03/10/2007 (Business Times) - SARAWAK’S Ta Ann Holdings Bhd is setting aside almost RM200 million to plant more oil palm and timber trees and expand its timber-processing mills.

As a resource-based group, managing director and chief executive officer Datuk Wong Kuo Hea said the company is ploughing back profits to ensure sustainable returns in the years ahead.

“No planting, no future. We must invest now for a better tomorrow. Our gearing is manageable at 0.3 times,” he told Business Times in an interview held in Sibu recently.

Wong said that every year Ta Ann allocates RM15 million to plant 5,000ha with acacia “superbulks” and RM30 million more for 5,000ha of oil palm trees.

Currently, 43 per cent of Ta Ann’s 39,383ha oil palm plantation land is already planted. Since the company started planting only in 2000, the current mature area amounts to 6,000ha.

“We ventured into oil palm plantation to stabilise cyclical earnings in the timber business. This year, as more oil palm trees mature, we should be able to harvest more fresh fruit bunches from last year’s 12,000 tonnes,” said Wong.

Ta Ann chalked up a world’s first by incorporating reforestation of tropical trees into its business model.

Since 1997, it has invested RM54 million to plant 19,000ha with high-yielding species like acacia mangium, acacia hybrid, kelampayan, P. falcataria, sawi, and benuang.

Wong said more than 21 million trees have been planted in logged-over areas in Bintulu and Kapit.

“We plant 1,111 acacia trees on one hectare to reap optimum yield every 10 years. We also intersperse the forest plantation with natural forest belts to facilitate wildlife crossings,” he said.

Although it is a lot more expensive to plant trees in small patches, Wong explained that the acacias grow better in a diverse ecology.

As the first batch of acacia superbulks mature in 2012, they will be harvested and made into sawn timber, plywood, veneer and blockboards.

In January 2006, Ta Ann and Sumisho Mitsuibussan Kenzai Co Ltd signed a 20-year wood supply agreement with Forestry Tasmania, an Australian government agency that manages 1.4 million hectares of multiple-use state forest and 178,000ha of forest reserves.

As one of Japan’s biggest building material suppliers, Sumisho’s 15 per cent stake in Ta Ann’s Tasmania project lends credence and guarantees sale of new plywood into the Japanese market.

Following this tie-up, Ta Ann and Sumisho set up an A$30 million (A$1 = RM3.02) rotary peeled veneer mill in the Huon district of Tasmania. With annual capacity of 60,000 cubic metres, the mill started production in July.

Veneers are shipped back to Sibu and processed into container flooring and other special laminated wood products like the Pachinko plywood and scaffolding planks.

“The business is growing. We’ll need to pump in another RM90 million to expand the veneer mill in Tasmania and RM60 million for Sibu’s plywood mill,” Wong said.