21/08/2009 (The Star Online), Subang - IJM Plantations Bhd’s palm oil production next year will be much higher than this year though it will not be a double-digit growth, says chief executive officer and managing director Velayuthan Tan.

He said the company hoped to plant oil palm on 6,000ha of its land in Indonesia before the end of its current financial year ending March 31, 2010.

“Currently, about 1,462ha have been planted and our focus now will be on Indonesia for our crop production apart from the existing plantations in Sabah,” he said yesterday after the company’s AGM and EGM.

The company has over 25,000ha of oil palm plantations in Sabah and Tan said it planned to have about 30,000ha to 40,000ha of oil palm estates in Indonesia to increase its crop production.

It was reported that IJM Plantations would finish its buying spree of oil palm estates in Indonesia by end-2009 and start planting immediately after to tap the growing demand for the vegetable oil.

Tan was reported to have said that so far, the company had met nearly 70% of its 40,000ha acquisition target on the Indonesian side of Borneo island, located near its existing plantations in Sabah

Asked on the matter, Tan said: “We hope to conclude the acquisition by end of this year but it all depends on how fast the processes involved such as getting the title of the land can be completed.”

Shareholders yesterday approved IJM Plantations’ proposed rights issue to raise about RM330mil which Tan said would be used mostly for the Indonesian land acquisition.

He said based on the rule of thumb in developing oil palm land which included mills, it would cost about RM20,000 per hectare and for 40,000ha in Indonesia, the company needed to have about RM700mil.

“We will find other ways to fund the development. This, however, will be done maybe in another two or three years once the proceeds from the right issue are fully utilised,” he said.

Touching on the crude oil price trend for the second half of this year, the company’s corporate affairs and finance general manager Purushothaman Kumaran said the price was expected to be better than the first half but not as high as in 2008.

This, he said due to several reasons such as the shortage of world vegetable oils.