Ranveer: ‘If you put a freeze on labour, you are going to really stifle this sector.’

14/03/2016 (The Star) - The freeze on intake of foreign workers will stifle the palm oil sector in Malaysia, said an Olam International Ltd commodity trader.

Ranveer Singh Chauhan said the shortage of labour was currently among the biggest challenges facing the industry here.

“Clearly this sector will require labour.

“If you put a freeze on labour, you are going to really stifle this sector.

“With Malaysia’s current over US$10,000 GDP per capita, I dont expect it will be able to find these workers from its own population.

“Malaysians are likely to go in as entrepreneurs, and owners, but for labour, you are unlikely find them within your population,” Ranveer, who is the managing director and CEO of Olam’s Palm and Natural Rubber division told StarBiz.

Last month, the Government suspended the recruitment of all foreign workers pending a review of the levy and rehiring programme.

The move came just a day after Malaysia inked a deal with Bangladesh to bring in its workers here over the next three years.

Ranveer added that they expected palm oil production in Malaysia to drop by between 1.5% to 2% this year.

“The hectarage growth of palm oil plantations is in Malaysia has fairly tapered off.

“We are expecting production to be marginally lower than last year - at least about 1.5% to 2% lower than last year,” he said.

Ranveer said that in Indonesia, there was still hectarage growth and that this would reduce the impact of the decrease in production.

“While there is a serious shortfall in the crop, the new plantations coming to stream has reduced the impact of that fall.

“So Indonesian palm oil production growth will remain at the same level as last year.

“If production had followed the normal trend, Indonesia should have grown by another 2.5 million tonnes this year,” he said at the sidelines of the Palm and Lauric Oils Conference and Exhibition here recently.

Moving forward, Ranveer said Malaysia needed to invest further in engaging with the Indian consumers and businesses.

“The Malaysian Palm Oil Board already plays a big role in raising awareness about palm oil and its products across the globe.

“However, I do not see the Indian consumer and vegetable oil industry truly taking up their partnership with the palm sector as they should.

“I believe Malaysia has to further invest in ensuring that the Indian market, consumers and policy makers understand the importance of palm oil for their own people.” he said.

He also sees growing demand from Africa over the next few years.

“Africa is a growing consumer, they use close to five million tonnes.

“There will be a growth in that demand just like we saw in India over the past three years,” he said.

On his outlook for CPO prices, Ranveer said they expected prices to approach US$700 over the next three months.

However, he said this expectation could be affected by the economic situation in China, Japan and Europe.

“Japan is in a fragile state, China is in a different scenario than what it used to be, and Europe is struggling.

“From what we see, the prices should head closer to US$700, but some of these macro factors are still weighing down on the industry,” he said.