17/06/2008 (The Star Online), Kuala Lumpur - Sime Darby Bhd intends to diversify into rice production with an initial area of 7,000ha in Sarawak, said chairman Tun Musa Hitam.

“This is something that we can contribute for local consumption, but it must be viable, profitable and of quality to address the food shortage in the country,” he said after the panel session yesterday.

The land would be cultivated using Chinese agriculture technology, which could produce higher yields than the present production average, Musa said, adding that the Sarawak government was willing to provide more land in the future, if the need arose.

However, no specific investments have been set yet as a due diligence process would be implemented later. Musa indicated that the management would be visiting the site next week.

Global rice prices have doubled this year and this caused Asian countries, where rice is the main staple, to face increasing inflationary pressure. It does not help that crude oil prices have continued their upward trend.

Sime Darby is the biggest oil palm planter in the country.

Asked if the latest venture was politically driven or based on commercial reasons, Musa said: “I've done enough national service on a personal basis.”

He added that the group had always been on a diversification track.

“We've used the money from rubber to diversify into crude palm oil. Now it's time for us to go back to basics because food has turned out to be the most important items,” he added.

On the recent dismissal of the group chief financial officer, Musa said some reports were “sensationalised” based on the media's interpretation.

Sime Darby, being an international company that operated in 20 countries, had been “doing good business”, he said.

“We will continue to uphold and adopt good practices as we want to be respected as a company that is responsible to its stakeholders.”