Archived News

KUALA LUMPUR, May 1. (NSTP) — Malaysia could lead in biotechnologydevelopment in the region as it is taking the right steps in expanding andpromoting the field.

24 April 2002 (Business Times) - PLANS to double-track the main railwaylines in Peninsular Malaysia may suffer a setback as one of the foreigncontractors involved in the project is said to be under graftinvestigations.The Government has agreed to parcel out the project to Indian RailwayConstruction Co (Ircon) and a consortium led by China Railway EngineeringCorp.The former is being investigated, according to a report on the IndianExpress’ website dated March 9.Industry sources were divided about the news, with some saying the projectwill be delayed while others insist it will take off as scheduled thisyear.“The investigations have no direct link whatsoever with the project here.They involve the company’s deals elsewhere and its previous managingdirector,” a source told Business Times in Kuala Lumpur yesterday.“In fact, Ircon is appointing a new project director to expedite theMalaysian project,” added the source who confirmed that the investigationsare on-going.But the Indian Express report claimed that Indian Railway Minister NitishKumar had called for files following reports that senior bureaucrats athis ministry were overly keen to hand the Malaysian project’s consultancyservices to a Malaysian company.The firm is said to be charging between 8-9 per cent of the project costcompared to 4.5 per cent quoted by three other bidders.The allegations first surfaced when Kumar’s predecessor Mamata Banerjeeclaimed that Ircon’s former managing director Arun Prasad had pushed forthe contract to be awarded to the Malaysians.Prasad retired on January 31 last year.Banerjee had written a confidential letter to Indian Prime Minister AtalBehari Vajpayee, which was leaked to the press.She said Ircon should not participate in the project in view of the flurryof serious allegations of corruption levelled against Prasad in connectionwith “certain on-going projects in Malaysia”.“It was necessary for me to ensure that before Ircon is permitted tofurther participate in the project in Malaysia, the corruption allegationsare duly verified by the authorities.“I would like to inform you that the preliminary investigations havesubstantiated the very serious allegations of corruption against Prasad.We are taking follow-up action on the vigilance report very soon,”Banerjee wrote.The report further said the unusual interest shown by the MalaysianGovernment in trying to get an extension for Prasad also raised eyebrows.Transport Minister Datuk Seri Dr Ling Liong Sik had suggested in a letterto his Indian counterpart Kumar that Prasad should continue in service andnot be retired, the report added.Dr Ling and Ircon’s current managing director B.S. Kapur and Irconofficials based in Malaysia could not be reached for comment.Sources said that weeks after the memorandum of understanding for theproject was signed in Kuala Lumpur, a board meeting of Ircon attended byPrasad decided that the consultancy services contract be awarded to theMalaysian company.India’s anti-corruption agency, the Central Vigilance Commission (CVC),has since stepped in and its commisioner V.S. Mathur recently recommendedthat action be taken against Prasad.Meanwhile, a Malaysian Government official said the developments will haveno bearing on the counter trade deal as it is entirely an Ircon internalmatter.“It has got nothing to do at the Government level and I’m sure Ircon willstick to the deal and clean up its house accordingly.”Malaysia had in May last year endorsed the participation of India andChina in the railway project under a RM12 billion counter-trade programmeinvolving payment in crude palm oil for work done.The deal will see the delivery of around eight million tonnes of thecommodity over a period of between five and six years to the twocountries.Ircon, which is a state-run engineering and construction firm, willundertake double-tracking and electrification works for the northern gridspanning 338.8km that links Ipoh with Padang Besar. The parcel is worthRM6 billion.China Railway and local partners DRB-HICOM Bhd, Emrail Sdn Bhd and KienHuat Group, on the other hand, will work on the 297km southern gridlinking Seremban and Johor Baru, which is also valued at RM6 billion.The railway forms part of the Trans-Asia Rail Grid stretching fromSingapore to Kunming in south China.The deal was supposed to have been signed end of last year for work tobegin this year, but to date nothing has been inked between thecontractors and the Government.However, Ircon officials based here have said that preliminary civil workshave started and the project is on track.Double-tracking refers to the construction of a new track parallel to theexisting one to enable uninterrupted two-way train traffic.

