“As far as I know, it’s not true,” executive chairman Tan Sri Lee Shin Cheng said.
Two months ago, an online portal cited an unidentified source claiming that Achi Jaya Plantations, which neighbours IOI Corp’s estates in Johor, had been put up for sale for a while.
Achi Jaya Plantations (formerly Achi Jaya Services) acquired Socfin Plantations Sdn Bhd’s assets comprising 12,074ha oil palm estate, workers’ quarters, staff and executive bungalows, a clubhouse, a nine-hole golf course, a 60-tonne oil mill and other facilities and amenities for RM512.16 million in January 2004.
Meanwhile, IOI Corp had announced last month that it plans to spin off and relist its property division on the stock market.
It will do so by injecting its property development, real estate investments, land and other related businesses into IOI Properties Group Sdn Bhd in exchange for shares in IOI Properties. It will also distribute one share in the new unit for every three held by existing shareholders.
When asked on the progress of this plan, Lee smiled and said IOI Corp shareholders are poised to benefit from lower entry price in its property division.
“The property business is on a stronger footing now with more valuable assets. We have built up the property landbank in strategic locations, so it is about time we unlock its value,” he said.
Since IOI ventured into Singapore and China in 2011 and 2012, it has been rebranding itself. It is no longer just a township developer and is moving towards becoming a high-end condominium and commercial developer.
This effort is seen in its appointment of world-renowned Sir Norman Foster as the architect for its South Beach development in Singapore.
Analysts estimated the share sale of the soon-to-be relisted company to raise as much as RM10 billion.
This is a huge improvement in size, considering that it was only in 2009 that IOI Corp had taken private its then-listed property arm, IOI Properties Bhd, for a mere RM310 million in cash and shares, valuing the unit at about RM1.3 billion.
The minister’s visit comes during a tense period in Franco-Malaysian trade relations due to French attacks on palm oil, a crucial commodity for the Malaysian economy.
Last year, French politicians proposed a 300 per cent tax increase on palm oil, supposedly to improve public health.
In the end, the French National Assembly rejected the tax since the allegedly harmful effects of palm oil could not be scientifically documented.
In fact, French experts such as Dr Jean Michel Lecerf of the Pasteur Institute and Dr Odile Morin of ITERG have published research showing that palm oil is a healthy and nutritious product that is perfectly compatible with a balanced and healthy lifestyle.
However, palm oil still suffered reputational damage as a result of the proposed tax increase. The French government has made some amends by agreeing to a joint Franco-Malaysian taskforce to explore ways to provide more accurate information about palm oil.
Yet the fact remains that palm oil-producing countries such as Malaysia and Cote d’Ivoire now have reason to doubt France’s commitment to economic cooperation.
It doesn’t help the situation that a French member of the European Parliament, Corinne Lepage, is currently leading an effort to discriminate against palm oil in new European biofuels policies.
Lepage is promoting a scientifically flawed concept known as Indirect Land Use Change (ILUC), which claims that palm oil production harms the environment by displacing rain forest.
What the concept misses is the fact that palm oil is by far the least land-intensive of all the competing products used to make biofuels.
A true green policy would, thus, promote reforestation of France and other European countries rather than a halt to palm oil development in Malaysia. Incidentally, Malaysia currently has 63 per cent of its land under forest cover. The corresponding figure for France is 29 per cent.
Furthermore, major French corporations such as Casino, Système U and St Michel have launched campaigns against palm oil in order to promote their own “palm oil free” products.
In the case of Système U, the campaign was so blatantly misleading that a group of small farmers from Africa sued the company and won the case in French court.
The French attacks on palm oil are unfortunate on many fronts. First of all, disinformation and boycotts in France harm thousands of Malaysians who depend on palm oil to make a living.
Businesses related to palm oil employ more than 800,000 people in Malaysia, including 240,000 small farmers who account for 40 per cent of the land under cultivation. Palm oil accounts for 10 per cent of Malaysia’s gross domestic product.
Thanks in large part to palm oil production, Malaysia has successfully reduced poverty from 50 per cent at independence to less then five per cent today.
Secondly, France is missing out on the growth opportunities that would follow from closer ties to Malaysia. At this time when the French economy remains stagnant, it is in the national interest of France to tie itself to the rising tiger economies of Southeast Asia, notably Malaysia.
France has a proud tradition of sophisticated diplomacy to advance its national interest. Bricq would do well to keep this tradition in mind during her visit.
It would be wise for the French minister to reassure her Malaysian counterparts about the commitment of the French government to economic development in Malaysia.
Such a commitment must necessarily include reassurances that France will not discriminate against palm oil.
Ideally, Bricq should go even further and positively embrace palm oil as a core strategic product for the economic future of both France and Malaysia.
Such an act would go a long way in countering the negative and misguided campaigns by French corporations and politicians.
In a telephone interview with Business Times yesterday, he said Nash had appealed to French Minister of Foreign Trade Nicole Bricq to support open trade and positive trading relations between France and Malaysia.
“We wrote to the French minister. We asked for the French government’s commitment not to discriminate against palm oil and not to put up protectionist trade barriers that harm small oil palm farmers here,” Aliasak said.
