of January 31, according to the Bloomberg Billionaires Index.
Trim, dapper and straight backed at 89, he shows no signs of stopping there, Bloomberg Markets magazine will report in its March issue.
This year, the media-shy Malaysian-born magnate will likely open his 71st sumptuously appointed Shangri-La. Six of them are scheduled to be opened in the third quarter alone, including one perched in the Shard, the 72-storey London skyscraper that's the tallest office building in Western Europe.
Meanwhile, the public and private companies his family controls continue to pump money into his ancestral homeland, China, where his investments range from Beijing's tallest building to cooking oil brands that have gained a 50 per cent market share in the world's most populous nation.
One of Kuok's companies, Singapore-listed Wilmar International Ltd, is the world's biggest processor of palm oil and eighth-biggest sugar producer.
Others operate shipping and logistics businesses, a property portfolio stretching from Paris to Sydney and East Asia's most influential English-language newspaper, the Hong Kong-based South China Morning Post.
"He's so vital, so active and continues to be so personally powerful," says Timothy Dattels, San Francisco-based senior partner at US buyout firm TPG Capital LP and a director of Kuok's Hong Kong-listed Shangri-La Asia Ltd. "I can't imagine a day without him at the top."
Others can, which is why the question of succession looms over the Kuok empire as the patriarch prepares to mark his 90th birthday in October.
Through the unlisted family-owned holding company, Kerry Group Ltd, which he chairs, Kuok controls listed enterprises with a total market value of about US$40 billion.
As it stands, the family enterprises are seeking to recover from a rocky 2012 that featured some sharp share-price and profit drops.
In his first interview with Western news media in 16 years, Kuok, who has eight children and numerous other relatives sprinkled through his executive ranks, says he won't be worried when that day eventually comes.
"Everything on earth is dynamic," he says in perfectly enunciated English. "I can only give my children a message, not money. If they follow it, we can go another three or four generations."
Relatives run the most important of the Kuok businesses.
Kuok's second son, Khoon Ean, 57, heads Shangri-La Asia, of which the family owns 50 per cent.
A nephew, Khoon Hong, 63, co-founded and chairs Wilmar International, the largest Kuok-controlled company, with a market value of almost US$20 billion, in which the Kuok family controls a 32 per cent stake.
A daughter, Hui Kwong, 35, is executive director of SCMP Group Ltd, publisher of the 109-year-old South China Morning Post, which Kuok took control of in 1993, when he paid Rupert Murdoch's News Corp US$349 million for a 35 per cent stake.
As to who will succeed the master, most investors in Kuok enterprises focus attention on his eldest son, Khoon Chen, 58, who's known as Beau.
Robert declined to confirm that Beau, who is deputy chairman of Kerry Group, will succeed him.
"News hounds like excitement in their stories, whereas leadership of a business group is always a serious matter, and it would be wrong to put in writing any kind of assumption," Kuok wrote in an email following the interview.
Beau, who has worked in his father's businesses since 1978, is chairman of Kerry Properties Ltd. The firm, 55 per cent owned by Kerry Group, develops luxury apartments, shopping malls and offices mostly in China and Hong Kong.
"I know Beau and he has a good team," says Peter Churchouse, founder of Hong Kong-based property investor Portwood Capital Ltd. "But you have to wonder whether the second and third generations have the entrepreneurial and trading instincts that the father has."
The father's instincts were honed over decades of personal and historical turbulence inconceivable to the generation vying to take over the family business.
That experience helped him become one of the first - and best-connected - foreign investors in China following Mao Zedong's communist revolution.
"Robert is the best China watcher in the business," says Simon Murray, chairman of Glencore International Plc, the world's biggest commodities-trading company. "He understands the steel backbone of the Communist Party, but while other Hong Kong tycoons tend to be hugely subservient to Beijing, he is in no way obsequious."
For all of Kuok's prowess, 2012 was a tumultuous year for investors in his enterprises.
While Kerry Properties stock surged 57 per cent in Hong Kong last year - more than double the increase in the Hang Seng Index - Wilmar International's shares plummeted 33 per cent, making it the worst performer in Singapore's Straits Times Index.
