MARKET DEVELOPMENT
26-02-2003
Web portal developed to handle all palm oil transa
2/25/2003 (New Straits Times Malaysia) - THIS June, palm oil andeverything associated with its production, can be bought and sold on theInternet when the first transactions take place onhttp://www.oilpalmworld.com, the country's first comprehensive e-commerceportal for an entire industry. The Malaysian-made portal will become aone-stop B2B exchange for all business transactions in the palm oilindustry in Malaysia and overseas. The portal links all players in thepalm oil supply chain, and addresses time-to-market pressure the industryconstantly faces.It is expected to speed up business, raise awareness, increasetransparency, lower costs and be the device used by the industry tointelligently predict global market trends of Malaysia's most profitablecommodity.Among its highlights is that it is likely to diversify the buyer basedrawing smaller buyers around the globe who can be supported by anaggregation method that lumps them together, making them attractive tosellers.Eventually, this is expected to make palm oil prices more competitive andprevent any cartel behaviour among the world's handful of big buyers, nowprevalent in commodities.The web-enabled, browser-based portal can be used by the smallest ofcompanies by simply logging in with a user ID. The site will be up-and-running late March.Companies expected to use the portal are plantation houses, smallholders,refiners, manufacturers, shippers and suppliers of all raw materials andequipment used by producers and users of palm oil.Tomorrow, a soft launch of http://www.oilpalmworld.com will be held at theevening programme of Malaysian Palm Oil Association's seminar on bestpractices and food safety held at the JW Marriot Hotel at Putrajaya."The portal is a one-stop exchange to handle all commerce functions of thepalm oil industry, a virtual marketplace," says K. John Kuruvilla,managing director of Cosville Holdings Sdn Bhd, a private investmentholding company and majority shareholder of Oilpalmworld Sdn Bhd.Its IT partner is Virinchi Integrated Solutions Sdn Bhd, a B2B solutionsprovider for net markets, private exchanges and supply chains.The portal's most obvious feature is that it gathers buyers and sellersunder one roof."Buyers and sellers are scattered globally, connecting them in thephysical world has always been difficult," says Kuruvilla, "but it'seasily done on the Internet. On this portal, smaller buyers and sellerswill find business quickly." As more banking services go online, thebanking related to the oil palm industry can be done on the portal aswell.The e-commerce functions of portal include trading of palm oil and oilpalm products, procuring of raw materials and equipment (like fertilisersand machines), recruitment and chartering vessels. It has functions forauctions, bids and tenders and will be an on-line catalogue for theindustry.Also possible are private exchanges between companies which need privacyfor trade strategies. All transactions are supported by secure softwareand bound by Malaysian law. The portal acts as an enabler of thosetransactions.For the industry, there will be current industry news provided by newsagencies, price watch features, advertising and classifieds. Futurecontent providers include the Malaysia Palm Oil Association, Palm OilRefiners Association of Malaysia and Malaysia Palm Oil Board which havesupported the portal's initiative."The portal also promotes the sustainability of the oil palm cultivation,plus the health and nutritional benefits of palm oil." The project has thesupport of the Ministry of Science, Technology and Environment, theNational Information Technology Council and MIMOS which have funded itthrough the Demonstrator Application Grant Scheme.For industry executives, time savings will be its most attractive feature."Conventionally, transactions are known to take as long as three weeks,"says Kuruvilla. "On an electronic portal, this can be reduced to a day."The portal will remove some layers of costs and reduce dependence onmiddlemen.The portal's revenue sources will come from membership subscription ofwhich there will be many categories based on volumes and scope of use,advertisements and IT packages designed for the palm oil industry.The portal falls in line with the digital revolution now underway in theoil palm industry. Larger palm oil producers began engaging IT in the1980s, mostly for estate operations."We can expect greater connectivity for Malaysian plantations abroad,"says Kuruvilla. Malaysian companies have invested substantially to expandplantation operations overseas, particularly in Indonesia, andcollectively control a landbank of some one million hectares. Most of thisland is already planted or is being planted with oil palms.Although cultivation has moved abroad, marketing of produce is almostexclusively executed in their Malaysian headquarters. These companies arelikely to find an electronic marketplace useful for better co-ordinationof production and marketing.Exports of oil palm products include palm oil, palm kernel oil, palmkernel cake, oleochemicals and finished products. Major buyers ofMalaysian palm oil are India, the EU, China and Pakistan. Numerous smallerbuyers are expected to find it easier to access information through theportal.In 2001, palm oil earnings exceeded RM14.1 billion from exports. Duringthe 1997-1998 financial crisis, palm oil exports exceeded RM22.5 billion,cushioning the higher import bill and helped the Malaysian economy stayrelatively calm even as other Asian nations struggled with their financialstability.Publication: New Straits Times (Malaysia)