Of late, big multi-nationals in the French food industry like Casino, Système U, Findus, Lesieur, Lays and Jacquet have been intensifying their campaign against palm oil.
“The French government needs to re-set relations between France and Malaysia.
“We call upon the French government to publicly disassociate from the actions of these multi-nationals and condemn their aggression towards small oil palm farmers,” said.
Aliasak noted that the Tribunal de Commerce in Paris had, recently ruled that there was no justification for the anti-palm oil campaign and ordered Système U to remove misleading and inaccurate anti-palm oil advertising.
France and Malaysia have excellent trade co-operation and this includes imports of French beverages, food, airplanes and defence equipment. “Why should Malaysia sign a trade agreement with the European Union when French companies vehemently attack Malaysian products and undermine the opportunity for many families here to earn a decent living?” he asked.
The French anti-palm oil campaign is not based on facts and figures but rather on exaggeration and emotions, he said.
The reality is that oil palm is the most efficient oil crop in the world yielding seven times more oil that France’s rapeseed agriculture. In terms of energy balance, it takes less sunlight to produce a unit of palm oil than any other vegetable oils.
“These are known to scientists and academics who are worth their salt, including those in France from the Institut Pasteur and CIRAD. In fact, the first oil palm estate in Malaysia, named Tenamaram, was established in Selangor in 1917 by Frenchman Henri Fauconier,” Aliasak said.
Nine months ago, Nash submitted a letter to the French ambassador to Malaysia, Martine Dorance, to express Malaysian smallholders’ disappointment over the behaviour of French retailers, in particular Casino and Système U, for producing television commercials that slander palm oil and, by association, the small farmers of whom Nash represents.
To make matters worse, French Industry Minister Arnaud Montebourg had even said in a statement that “all (French) left-wing parties should campaign against palm oil”.
Half truths on palm oil were and are still being repeated by other French political leaders. For example, senator Jean-Vincent Place had claimed in Parliamentary Question 02164 that palm oil contains trans fat.
This is simply untrue, said Aliasak, as palm oil is 100 per cent free of the artificial trans fat. In fact, palm oil is instrumental in removing artificial trans fat from the daily diet of common folks worldwide, he added.
Last week, in its filing to the stock exchange, Hovid’s third quarter net profit ended March 2013 rose 33 per cent to RM5.13 million from RM3.85 million posted a year ago.
Excluding the non-recurring item, Hovid’s year-to-date pre-tax profit RM18.41 million works out to be 51 per cent higher than the previous year’s RM12.19 million.
In its notes to investors, Hovid said Carotech was an associate company up to December 22 2011. It has now become a simple investment to Hovid.
In the last three years, Carotech faced difficulty as there was no working capital. One way for Hovid to raise funds is to embark on a rights issue of new warrants.
Hovid is set to raise RM7.62 million. These 5-year warrants will replace the original warrants that had expired. The listing of the new rights warrants will be carried on June 10. Apart from working capital. Hovid will also use a portion of the RM7.62 million to defray expenses incurred in the right issue of warrants.
In an interview with Business Times here, Ho assured investors that Hovid is on the recovery path. It has been 17 months since Hovid was lifted from PN17 status on January 16 2012.
“When Hovid slipped into PN17 status, it was like we were in intensive care. Now that we’ve been lifted from that status, you can say Hovid is well on the recovery path in the normal hospital ward,” he said.
“In Hovid’s books, Carotech is written off to RM1. The plant in Lumut is still running with just a skeletal workforce. We are still resolving Carotech’s debts with the banks. Hopefully, we can resolve this by the end of this year and get discharged from the hospital, so to speak,” Ho added.
Hovid’s laboratories in Perak produce antibiotics, antidiabetics, antihypertensives, antimalarial and anti-inflammatory analgesics, ranging from skin care and hair care products to health beverages. Its products are GMP-compliant and exported to more than 40 countries.
In the consumer market, Hovid is known for its popular Tocovid SupraBio health supplement and Ho Yan Hor Herbal Tea.
The Tocovid SupraBio health supplement is currently the consumer market leader for palm oil phytonutrient extract. Among the active ingredients in the extract are tocotrienols, little known but the better half of the vitamin E family.
Tocotrienols, which are most abundantly found in palm oil, are showing promise in clinical trials that they are capable of reducing risk of degerative diseases such as stroke, heart attack and cancer.
Asked on the prospects of Hovid’s pharmaceutical business, Ho said the requirement for product registration has become lengthier with increasing stringent rules in the development of generic drugs. This, he said, has slowed pharmaceutical launches.
Nevertheless, Hovid has at least 10 to 15 products being developed in the pipeline each year. “We hope that our margin will improve slightly in the second half of this year. We are tweaking our product mix to drive sales of higher margin products.
“We have been working hard submitting dossiers to gain market approvals. We do expect some new dossiers to come in some time towards the end of the year,” he said.
“This year, if we can maintain our performance, that will be quite good. Hopefully, by next year, we will be back on our feet and focusing on growing the pharmaceutical business,” Ho added.