The plunge wiped the equivalent of more than US$8 billion from the company's market value - and almost US$3 billion from the family's fortune. This year, Wilmar's share price has rebounded, rising 14 per cent in January.
In any event, Kuok disputes Bloomberg's valuation of his personal wealth at US$19.4 billion; he says it's "a fraction" of that amount, though he does not volunteer an alternative figure.
Wilmar's woes stem from its massive exposure to China, where its cooking oil brands - led by Jin Long Yu, meaning Golden Dragon Fish - grease half the country's woks and where it gets 48 per cent of its revenue.
Beijing limited price increases on edible oils during most of 2011 and part of 2012, Wilmar said at the time.
Furthermore, the rising cost of soyabeans, which Wilmar uses to produce cooking oil, hit a record US$17.89 a bushel in September, squeezing earnings.
In the first nine months of 2012, profit fell 29 per cent to US$779 million from US$1.1 billion a year earlier.
Kuok's Hong Kong-based companies have had a rough ride since the global financial crisis.
As of January 31, Shangri-La Asia and Kerry properties shares were both down 19 per cent compared with a one per cent increase in the Hang Seng Index.
Asked about such underperformance, Kuok says enigmatically, "It is right and proper for the investor to like or dislike a share."
Underperformance isn't the only problem at SCMP Group, whose share price had declined 69 per cent as of January 30 since Kuok acquired it. In 19 years, the South China Morning Post has churned through 11 editors, including one who served twice.
And although Kuok says his news executives publish without fear or favour, present and former staff members have publicly complained that the paper sometimes self-censors stories it thinks the Chinese government wouldn't like.
If that's true, it might be a first for Kuok, whose life story has been one of single-minded achievements.
The son of Chinese immigrants who had settled in British-controlled Malaya, Robert Kuok Hock Nien - his full name - grew up speaking his parents' Chinese Fuzhou dialect, English and even Japanese during Japan's wartime occupation of the region.
Significantly, given the role China would play in Robert's life, his mother encouraged him to achieve fluency in Mandarin and embrace his Chinese heritage.
Kuok's parents ran a shop that sold rice, sugar and flour. Kuok recalls living with the smell of his addicted father's opium pipe in his nostrils.
Still, there was enough money for Robert to progress from a local English school to Raffles College in Singapore, where fellow students included Lee Kuan Yew, later the founder of modern Singapore.
Kuok never finished his studies. In 1941, Japanese troops stormed through the Malay Peninsular and in February 1942 captured Singapore.
Kuok took a job with Mitsubishi Corp. With Japan's defeat in 1945, his family resumed doing business under the British.
In 1949, after his father died, Robert; a brother, Philip; and other relatives founded Kuok Bros Sdn Bhd, which later specialised in sugar refining.
Philip went on to become a Malaysian diplomat, and a second, much-admired brother, William, took an entirely different path again by joining the communist revolt against colonial rule. In 1953, William Kuok was killed by British troops in a jungle ambush.
Robert Kuok, by contrast, used his English-language skills on visits to London to learn the sugar business, while remaining based in Malaysia and later, Singapore.
During the Cold War, he traded with both Western and communist blocs, meeting Cuba's Fidel Castro and doing business with China's Mao from as early as 1959.
In 1973, with China in the grip of the Cultural Revolution, Kuok was summoned to Hong Kong for a furtive rendezvous with two of Mao's trade officials.
They confided that China was facing a sugar shortage. Kuok stepped into the breach, transferring his headquarters to Hong Kong that year.
It was a prescient move. In 1976, Mao died, and in 1978, Deng Xiaoping tore down the so-called Bamboo Curtain, initiating reforms that sparked 34 years of surging economic growth.
In 1984, Kuok opened his first Shangri-La on the mainland. The following year, he partnered with China's foreign Trade Ministry to begin building the China World Trade Centre in Beijing.
In 1988, at his nephew Khoon Hong's suggestion, he branched out into edible oils. By 1993, Coca-Cola Co was impressed enough with Kuok's China connections to form a bottling joint venture with him.