26 April 2002 (Business Times) - THE Malaysian Palm Oil Association (MPOA)wants the Government to be more flexible in issuing quotas on duty freeexports of palm oil.Its chairman Tan Sri Abdul Khalid Ibrahim said for 2002, the allocationfor duty free exports was announced at 1.3 million tonnes, divided intotwo tranches.“This has been found to be restrictive as it does not allow the selectedcompanies the flexibility to sell forward,” Abdul Khalid said at the thirdannual general meeting of MPOA early this month.The Government had in year 2000 allowed between five and seven companiesto export 500,000 tonnes of the commodity tax free to counter low prices,weak demands and intense competition from the world’s other 16 edibleoils.A brainchild of Primary Industries Minister Datuk Seri Dr Lim Keng Yaik,the quota is announced twice a year in January and June and selection ofcompanies and amount of palm oil vary from one announcement to the other.Dr Lim has never revealed the identities of the companies for fear ofbeing accused of favouritism as well as price manipulation of palm oil aswell as the company’s share prices.But traders put them as Golden Hope Plantations Bhd, Sime Darby Bhd, PasirGudang Edible Oils Group, Felda, IOI Corp Bhd, Kwantas Corp and KualaLumpur Kepong Bhd.“The quota allocated has to be utilised within a fixed time frame. It isimportant that the selected companies should be given flexibility toexercise their quotas according to prevailing market developments,” saidAbdul Khalid.“European buyers who traditionally prefer palm oil are always buyingahead, as far as six to 12 months forward,” said Abdul Khalid who is alsoKumpulan Guthrie Bhd chief executive.“With the current scheme in place the palm oil market would again becapitalised by our neighbouring competitor who has a flexible exportpolicy. This is an issue we will be taking up with the minister,” saidAbdul Khalid.Meanwhile, an industry observer said the current scheme does not allowMalaysian companies to commit to buyers.“Let’s say a buyer wants palm oil in March 2003. The Malaysian company canonly wait for the quota announcement in January 2003,” said the source.“Even then the company will not know whether it is selected this timearound and if it is, what is the quota?,” he asked“Furthermore, the scheme is introduced when prices are low. Now thatprices are good will the Government still carry on with the scheme nextyear?” asked the source.Abdul Khalid, meanwhile, said prices of palm oil have picked up and theindustry is looking hard at improving yields in which production hasincreased by 8.15 per cent from the year 2000 especially with newlyplanted areas coming on stream in Sabah and Sarawak.He added that prices of most vegetable oils and fats in the world marketfell markedly in 2001.This was due to larger supply and stock levels and prices of crude palmoil last year was RM 893 a tonne and this did not compare favourably withthe average price for year 2000, which stood at RM 993 per tonne.“Palm oil was traded at US$68 (US$1 = RM3.80) cheaper to soyabean oil in2001 compared to US$28 in year 2000.“Despite the lower average, what is significant is the steady improvementin prices at RM1,150 a tonne currently with good prospects in the secondpart of the year,” said Abdul Khalid.The association groups 96 plantation companies with a combined landbank of1.6 million ha.(The informations and opinions expressed in this article represent theviews of the author only. They should not be seen as necessarilyreflecting the views of Palm News)

