MARKET DEVELOPMENT
16-07-2001
Austral strongly advocates ePOMEX
Austral strongly advocates ePOMEXMonday, July 16, 2001(The Star) - AUSTRAL Enterprises Bhd, one of the topnine major plantation companies in Malaysia, strongly advocates theformation of the Malaysian Palm Oil Exchange (ePOMEX), the world's firstelectronic exchange for trading oil palm products for physical delivery.Austral group managing director Dr Radzuan Abdul Rahman said: "We aredefinitely among the earliest shareholders and a firm believer in theexchange."Austral has taken up a 5% stake in Ecomex Palm Oil (M) Sdn Bhd (ePOM), thecompany which undertakes the implementation and operation of ePOMEX.Apart from the two ePOM anchor shareholders--Heitech Padu Bhd and NewZealand-based Global Ecomex Ltd--Austral is also optimistic that ePOMEXwill received strong backing from producers and positive support from thegovernment."This timely and solid electronic exchange will pave way for a moreefficient and aggressive market," Radzuan told Star Business in KualaLumpur.Presently, Heitech Padu has an 18% stake in ePOM, followed by GlobalEcomex (19%), IOI Corp (3.9%), Felda (10%), Austral (5%) and otherindividuals (13%)."We want ePOMEX to attract a well-balanced mix representing major playersin the industry, namely the producers, refiners, millers, oleochemicalcompanies and traders."To transform ePOMEX into an almost perfect electronic exchange, we need afull representation of shareholders and seatholders from theseindustries," added Radzuan. (One has to be a seatholder in order to tradeon ePOMEX.)Commenting on Austral's involvement in ePOMEX, he said the company may beviewed as a "seller" in the local market since Austral did not have arefining capability at this time.Personally, he views that sellers would benefit from the level playingfield available in an electronic marketplace."Perhaps more importantly, Austral's small but soon-to-be lucrativeinvestment in ePOMEX is our way of encouraging the development of thelocal palm oil industry, a vital engine for the economic growth."At the same time, Radzuan said, "it is also crucial for large independentrefiners to actively take up a role in ePOMEX as the exchange also rideson other opportunities as well."He believed that ePomex could already have a smooth first year ofoperation with Felda, the single largest producer of crude palm oil, beingone of ePOMEX shareholders and "perhaps getting at least five plantationgroups, refiners and traders."The top nine plantation companies in the country are IOI Corp, Sime Darby,Tradewinds, Golden Hope, Boustead, KL Kepong, Austral, Perlis PlantationsBhd and Kumpulan Guthrie.Meanwhile, ePOM chief executive officer Akit Sebli said: "ePOMEX expectsto trade between 4% and 5% of the total CPO production in Malaysia orabout 550,000 tonnes in the first year."At the same time, ePOMEX is also targeting to trade up to 25% of the totalCPO production over the next four years.The electronic exchange is slated to be launched in late August, beginningwith the physical trading of the CPO contract.Akit also mentioned that as immediately as convenient, ePOMEX planned tooffer its trading services to the overseas players as well.Asked on the current drawbacks of the traditional system of trading palmoil products, Radzuan said "market reach is dependent upon and largelydetermined by prior experiences with buyers and sellers over a longperiod."Traditionally, trading was often limited to the personal contacts ofmarketing personnel, he said, adding that this mechanism posed physicaldifficulties of contacting and negotiating with a significant segment ofthe market and was often restrictive.Radzuan said reliance on the futures market as a pricing benchmark alsoconfined trading within the Malaysia Derivatives Exchange's hours.The 24-hour trading on ePOMEX, however, brings together both buyers andsellers representing millers, refiners, palm kernel crushers, oleochemicalcompanies and traders in a single electronic marketplace.Citing on the trading application, he said buyers and sellers couldeffectively utilised the tools they needed to conduct either acomprehensive auction or a negotiated trade for their offers to sell orrequests to buy.As the exchange grows, other services ancillary to the actual trade willbe incorporated to further enhance the efficiency of the exchange.