That lasted until 2008, when Coke bought back Kerry Group's stake for an undisclosed amount, both companies pronouncing the outcome a success.
The family's history of that period harbours an enduring mystery: a 16-year parting of the ways between Robert and Khoon Hong, who in 1991 left the Kuok Group to set up Wilmar with Indonesian entrepreneur Martua Sitorus.
It wasn't until 2007 that Robert acquired a 32 per cent stake in Wilmar and injected most of his agribusiness into it. Neither Robert nor his nephew would discuss the split.
For all his triumphs in the capitalist world, Robert Kuok says the biggest influences on his life were his devoutly Buddhist mother and his communist revolutionary brother, William.
Kuok says he has tried to pass on those values by not cocooning his children in privilege. Nor, he adds, does he place much emphasis on scholastic qualifications, including MBA degrees, when hiring senior staff.
Among members of the extended family, Kuok speaks highly of Khoon Hong, his nephew at Wilmar.
The perils of succession are acute in Kuok's bailiwick, according to researchers at the Chinese University of Hong Kong.
Their study of 250 family-controlled businesses in Hong Kong, Singapore and Taiwan from 1987 to 2005 shows that stocks typically plunged 60 per cent over an eight-year period before, during and after a founder's relinquishing control.
Joseph Fan, the finance professor who led the research, attributes this wealth destruction to the inability of the patriarch to pass on, even to family members, his most valuable, intangible assets, including relationships with governments and banks. "The founder is the key asset," Fan says.
That's why, Fan says, so many tycoons remain at the helm of their businesses well into their 80s and don't disclose succession plans.
TPG Capital's Dattels says succession isn't a concern when it comes to the Kuok businesses. "There's only one Robert Kuok, there's no doubt," he says. "But he has instilled his business philosophy deep into the family. With what he has built, they are |well set to continue, whatever happens."
Back at his Hong Kong headquarters, Kuok asks an assistant to bring him a favourite quotation. Written by his mother in Chinese and engraved on a steel plate, the aphorism reads: "If my children and grandchildren can be like me, then they don't require material inheritance. But if they are not like me, then of what use is my wealth to them?"
Those words beg the question investors in Kuok's far-flung businesses are asking now more than ever: How like Robert Kuok are his heirs?
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February 5, 2013, 2:29 am
PUTRAJAYA: PALM oil exports for this year are expected to improve as prices are beginning to climb, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said.The restructuring of the crude palm oil (CPO) taxes also means better prospects for the exports.
“We should be able to do better than last year’s palm oil exports of RM71.5 billion. In 2012, palm oil prices were dragged down by a host of factors most of which were beyond our control. Now that we’ve restructured our crude palm oil (CPO) taxes, the prospects of higher exports lie ahead,” he said at the “Reach and Remind Friends of The Industry Seminar and Dialogue 2013” held here yesterday.
Since the start of the year, the government had set an export tax of between 4.5 per cent and 8.5 per cent on CPO versus 23 per cent previously. There is no tax on CPO, however, if the price dips below RM2,250 per tonne.
Palm Oil Refiners’ Association of Malaysia (Poram) chief executive officer Mohammad Jaaffar Ahmad, who was also at the seminar, concurred with the minister that brighter days lie ahead for refiners. “Our members are seeing better margins as they ramp up production,” he said.
Last week, the Indonesian government raised the CPO export tax to nine per cent for February from 7.5 per cent in January.
Jaaffar responded that this move could be a blessing for refiners here because it would mean CPO in Malaysia will be cheaper than Indonesia’s and this will spur interest from CPO-importing countries. “More imports will mean less CPO stock in the country, which will ultimately raise the price of CPO. What we need now is to reduce our stock level to the manageable level of two million tonnes,” he added.
To a query if March is deemed to be another month of zero export tax on CPO, Dompok replied that palm oil prices seemed to have bottomed out and the only way prices can move is up. “Prices have started to improve in the last two weeks. Last Friday, it closed above the tax threshold of RM2,250 per tonne on the physical market,” the minister said.
Malaysia mooted the use of B5 (95 per cent diesel and 5.0 per cent palm oil) in 2006 and was supposed to implement its use nationwide by end of last year.