KUALA LUMPUR: SIME Darby Bhd, the country’s largest and oldest conglomerate, is expected to match or even exceed its internal net profit target of RM3.2 billion, said president and group chief executive officer Datuk Mohd Bakke Salleh.
“We have, so far, achieved 75 per cent of our current financial year KPI (Key Performance Indicator) net profit target,” he said.
Mohd Bakke said Sime Darby’s internal profit target is RM1 billion lower than what the group had achieved in the financial year ended June 2012. Last year, it registered RM4.2 billion in net profit.
Sime Darby, which last year beat Russian billionaire Roman Abramovich to acquire London’s iconic Battersea Power Station for £400 million (RM1.88 billion), had anticipated the current financial year to a challenging one. Net profit in the current quarter ended March 2013 stood at RM691 million, 21 per cent lower than the RM876 million recorded a year ago.
The figures were posted on the back of RM10.84 billion in revenue, which is one per cent lower than corresponding period last year.
Mohd Bakke said the anticipated lower fullyear profit was due to the challenging conditions of lower crude palm oil (CPO) prices and weaker economy in some of its markets.
The average CPO price in the three months ended March 2013 was RM2,147 per tonne, 26 per cent lower than RM2,903 in the same period last year. As a result, its plantation division’s pre-tax profit declined to RM413.2 million, a 27 per cent drop year-on-year.
For the nine-month period, its net profit was RM2.39 billion, 22 per cent lower than the RM3.05 billion registered previously. Revenue was RM33.84 billion, two per cent higher than in the previous nine-month period.
The bright spot for the conglomerate came from its motor, property and healthcare divisions, which posted double-digit gains.
The motor division’s pre-tax profit expanded by 18 per cent, helped by strong local and Hong Kong sales, while the property unit’s pre-tax profit climbed 15 per cent year-on-year and 100 per cent against the preceding third quarter due to higher sales from new projects.
The healthcare unit also did better in the third quarter with a 28 per cent rise in pre-tax profit.
Mohd Bakke said with the group’s recent joint venture with Australia’s Ramsay Healthcare, a major expansion in Asia was on the cards. The healthcare business, he said, is planning to double the number of hospitals in five years and a listing will only be considered thereafter.
On the listing of some of its other flagship businesses, Mohd Bakke said the company is working towards that direction, but at this point of time, “it is still too premature to announce anything”.
I was in Miri to meet up with Sarawak Oil Palms Bhd (SOP) to get an update of their estate and refinery business.
One of the highlights of the visit was Rosela (my colleague) and I got to savour the lip-smacking hawker delights there like Kolo Mee, Kampua Mee and Mee Sapi.
Rosela and I will cherish the warm hospitality extended by SOP corporate communications team who are, none other than the dynamic duo Judy and Abel.
Kolo Mee is made of egg noodle, blanched in water that looks like instant noodle and served in a light sauce with some condiments like chicken cutlets, minced meat or sometimes shredded beef .
The difference between Kolo Mee and Wanton Mee, which is popular in West Malaysia, is that Kolo Mee is not drenched in dark soy sauce and water is not added to the noodles when served.
Mee Sapi is the gravy version of Kolo Mee with a more curly type of noodle similar to that of angelhair spaghetti.
These scrumptious hawker dishes are prepared with palm cooking oil, a nutritious and affordable kitchen staple in most eateries.
Watch 17.13 ….”for our industry, we need to be detailed because as you might have heard… If you don’t walk the fields, if you don’t talk to the trees, I think the trees are not going to produce. Ha! Ha! Ha!” Kuala Lumpur Kepong Bhd (KLK) chief executive officer Tan Sri Lee Oi Hian was actually making a reference to the article I wrote 8 years ago about the legend of IOI Group’s Tan Sri Lee Shin Cheng singing to his trees.
It all started with that fateful field trip to Sagil Estate, Johor in 2005. Back then, I was still new to the palm oil sector and I had no idea what to report from field trips. I went up to one of my editors then, Shahriman Johari and asked for his advice.
Shahriman looked up from his computer screen and told me in a straight face, “People have said Tan Sri Lee talks to his trees. See if this is true…”
And so I went along to the field trip with this unusual mission at the back of my mind. Throughout the 2-day trip, journalists and stock analysts asked IOI Group Tan Sri Lee questions on crude palm oil price trend, soya oil price trend, oil extraction rates, acquisition plans, company borrowings and forecast results.
When all ‘serious’ questions were asked, senior journalists and stock analysts made their way to the buffet tables, leaving younger and inexperienced reporters, like me, to face the stern looking Lee in awkward silence.
After what seemed like five minutes of polite smiles and nods, I took a gamble and asked Lee if he loved his oil palm trees. He hesitated and looked around. I held my breath and thought to myself, “Oh uh… I’m in big trouble now.”
To my surprise, he replied, “Yes, of course. My trees are my girlfriends. Each one has her own characteristics. If one produces well, I will tell her ‘I love you’,” he grins, adding that if a tree is not productive he would tell her that he will give her six to nine months to bear the quota of fruits. “Surprisingly, they tend to bloom to expectation,” he said.