April 16 (Bangkok Post)--Palm-oil crushers warn that any increase in theprice of palm nuts will lead to a flood of cheaper crude palm oil fromMalaysia.The manufacturers are worried that the move by Commerce Minister AdisaiBodharamik to raise the price of palm nuts to three baht a kilogrammewould affect the industries involved, as well as consumers.The market price has dropped to 2.10-2.20 baht a kilogramme from about2.50 baht last year.Mr Adisai promised to raise the price of palm nuts to three baht when hevisited planters in Surat Thani some months ago.The minister plans to call a meeting with crushers on April 22, when he islikely to ask them to co-operate by paying planters a higher price.Wiwan Boonyaprateeprat, the chief executive of Southern Palm Oil IndustryCo, a major palm crusher in Surat Thani, said the severe drought affectingthe South had reduced the oil content, leading to lower prices.Local palm now yielded an average oil content of 17 percent, compared with19 percent from Malaysian palm. Given its poorer quality, the Thai palmindustry cannot compete with Malaysia's, which is better managed.According to the Office of Agricultural Economics, Malaysia prohibitsmanufacturers from buying palm with less than 19 percent oil content.However, the requirement in Thailand is not as strict, allowing plantersto sell lower quality nuts at cheaper prices.Ms Wiwan said Thai crude palm oil was now fetching 14 to 15 baht akilogramme compared with 13 baht for Malaysian oil.When using palm with 17 percent oil content, 5.88 kilogrammes of crudepalm was required to produce a kilogramme of refined or cooking oil whichwould retail at 19.76 baht.Raising prices without due care would encourage planters to cut palm nutsquickly, regardless of the quality, she said."Palm from some areas yields only 12 percent oil. That means it takes upto 8.33 kilogrammes of crude oil to make cooking oil which could then cost24.67 baht a kilogramme," she said.The increase in the retail price of cooking oil would affect consumers andprices of other products.As well, Ms Wiwan warned that cooking palm oil might not be able tocompete with soybean oil, which would probably weaken in price after thegovernment allows unrestricted imports of soybean later this year.She urged the government to raise the competitiveness of the Thai palm-oilindustry to a level approaching Malaysia's.Palm plantations in Thailand lack economies of scale as 70 percent of the40,000 planters are small producers, each farming less than 50 rai. InMalaysia, small planters account for only 10 percent of the industry while60 percent is controlled by big companies and 30 percent is managed bystate agencies.

AMSTERDAM, April 19 (Reuters) - Rapeoil prices could stagnate, due to abigger European rapeseed crop, unless biodiesel demand in Germany picksup, traders said on Friday.Supply problems for Argentine oilseeds could spark price spikes, butthey would probably be brief since huge South American crops willeventually come onto the market.Nearby rape oil prices in Europe have eroded so far this year, withoffers declining from a high of 525 euros in January to 460 euros onFriday.Last year rape oil rallied by 50 percent over 12 months, climbingsteadily on tight supplies from 350 euros in January to a peak of 530 inDecember.But the EU rapeseed crop is likely to hit a three-year peak in 2002,rising 10 percent to 9.85 million tonnes, newsletter Oil World said thisweek.It had been hoped that an expanding biodiesel sector in Germany wouldhave an increased appetite for rapeseed, mopping up any excess supply.The German association for the promotion of biofuels, UFOP, estimatesGerman biodiesel output in 2001 at 492,000 tonnes and expects newrefineries under construction to increase the total to around 800,000tonnes in 2002/2003.

BUENOS AIRES, Argentina, April 19 (Reuters) - Argentina's governmentordered on Friday the repeal of an export tax change that had paralyzedgrains trade for three days, Cabinet Chief Jorge Capitanich said.Capitanich said the new decree effectively reverses another decreepublished on Wednesday that required exporters to pay export taxes on farmgoods at shipment time rather than at purchase."This decree should allow grains markets to resume normal operations,"Capitanich told reporters.The controversy over the tax change had led to the paralysis of thegrains market right in the middle of harvest, with numerous grain, oilseedand subproduct contracts to be filled at the end of April and thebeginning of May.Grain and oilseed exporters stayed out of the local grain market for athird day on Friday, awaiting confirmation the government would repealWednesday's decree.The government introduced the levies in March to boost tax revenuesthat have plunged during a four-year recession, a move many analystsargued would hurt the only dynamic sector of the economy and prompt a dropin grain and oilseed output next year.In April, the government doubled and in some cases quadrupled the taxrate to 20 percent for grains, oilseeds, vegetable oils and vegetablemeals. The rate for unprocessed oilseeds is 23.5 percent because the statecontinued a previous tax of 3.5 percent.Exporters had argued Wednesday's measure would make it impossible forthem to determine how much to pay farmers for their goods, making itdifficult for farmers to make seeding plans for the next crop, which couldcut production."The market is not operating," said a trader at a major internationalgrain firm. "Until the modification, the rectification, comes out in theofficial bulletin, we are not going to start operating again."Farm exports made up half of the $26.5 billion worth of goods Argentinashipped last year.