Last week, Felda Global Ventures Holdings Bhd (FGV) president and chief executive officer Datuk Sabri Ahmad urged the government to quickly implement the use of B10 biofuel so as to help lift weak CPO prices.
When asked to comment. Dompok said the government has spent over RM80 million to set up blending facilities nationwide. He then clarified that these facilities will be operational by mid-2014 and not by the end of this year.
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February 9, 2013, 5:12 pm
Seri Kembangan, Selangor: NINETY-NINE per cent of the Country Heights Grower Scheme (CHGS) investors yesterday voted for early termination of the scheme and accepted Tan Sri Lee Kim Yew's proposed RM25 million goodwill payment.
More than 1,300 growers attended the general meeting held by Plentiful Gold-Class Bhd, the management company of CHGS, and cast their votes.
Lee, who is Plentiful Gold-Class chairman, had personally undertaken to pay RM25 million or the sixth year dividend of 12 per cent by August 8. "I am making this offer in my own personal capacity. We don't pay out dividends because this scheme is a trust. But out of goodwill, I will fork out RM25 million."
On top of that, Lee said he would personally guarantee that growers would receive their 100 per cent cash money due from the termination of the CHGS by August 8 instead of the two years stipulated in the circular.
"I will ensure that the growers are paid within six months. If the company cannot come up with the money within the six months, then I will find ways to repay them myself," he said.
Soon after the poll results were announced, Lee said "this is a happy ending", adding that the company has a lot of responsibilities going forward and delivering what has been promised.
"I hope the growers appreciate what I have done and understand my good intention."
Lee noted that Plentiful Gold-Class had paid out RM78 million in dividends in the last five years. This means investors had seen a return on investment of 48 per cent.
Initiated in 2007, the CHGS had raised RM215.5 million. It is Malaysia's first oil palm farm-sharing investment scheme.
Following the early termination of the scheme, Lee said the plantation land in Gua Musang, Kelantan will be put up for sale via an open tender at a reserve price of RM170 million.
Any difference between the sale price and the total buyback amount will be borne by the parent company, Bee Garden Holdings Sdn Bhd.
Investor Chua Geok Seng, 57, told Business Times: "I'm not losing any money but I'm a little disappointed that this guaranteed interest scheme ended so soon. I had wanted this to be part of my retirement plan."
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February 13, 2013, 6:58 pm
DESIRABLE INGREDIENT: Valentine's Day is a celebration of love and romance. Apart from flowers and candlelit dinners, there's that almost obligatory gift of chocolates. A specialty fats maker tells Ooi Tee Ching that palm oil is being increasingly used to make chocolates all over the world.
CHOCOLATE, once a precious food reserved for royalty and the upper class is now an delectable treat for all, regardless of social status. One thing that has never changed throughout history is that chocolate is considered a food that stimulates passion.
"We can't live without chocolate," said Prakash Mathavan, Goodhope Asia Holdings Ltd's director and chief operating officer of downstream businesses. "In good times, we celebrate and in bad times we seek comfort with chocolate," he smiled with a hint of twinkle in his eyes.
In the olden days, the main ingredient in chocolates was cocoa butter. But after this commodity became very expensive and short in supply, chocolate makers turned to specialty fats.
He said confectionery makers nowadays like palm and palm kernel-based specialty fats because of the excellent gloss retention and flavour release.
"It also possess good 'snapping qualities' and, therefore, is ideal for moulded products like chocolates," Prakash told Business Times in Kuala Lumpur.
Even though chocolate is regularly eaten for pleasure, there are potentially many health benefits. While, antioxidants present in chocolates protect the body from pre-mature ageing caused by free radicals, which can cause damage that leads to heart disease, flavonoids also help relax blood pressure through the production of nitric oxide and balance certain hormones in the body.
Prakash noted that when palm specialty fats are used to make chocolate, it facilitates good flavour release, exhibits outstanding mouthfeel and extends its shelf life.
The multi-billion dollar specialty fats market was pioneered by Loders Croklaan more than a century ago. Now, a unit of IOI Group, Loders Croklaan, is joined by AarhusKarlshamns and Fuji Oils as sizeable producers of specialty fats.