Three years later in 2008, Sime Darby chairman Tun Musa Hitam acknowledged IOI Group Tan Sri Lee’s singing of Tamil songs has worked wonders on oil palm yields. He then said he was seriously thinking of “asking the boys at Sime Darby to sing Indonesian songs to the trees too.”
MANY who attended the recent “Palm Oil Nutrition Week” lecture presented by Universiti Sains Malaysia (USM) Professor Dr Yuen Kah Hay were surprised when he revealed he was a stroke victim.
He showed no signs of mental regression or physical disability. Indeed, seeing is believing.
The spritely 59-year-old is a living proof that with proper supplementation of palm oil vitamin E and blood thinning medication, one can reduce the risk of contracting stroke that plagues 15 per cent of Malaysia’s population.
On top of proper supplementation, one must also refrain from choosing a lifestyle that contributes to early death. This includes eating too much junk food, not exercising, smoking and over-indulging in alcohol.
Heart attack and stroke are deadly diseases caused by a blockage of bloodflow to the heart or brain. The most common reason for this is a build-up of fatty deposits on the inner walls of the vessels that supply blood to the heart and brain.
The World Health Organisation (WHO) statistics show that globally, more people die of stroke and heart disease than all cancers combined. By 2030, WHO estimates the death toll to jump as high as 23 million.
Although the numbers look depressing, there is increasing medical evidence that palm oil vitamin E can reduce the risks of cardiovascular diseases.
Vitamin E is an oil soluble nutrient that is made up of eight siblings, namely four tocopherols and four tocotrienols. Soft oils like olive, soya, canola and sunflower only contain tocopherols. Tropical oils such as palm and rice bran, however, have both tocopherols and tocotrienols.
Over the last 30 years, scientific studies have shown that palm oil vitamin E, particularly the tocotrienol variants, is a far more potent antioxidant than tocopherols.
Tocotrienols are usually extracted from palm oil because the oil palm tree is able to produce the highest concentrate compared with other oil crops. Every year, Malaysia exports some RM50 million worth of palm oil health supplements, mainly to Europe, the United States, Canada and Japan. A kilogramme of palm oil vitamin E sells for US$500 (RM1,515).
In an interview with Business Time recently, Yuen explained that the difference between tocotrienols and tocopherols is the ‘tail’ on the vitamin E molecule.
“Tocopherols have long saturated tails while tocotrienols have unsaturated tails.”
The unique structure of tocotrienols enables them to do many things that tocopherols cannot do. This includes more powerful anti-oxidative function in cells, the ability to penetrate internal organs and activation of gene signals.
Since 2009, Yuen and his team have run brain scans on 200 volunteers before and after the administration of the tocotrienol supplements and placebo in a randomised, double-blind study.
After one year, those on tocotrienol supplements showed only a little increase in the amount of white matter lesions, compared with the group on placebo which saw a seven-fold increment.
By the second year, the placebo group continued to show a bigger area of cell degeneration while those on tocotrienols showed slower brain cell death.
What the preliminary findings showed, Yuen said, is that palm oil vitamin E is able to stop human brain cells from dying in the event of a stroke. “They work by suppressing two key signals in the cells to prevent them from dying. So, if people were to take tocotrienols as a supplement, it can prevent brain cells from dying in the event of a stroke and also stimulate the reconstruction of blood vessels thereafter.”
In view of such promising findings, Yuen said it is imperative that the administrative momentum of clinical trials is accelerated.
As Malaysia’s population starts to age, the government needs to steadfastly support clinical trials for deadly diseases. With better public awareness and timely administration of government money, many lives can be saved from degenerative diseases.
“We cannot afford to have start-and-stops in government funding to clinical trials. There has got to be a steady momentum to this quest in order to reach any significantly meaningful outcome that can benefit so many lives,” Yuen said.
In a separate interview held in Petaling Jaya, Selangor, Dr Chandan K. Sen, professor of surgery at the Ohio State University Medical Center concurred with Yuen. In the US, the government readily commits deserving funds for the long term to ensure research talent are expeditiously optimised.
Having dealt with Vitamin E since the start of his career almost 20 years ago, he reiterated that tocotrienols are the better half in the Vitamin E family.
Last year, for the first time in the US, Sen and his team reported a human trial proving palm tocotrienols are potent neuroprotective agents. This is after having studied stroke prevention effects of tocotrienols, using animal and cellular models for the last 13 years.
Sen said his team’s initial findings matched that of Yuen in that tocotrienols help recovery from stroke by inducing growth of new brain arteries that bypass stroke-affected areas.
Following this assessment, Sen said tocotrienols can be orally consumed with blood-thinning drugs like aspirin to prevent a brain attack. “If I had a mini stroke, I would want to take something that would minimise my damage should I suffer from a full-blown stroke. We are testing this in clinical trials now.”
Next year, Sen and his colleagues plan to have a much larger clinical trial to assess the safety and effectiveness of tocotrienols against stroke and end stage liver diseases.
“If palm tocotrienols are established in fighting serious liver diseases, it would benefit the bulk of dying patients in developing nations who cannot afford costly liver transplants,” he added.