Sunday, April 21, 2002 (The Star) - ADMITTEDLY, Australian entrepreneurSteve Kyle is not an expert in the oil palm industry. Nor is he directlyinvolved in the production of palm oil.But his ideas on how to solve the problems facing the industry in Malaysiaseem logical and worth considering.He believes there is a need to change the mindset of the producers thatthe “old way” of doing business is now outdated and the “new way” ofadapting to high technology is a must to survive in an impending,inevitable stiff competition from other countries.Moreover, with such a change, they are likely to gain a bigger slice ofwhat he says is a US$30bil global market.Kyle, 48, who graduated from Curtin University in Applied Science focusingon geographic information systems in 1991, was giving his views on lastweek’s article in which PPB Oil Palm executive director Khoo Khee Mingoutlined the importance, challenges and threats facing the industry.The threats to Malaysia come from what Khoo describes as “the increasingscarcity of two essential inputs – land and labour.”But Kyle believes that a bigger threat looms not only from Indonesia wherevast tracks of forest are being cleared for oil palm cultivation, but alsofrom India, Bangladesh, Africa and South America, which are also planningto grow their own oil palm.He warns that Malaysia, which now has almost a monopoly on palm oilexports, cannot be complacent or it would lose its lead in the industry.Its producers must look for new markets rather than concentrate mainly onAsia and Africa.“They have to break down the invisible wall that they have built to defendtheir present positions,” he argues.“They do not, in general, make much effort to accommodate buyers,particularly small and new markets, preferring to isolate themselves fromthem by a multi-tiered distribution system of middlemen.“So a system exists where small or new markets are satisfied by adistributor network that the major producers control by supply.Unfortunately, I believe the existing distribution network is not strongat satisfying new markets.“Typically, the distributors don’t seem to have the international skillsto facilitate market-making with new international buyers. I am convincedthat this is why the market for palm oil is showing growth only throughnation-to-nation initiatives, such as those with the Chinese Government orwith former communist-bloc countries.”Kyle says that the present situation is not straightforward and simple.There are many reasons that “dictate the way it is.”Increasingly, Indonesia, Africa, South America and other countries in thefuture will offer alternate supply paths. As their production increasesover the next few years, he says, a “price-cutting war” may result.He believes the Malaysian Government is aware of this and is trying toform an alliance with the Indonesian Government on the marketing of palmoil.In the past four years, Kyle has made extensive studies of the oil palmindustry of many countries and their future plans. He has attendedconferences and talked to people in the industry.When he first started his inquiries, he was “quite astounded” to find thatpalm oil has more nutritional value than any other oils in the world. Butnone of the producers has taken full advantage of these values to improvetheir products and market them in the West.“We pay double the price for margarine when palm oil is cheaper with thesame nutritional values,” he says.“To me, it is crazy that the producers are not making new products out ofpalm oil to attract the American market. All they are doing is to sellcrude palm oil as cheap cooking oil to countries like India, Pakistan,Bangladesh and China.“There is a big market in the West for products with nutritional values,especially in the health category,” he adds.Kyle believes that Malaysia was lucky not to have lost its dominance inthe industry two years ago. It was saved by the crash of technology sharesin the stock market.Otherwise, American companies would have set up portals focusing onparticular industries. These portals would provide a centralised and easyway to find all participants.If buyers accept this model, which represents a more efficient andcost-effective marketplace, then suppliers will be forced to participateor risk losing new business.“So Malaysia producers will find this marketplace a challenge if they areunwilling to adapt their existing business processes,” he says. “As withany market, there is a definite ‘first mover’ advantage.“In this case, those producers who grab the opportunity to use technologywould be able to build new relationships with less competition andstreamline existing processes to reduce costs. By using a system that letsthem deal directly with smaller or new customers, they would be more pricecompetitive.”That is why, Kyle says, he has registered the name “oilpalm” which isgeneric to the industry.It is easy for people to search for the website when they want to buy palmoil or to know more about the industry. It now has 6,000 members from 145countries.Companies that know how to apply computer technology in their businessdealings will be hugely rewarded, says Kyle, who owns Technology FleetManagement in Perth.But to have a good technological strategy is not simply setting up awebsite, he explains. There are many technical grounds to cover before itbecomes a vehicle with which to make deals.“It costs a lot of money to set up industry portals because none of thetools is readily available,” Kyle says. “That is why we are seekinginvestors to join us.“We have members from all over the world and we get postings regularlyfrom people wanting to buy palm oil. Some want 5,000 tonnes a month; oneis looking for 60,000 tonnes a month.“At the moment, we allow members to contact each other to complete thedeals. We don’t have the software yet to run the whole transactionsourselves.“What we need is a stock market-type of system where buyers put in anorder and if the price matches that of the sellers, the transaction goesthrough.“It is a very complex behind-the-scene transaction system. It opens a newavenue for marketing palm oil, especially to the smaller enterprises.”He believes that Malaysia is still in a position where it can activelyinfluence the “shape” of the new market environment. Its production sideand even product challenges can be overcome if there is a resolve toabandon the ‘this is the way it’s always been done’ mentality, he says.“Khoo Khee Ming is right. The Malaysian palm oil industry is at thecrossroads. The seemingly safe and comfortable status quo path leads tothe same place that rubber has found itself while other, initially moredisruptive, paths lead to the future.”By Jeffrey Francis