Newcomers that also want a bite of this profitable market are Goodhope Group, Mewah Group, Lam Soon Group and Sime Darby Bhd. As these companies seek to seduce and whet the world's increasing love for chocolate, Malaysia has emerged the world's export hub for specialty fats.
When describing specialty fats usage, Prakash said depending on the type of the fat and application, palm oil can be used as 100 per cent of the fat portion in chocolates or blended with cocoa butter.
Also present at the interview were his colleagues Ashok Chowdhury, Satish Selvanathan and Mayur Singh.
They noted that palm specialty fats are now increasingly used as substitutes for dairy fats such as milk fat and butter to make shortenings, ice cream, infant milk, mayonnaise and cheese.
Facts and figures on palm oil nutrition
* FACT 1: Palm oil is nutritionally balanced.One tablespoon of palm cooking oil contains 120 calories and 13.6g of fat. With a balanced combination of polyunsaturated, monounsaturated and saturated fats, palm oil is made up of 44 per cent oleic, 10 per cent linoleic, 40 per cent palmitic and five per cent stearic acids.
* FACT 2: Saturated fats are not necessarily bad.Tropical oils have a bad reputation in cardiovascular health because they contain high levels of saturated fats compared with other vegetable oils.Nevertheless, the January 2010 issue of the American Journal of Clinical Nutrition reported that there was no evidence to show that dietary saturated fat was associated with an increased risk of cardiovascular disease.The effect of saturated fat should be seen in the context of a person's overall diet and environment.High intake of saturated fat associated to low intake in polyunsaturated fatty acids, consumption of sugary and salty foods, excessive alcohol intake, smoking and stress collectively trigger the onset of cardiovascular diseases.
* FACT 3: Poly-unsaturated oils are unhealthy when partially hydrogenated.Many snack foods, like chocolate and confectioneries, require solid fats to give them structure and texture. This is achieved either by using saturated fats or partially hydrogenated polyunsaturated fats containing artificial trans fats.For more than 50 years, artificial trans fats was the preferred choice. But following increasing awareness of the negative effects of these artificial trans fats in the last decade, many food scientists have turned to alternatives.Health-conscious food producers have switched to palm oil and its solid fractions as they become convinced of its versatility and natural image.
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February 22, 2013, 5:18 pm
As families gather for Chinese New Year reunion dinners, a housewife tells OOI TEE CHING that the traditional dishes are best prepared with palm cooking oil.
NGAI Wai Heng, a Cantonese, learnt to prepare sumptuous Hakka meals when she married Yee Yon Fah, the eldest son of a Hakka family.
Ngai, still living with her 90-year-old mother-in-law Thye Mooi Ying, explained that it is normal for the wife to follow and adopt the culture of the husband's family.
The traditional Hakka reunion dishes that Ngai showcased when met in the presence of her still-discerning mother-in-law were ju geok chu (vinegar pork trotters), son pan ji (yam abacus beads) and kao ngiuk (sliced pork belly pot roast).
Both the meat dishes that Ngai prepared are meant to symbolise abundance and prosperity.
"There is a saying, 'yao yu, yao yuk', which means that there must be fish and meat on the table. That is what abundance is about," she told Business Times in Petaling Jaya recently.
"There are many popular Hakka dishes served during reunion dinners and the selection is very much each family's taste," said Ngai's husband Yee.
In his family, Yee said the son pan ji is a requisite Hakka dish eaten during major festivals, especially during Chinese New Year, because of its auspicious connotation that means wealth.
The yam dumplings are shaped to resemble Chinese abacus beads - a traditional calculator for one to count wealth.
To prepare the dish, the mashed yam and tapioca starch are kneaded into a dough before it is cut into bead shapes and boiled in water. The cooked pieces are then stir-fried with shallots, minced pork, dried shrimp, cuttlefish, sliced chilli and chopped parsley.
Ngai noted that she has been using palm oil for cooking for as long as she can remember because she finds this variant most suitable for stir-fry and deep-fry.