KUALA LUMPUR: IOI CORP Bhd shareholders are poised to benefit from lower entry price in its property division, which will be relisted under a new listing company (ListCo) by year-end.
Analysts said the ListCo is well positioned for steady earnings growth underpinned by booming property sales in the Klang Valley, Johor, Singapore and China.
They pointed out that IOI Corp shareholders may gain more than RM1.49 per share from the ListCo listing.
With the ListCo’s indicative issue price to be at least RM4.46, each IOI Corp shareholder will pay 30 per cent less of the price, or a discount of RM1.49.
“The gain will be greater if the actual listing price turns out to be higher than RM4.46,” said JF Apex Securities, which has upgraded IOI Corp from “hold” to “buy” with a target price of RM6.57.
The ListCo is set to be listed on Bursa Malaysia’s Main Market via distribution in specie of about 2.16 billion shares (one ListCo share for three IOI Corp shares held) and non-renounceable restricted offer for sale of 1.08 billion ListCo shares (one ListCo share for six IOI Corp shares held) to IOI Corp shareholders.
Public Investment Bank believes the ListCo’s valuation will not come cheap based on several factors including its strong earnings growth for the next three years and market value of appraised properties at RM18 billion.
The ListCo also has one of the industry’s highest operating profit margin of 50 per cent and international exposure across Malaysia, Singapore and China.
Kenanga Research analyst Alan Lim Seong Chun has a “neutral” view on the relisting plan. “The positive side of the deal is the unlocking of the value of IOI Corp’s property division and a higher rerating of its plantation business.”
The bad aspect is that IOI Corp’s earnings are expected to plunge by about 28 per cent in 2014 due to the absence of property contribution.
“Due to lower crude palm oil (CPO) prices, IOI Corp’s financial year 2014 core earnings will slide 17 per cent to RM1.5 billion. Besides, its net gearing will also soar to 0.5 times from the current 0.3 times as equity portion decreases,” Lim told Business Times yesterday.
He said IOI Corp may therefore need to expand plantation lands to offset the potential significant losses.
IOI Corp executive chairman Tan Sri Lee Shin Cheng, however, maintained on Tuesday that its joint venture with Indonesian plantation companies will help sustain its performance in the absence of property business.
“Our yields are improving, our trees are also matured and surely our profit will go up. Hopefully, this can cover potential losses from property,” he said.
On Bursa Malaysia yesterday, IOI Corp was the third top loser, easing 3.3 per cent, or 18 sen, to close at RM5.28.
PUTRAJAYA: MALAYSIA’S sixth richest man, Tan Sri Lee Shin Cheng will be the biggest winner upon the relisting of IOI Corp Bhd’s unit, IOI Properties Bhd.
With a stake of 45.77 per cent, Lee is currently the single largest shareholder in the plantation and property conglomerate IOI Corp.
From a wealth creation perspective, the deal will generate billions of ringgit for Lee and his family.
According to Forbes magazine, Lee has a net worth of US$4.5 billion (RM13.4 billion) as of March 2013.
Based on the current RM18.6 billion market value of IOI Properties, it could bring in an additional RM8.55 billion (about US$2.85 billion) for Lee, bringing his net worth to about US$7.36 billion.
Likewise, Lee will also surpass Tan Sri Lim Kok Thay of Genting Group (net worth of US$6.6 billion) and emerge as the third richest person in Malaysia.
IOI Corp privatised IOI Properties in 2009 in a deal valued at RM1.3 billion. Upon the relisting, the property unit’s asset value will balloon to RM14.6 million, a huge jump of 1,076 per cent.
“We privatised IOI Properties in 2009. At that time, the price was too low and that’s why we privatised it. And now that it has matured, we are going to demerge and relist it.”
Lee disagreed that the privatisation and relisting are tricks of tycoons to make personal gains. “This is not true at all. We are relisting to enhance the value for shareholders. I am working very hard for the shareholders, not for myself.”
Upon the relisting exercise, Lee will control 46.19 per cent of the shareholding in the new entity, IOI Properties Group Sdn Bhd, maintaining the company in the Lee family’s tight grip.
IOI Properties’ image has gradually changed since it ventured into the Singapore and China markets. From a township developer, it has transformed into a high-end condominium and commercial property developer.
So far, its overseas projects have received encouraging response from buyers, especially the Cityscape and Jalan Lempeng projects in Singapore.
“The project in Xiamen, China, will be launched soon. Once it is launched, you can collect 100 per cent payment from the purchasers,” Lee said yesterday.
While contribution from Xiamen will begin to come on stream, earnings for the next three financial years are anticipated to spike.
PUTRAJAYA: IOI Corp Bhd will relist its property business on Bursa Malaysia under a RM12.8 billion deal by the year-end, adding to a post-election flurry of stock debuts.
IOI Corp, the country’s fourth largest plantation company, privatised IOI Properties Bhd in 2009 in a RM1.3 billion deal, or RM2.60 per share.