15 April 2002 (NSTP) - RESEARCH into creating eco-friendly diesel isunderway by the Science, Technology and Environment Ministry with Petronasand the Malaysian Palm Oil Board.

14 April 2002 (Business Times) - The Primary Industries Ministry ispreparing a paper on the proposed restructuring of the oil palm and rubberindustries which are beset with oversupply and low prices.

NEW DELHI, April 16 -- The Solvent Extractors' Association of India(SEAI) reported that the country's import of edible oils fell by 20% to227,305 tonnes in March, 2002 as compared to 284,589 tonnes recorded inMarch, 2001.The fall is likely to continue in April due to improvedavailability of domestic oils.

HAMBURG, April 9 (Reuters) - Global palm oil stocks at the end ofcalendar year 2002 will fall to a four-year low of 3.14 million tonnes,Hamburg-based newsletter Oil World estimates.This compares to 3.75 million tonnes at the end of 2001.The reason is slowing palm oil production growth and risingconsumption. The newsletter estimates global 2002 output at 23.68 milliontonnes against 23.36 million tonnes in 2001.The 300,000 tonne rise in 2002 compares to average annual rises of 2.1million tonnes in the last three years, it said.Background is the downturn of the biological yield cycle of palm treesafter the strong production growth in the past few years plusbelow-average growth in Malaysia's area of mature trees."This slowdown will considerably squeeze export availability and willalso lead to a substantial reduction in world palm oil stocks," Oil Worldsaid.It expects main inventory reductions to take place in Malaysia, whereit estimates stocks on December 31, 2002, at 900,000 tonnes against1,214,000 tonnes on December 31, 2001.Global 2002 palm oil consumption is set to rise strongly to 24.59million tonnes from 23.62 million tonnes in 2001, it forecast.

KUALA LUMPUR, April 9 (Reuters) - India, the world's largest edible oilimporter, has booked up to 200,000 tonnes of palm oil from Malaysia andIndonesia so far in April to replenish its dwindling stocks, traders andfreight brokers said on Tuesday. "I think bookings to India are within therange of 180,000-200,000 tonnes so far this month," said one freightbroker."I would say India will be buying 230,000-270,000 tonnes for the wholeof April," said the broker, adding that India normally purchases around200,000 tonnes of palm oil a month from Malaysia and Indonesia, theworld's largest producers. Some traders speculated that India's palm oilintake had been slow in March because it had thought China, another mainbuyer, would hold back new import licences which would depress prices.India bought 109,290 tonnes of palm oil from Malaysia in March, downfrom 112,740 tonnes in February.But Kuala Lumpur dealers trading with China said on Tuesday Beijing hadissued new import quotas last week which totalled two million tonnes, upfrom 300,000 tonnes it released in late March.China is set to import 2.4 million tonnes of palm oil in 2002 followingits entry to the World Trade Organisation (WTO).Some traders said India's palm oil imports could touch 300,000 tonnesin April because of the low stocks, seen far below the monthly 600,000tonnes, and uncertainties in Argentina's soy oil exports.Traders said Argentina's decision to increase export tax rates ongrains, oilseeds and sub-products to 20 percent from 10 percent willlikely lead to a reduction in soy output and exports.The government has forecast 2001/02 soy output at 28.7-29.5 milliontonnes.