In fact, it was Thye who started using palm cooking oil in the 1970s to prepare meals when it became an alternative to the traditional but less healthy lard used by Chinese families.
Palm oil is able to withstand stir-fry heat better than other vegetable oils like olive, soyabean, corn, canola and sunflower.
"Palm oil can be better used for cooking at higher temperatures than other oils. Also, I find it very suitable when I do not want the flavour of .... say, for example, olive oil," Ngai said as she flips the slightly chewy and bouncy son pan ji in her wok.
She was surprised to learn that while palm oil is the cheapest cooking oil in the world, it is nutritionally comparable to olive oil.
When it comes to keeping her cooking oils fresh, Ngai said whether it is palm oil, sesame oil or sunflower oil, they do not last forever.
So, what happens when cooking oil goes bad? Used cooking oil can turn rancid after a month or two, affecting the taste and quality of the food.
Ngai said she places her array of cooking oils in a dark cupboard, away from heat. "If you have oils that you do not use frequently, consider buying smaller bottles and marking the bottle with the date it was opened," she said.
Nutritionally balanced and contains no cholesterolUK-BASED food technology expert Kurt G. Berger said over the course of his research of more than 50 years, many people are unduly suspicious of palm oil, an ingredient many are still unfamiliar with. He tells Business Times in an interview that once the functional and economic advantages of this "more natural product" are explained, people will become more confident of the health benefits of palm oil in their daily diet.
Q: Why does palm cooking oil sometimes turn "cloudy"? Is the oil still safe for consumption? A: Palm oil becomes jelly-like and cloudy when stored in the fridge, when all the other major vegetable oils remain liquid. This is due to its 50 per cent content saturated acids, mainly palmitic and stearic. More importantly, the other half of palm oil's fat content is monounsaturated and polyunsaturated - known to increase HDL, the "good cholesterol", and can benefit the cardiovascular system. Unlike other vegetable oils grown in temperate countries, palm oil contains the whole spectrum of Vitamin E, minerals, antioxidants and other phytonutrients. Its deep orange hue shows it is packed with beta-carotene, a Vitamin A variant.
Q: What is the world's most consumed oil? A: Today, palm oil is consumed by three billion people across 150 countries. Palm oil is mainly consumed as cooking oil. It is also the main ingredient of margarine and shortening. Last year, leading industry journal Oil World showed that global consumption of vegetable oils is around 180 million tonnes. Of that volume, palm oil accounted for 30 per cent of the global market share, while rivals like soyabean oil only command 24 per cent and canola 13 per cent.
Q: Is palm oil less nutritious than other more expensive cooking oils? A: Palm oil is nutritionally balanced. One tablespoon of palm cooking oil contains 120 calories and 13.6g of fat. With a balanced combination of polyunsaturated, monounsaturated and saturated fats, palm oil is made up of 44 per cent oleic, 10 per cent linoleic, 40 per cent palmitic and five per cent stearic acids. While palm oil is the cheapest cooking oil in the world, it is nutritionally comparable to olive oil. It is packed with carotenes such as beta-carotene and lycopene - the same nutrients that give tomatoes, carrots and papaya their reddish-orange colour. Palm oil has the richest natural source of the supervitamin E called tocotrienols. Olive oil does not contain any carotenes or tocotrienols, yet it is cleverly marketed as being heart healthy.
Q: How well is palm oil digested? A: Once consumed, palm oil does not remain intact in our stomach for long. Once the enzyme pancreatic lipase comes into contact with the fats we consume, it breaks down the fat molecules into fatty acids and mono-glycerides, which are then absorbed by our intestines. Palm cooking oil and margarine are 95 to 97 per cent digestible, which falls within the range of 93 to 99 per cent for most edible oils and fats.
Q: Does palm cooking oil contain cholesterol? A: Like all vegetable oils, palm oil does not contain cholesterol. In fact, the US Food and Drug Administrator has allowed palm-based products sold under the Smart Balance brand (containing up to 50 per cent palm oil and 50 per cent local oils) to carry the US patented label "To help increase HDL (good cholesterol) and improve the cholesterol ratio (HDL/LDL)".
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