“If everything goes right, the targeted relisting will be in December 2013,” said IOI Corp executive chairman Tan Sri Lee Shin Cheng at a briefing yesterday. Also present were his sons Datuk Lee Yeow Chor and Lee Yeow Seng, who are also directors in the company.
IOI Corp shares were suspended from May 9 till yesterday afternoon to facilitate the announcement of this exercise.
Once trading resumed at 2pm, IOI Corp’s shares jumped almost 7 per cent to a twoyear high of RM5.70. It gained 13 sen to close at RM5.46.
Under the relisting plan, IOI Corp will dispose of its entire 99.8 per cent stake in IOI Properties Bhd to a new entity for RM9.77 billion. This is in exchange for 2.8 billion shares in the new listing company called IOI Properties Group Sdn Bhd (ListCo).
The group will also sell other subsidiaries involved in property development to ListCo for RM2.63 billion in exchange for 589.27 million new ListCo shares.
IOI Corp will also sell 202ha of agriculture land in Rompin, Pahang, and 517ha in Segamat, Johor, to ListCo for RM276 million in return for 61.89 million new shares.
ListCo will also buy a 10 per cent stake in Property Village Bhd and another 10 per cent in Property Skyline Sdn Bhd from Summervest Sdn Bhd, which is controlled by Lee.
IOI Corp will also distribute one ListCo share for every three IOI Corp shares to eligible shareholders.
The exercise followed a proposed nonrenounceable restricted offer for sale (ROS) of 1.08 billion ListCo shares to selected shareholders on the basis of one ListCo share for every six IOI Corp shares at an offer price to be determined later.
The restricted offer of shares is expected to raise as much as RM1.8 billion to pare down the company’s borrowing.
“Barisan Nasional won in the general election, and everything is stabilising. That’s why during the last week, share prices have gone up. It’s a good sign,” Lee said. “I believe this is a good time for relisting. The property business is on a stronger footing now. We have built our landbank in strategic locations, so it is about time we unlock its value.”
Upon relisting, ListCo’s net asset value will grow from RM1.3 billion to RM14 billion, indicating more than a 10-fold leap.
Lee said the move is to streamline IOI Corp into two separate listed entities. “The relisting of IOI Properties on the Main Market will make it one of the largest listed property companies in the country,” he said.
Lee reassured that he will continue to be executive chairman of the two entities, although there will be a chief executive officer for each of them.
As at January 2013, IOI Properties’ market value stood at RM18.1 billion. As the underlying value of its property assets is unlocked, Lee is confident that ListCo will achieve operating profit of not less than RM1 billion per year in the coming three years.
In the year ended June 30 2012, IOI Corp’s property segment registered RM704 million operating profit. “We project 50 per cent of income to come from domestic market and while another 50 per cent from overseas business,” Lee added.
The property division has a total of 4,046ha here and overseas.
In the next three years, ListCo is expected to manage development projects with a total gross development value of RM16 billion.
It aims to achieve a more balanced ratio of 40:60 for property investment and development business in the coming five years. Currently, real estate investment business contributes 10 per cent to the overall property income.
Meanwhile, Lee expects palm oil prices to rebound to RM2,800 per tonne by year-end. Currently, it is trading at around RM2,300 per tonne at the Malaysian Derivatives Exchange.
“Fundamentals have been improving since last December. We have already seen the bottom and the only way is to go up,” he said.
Malaysia’s CPO inventory was high at 2.6 million tonnes last December. However, the stock level improved to 1.93 million tonnes as at last Friday.
A JAPANESE woman was chatting nervously in her mother tongue with her school-going son when she walked into the newly-built Sime Darby Medical Centre ParkCity.
Her eyes lit up as a staff member at the hospital counter welcomed her cheerfully in Japanese. The worry lines on her face vanished in an instant as they engaged in an animated banter. Soon after, they were bowing politely to each other.
As she made her way to the lift, she pointed to the “breast clinic” signage on the wall to her young son and commented that the hospital places high importance on its treatment for breast cancer patients.
When told of this incident, Sime Darby Healthcare Sdn Bhd managing director Raja Azlan Shah Raja Azwa smiled and noted that there are many expatriates living in Desa ParkCity and its neighbouring enclave, Mont Kiara.
“We see it fit to have interpreters for our clients’ convenience. Among other non-traditional services we offer at our International Patients Centre are facilitation of visa-on-arrival and its extension, currency exchange, shuttle services and short-stay accommodation,” he said.
“Our flagship hospital at Subang Jaya started off as a community healthcare centre catering to the needs of the people staying there. Similarly, we’re doing the same with our latest addition at ParkCity,” he told Business Times in an interview here recently.
Also present were Sime Darby Healthcare chief executive officer Elaine Cheong and Sime Darby Medical Centre ParkCity hospital director Ch’ng Lin Ling.
Sime Darby Medical Centre ParkCity is located at the juncture of Bandar Manjalara Kepong and Desa ParkCity. Manned by about 40 doctors and 160 nurses, it is a 300-bed hospital offering the full suite of medical and rehabilitative services, and a 24-hour emergency unit.
At Sime Darby, Raja Azlan said hospital administrators and doctors hail the adoption of an integrated electronic medical records infrastructure as it supports a patient-centric approach to healthcare.
The ease of typing a few keywords to retrieve a patient’s record as opposed to ploughing through thousands of folders, filing and refiling them saves the doctor and the hospital millions of dollars, even after taking the cost of the electronic system into account.
He then listed down intangible benefits such as a reduction in potential medical errors, instant communication of laboratory tests and improvements in the quality of data for clinical research.
While the electronic medical record system gives easy access to patients’ medical information, Raja Azlan gave the assurance that the group adheres to strict confidentiality of patients’ medical records as mandated by the laws of the country, provided under the Personal Data Protection Act.
To date Sime Darby Bhd is among the top 10 listed companies on Bursa Malaysia with a market capitalisation of some RM57 billion. Apart from healthcare, the conglomerate’s core businesses are in plantations, property, motors, industrial equipment, and energy and utilities.
Although the healthcare division accounts for less than one per cent of the conglomerate’s earnings, Raja Azlan is hopeful of doubling earnings contribution in the mid-term.
“Hopefully, as we seek to improve our margins by leveraging the expertise of our partner Ramsay, our earnings contribution could grow to two to three per cent of Sime Darby’s earnings,” he says.
Sime Darby and Australia’s largest private hospital operator Ramsay Health Care Ltd are joining hands to expand their healthcare businesses in Southeast Asia.
Sime Darby is combining its entire healthcare assets with Ramsay’s three hospitals in Indonesia, under a new joint venture company to be known as Ramsay Sime Darby Healthcare. Under this deal, Sime will receive RM390 million for transferring 25.7 per cent of the joint venture company to Ramsay’s subsidiary to allow both parties to own equal stakes in the merged entity.
Raja Azlan noted that the group will leverage on Ramsay’s clinical expertise and global procurement programme to manage costs and improve margins.
Moving on to the importance of nurturing close working rapport between hospital administrators and doctors, Cheong upheld the importance of a consultative approach that usually leads to joint decisions. ”We practise an inclusive culture that is built on trust and mutual respect.”
She went on to explain that loyalty to Sime Darby Healthcare is driven by the patient’s sense that the hospital and its physicians are united in ensuring their medical needs are met.
A doctor who goes the extra mile usually demonstrates empathy and is at ease with patients while involving them in health decisions. On the flip side, poor bedside manners reflect aloofness, curt replies, inadequate listening skills and a somewhat disregard for patients’ worries and fears.
Cheong acknowledged that some doctors and nurses are not naturally engaging in their communication but this soft skill is necessary for the hospital to ensure satisfactory healthcare is given to patients in the most economical and responsible way.
“It is only reasonable for patients to be given options for the most up-to-date treatment and that their doctor knows everything about their case, and that their pain would be adequately controlled.
“The upfront time a doctor spends attentively with patients usually saves time later in the form of phone calls, questions and complaints,” she said.
“For example, when a patient is dealing with a difficult diagnosis or chronic condition like cancer, a doctor or a nurse’s ability to talk respectfully and perhaps more importantly, listen empathetically, is among the most valuable assets for healthcare providers like us,” she said.
Service delivery, building and sustaining patient and community loyalty, branding an unassailable market reputation – all of this boils down to good old-fashioned teamwork, she added.
In recruiting doctors at Sime Darby Medical Centre ParkCity, Ch’ng said, “We make sure they have the tools they need – the supporting services, the equipment and the personnel they need to effectively do their job.”
Indeed, she is well aware of what motivates physicians to bring their time, effort and skills to the operations and efficient use of healthcare facilities.
She acknowledged that doctors are concerned about the prospects of losing autonomy, rising malpractice costs, increased paperwork, competition, regulatory requirements and tighter reimbursement.
“The ultimate achievement is creating a working environment where doctors would place their loyalty to a hospital where they would send their own families for care without hesitation,” Ch’ng added.
“There has been a 10 per cent increase in container throughput in the first quarter of the year,” said chief executive officer Datuk Mior Ahmad Baiti.
“We are hopeful of topping 45 million tonnes in total throughput by the end of the year. This is about 10 per cent more than last year’s 41.2 million tonnes,” he said after the company’s shareholders’ meeting here yesterday.
Last year, Bintulu Port reaped RM146.39 million in net profit on the back of a RM527.85 million revenue. Its major customer, Malaysia LNG Sdn Bhd, contributed 23.53 million tonnes of LNG exports, more than half of the total throughput tonnage.
Mior noted that Bintulu Port’s income will be less reliant on LNG as the palm oil cargo has started to expand rapidly in recent years, with encouraging growth in the container and dry bulk sectors, too.
“The amount of palm oil exports has expanded so much that it has overtaken that of container handling. This year, we expect an additional five per cent in crude palm oil shipment to 3.1 million tonnes,” he said.
Also present was chairman Tan Sri Dr Wan Abdul Aziz Wan Abdullah.
Bintulu Port’s major shareholders are Sarawak State Financial Secretary Inc, Petronas and Kumpulan Wang Persaraan.
It was reported that Bintulu Port was raising RM950 million from sukuk issuance to fund the new Samalaju Port, located 60km away to serve industries in the Sarawak Corridor of Renewable Energy (Score).
Bintulu Port will operate the Samalaju Port through wholly-owned subsidiary Samalaju Industrial Port Sdn Bhd, following Samalaju Port Authority awarding it a 40-year concession.
“The construction of Samalaju Port’s interim facilities to cater for barges is currently under way,” Mior said.
He added that two months ago, Bintulu Port had awarded a RM437 million job to Integrated Marine Works Sdn Bhd to carry out dredging and reclamation works. Under the package, the contractor will dredge a 5km access channel to deeper waters of 15m.
Mior said contract for the proposed breakwater package will soon be dished out while the wharf package will be called in June.
The other packages concerning land site infrastructure development and conveyor belt system would likely be awarded towards the end of this year.
The RM1.8 billion Samalaju Port, which is slated to complete by mid-2016, is designed to handle 18 million tonnes of cargo per annum compared with Bintulu Port’s current capacity of 17.63 million tonnes (of non-LNG cargo) per annum.
Samalaju Port’s capacity can be raised to 30 million tonnes a year, if necessary.
PETALING JAYA: SOUTHERN Lion Sdn Bhd, a 50:50 joint venture between Lam Soon (M) Bhd and Japan’s Lion Corp, aims to capture half of Malaysia’s detergent market by year-end from the current 47 per cent.
Its range of brands are Top, Biozip, Puteri Mas and Dobi.
“Although Top is the leading detergent brand in Malaysia, it’s important that we strengthen our position with new offerings that meet customers’ needs in today’s context of modern living,” said Southern Lion marketing director William Khoo.
He reiterated the company’s brand promise of delivering practical solutions to modern day space constraints for washing and drying clothes among high-rise dwellers, night washing and indoor drying for busy working professionals, smaller families, and the practice of energy and water saving.
In explaining Top’s latest feature, Khoo said the detergent is able to help create a more healthy living condition in the bedroom.
While we cannot completely eliminate dust mites from our homes, we can significantly reduce their number. Apart from vacuuming carpeting and upholstered furniture, we can reduce allergens that accumulate in our bedsheets, pillow cases and blankets by laundering the bedding materials every week.
“This is where Top comes in handy. Our new anti-dust mite formula is specifically formulated to remove 99.99 per cent of dust mite from our laundry,” he said at the launch of the new variant here yesterday.
Also present were Southern Lion managing director Annette Ling, senior marketing manager Carmen Foo and Japan’s Lion Corp head researcher (New Technology Development), Fabric Care Research Laboratories Dr Seiichi Tobe.
“We’ve successfully developed an enzymatic cleaning technology that breaks down soluble allergens in mite dust so that they are easily removed during the washing process. This will help minimise the risk of allergy triggered by mite dust,” said Tobe.
Many detergent makers, in a bid to improve environmental profile, have been sourcing renewable ingredients such as palm oil. Southern Lion’s range of detergent incorporates a highly biodegradable substance called methyl ester sulfonates (MES) that is produced by its sister company, Lion Eco Chemicals Sdn Bhd, in Johor.
“Our leading brand Top uses MES in its formulation because of its high detergency at low concentrate, even in mineral water. It is a very efficient cleaning agent,” Khoo said.
In Japan, parent company Lion Corp has been incorporating MES in its Top and Biozip brands of laundry detergent since 1991.
KUALA LUMPUR: THE Worldwide Fund for Nature (WWF) is one of the world’s wealthiest international environmental non-governmental organisations (NGOs). Its total global spending is close to US$500 million a year.
But it has blind spot, a big one. Eradication of poverty is not a priority for WWF.
In fact, the NGO’s strategies to protect the environment hinder efforts to combat poverty. This will be clear today when the Roundtable on Sustainable Palm Oil (RSPO) meets here for an extraordinary session to insert WWF’s anti-development agenda into a revision of the RSPO standard.
The revised standard includes onerous provisions for growers to report on greenhouse gas emissions. This is despite an acknowledgement by the RSPO that there is currently no practical or robust methodology for any such assessment.
Growers and millers are being asked to comply with sustainability requirements that lack scientific rigour, and are costly and technically demanding.
Malaysian growers are perturbed. Smallholders in particular should be concerned. The revised standard includes several new criteria that will increase costs for growers, without assuring improved environmental outputs on the farm.
The RSPO system is already too expensive and technically difficult for the majority of oil palm growers who manage small-scale plantations. There is little evidence that certification under RSPO adds value for growers who are required to meet expensive certification costs.
The system effectively prices palm oil producers out of the global oilseed and vegetable oil markets.
That appears to be WWF’s intention. Restricting the viability of Malaysian oil palm growers has a detrimental impact on the hundreds of thousands of households whose livelihood relies on palm oil production, as well as rural communities who have seen significant development as a result of increasing investment and infrastructure. This is the WWF blind spot.
Instead, WWF focuses most of its resources on demonising palm oil through a global campaign. It contends that unless producers follow WWF’s rules for cultivating oil palm, forests and habitats for wildlife will be destroyed.
There is no scientific justification for this claim. Forest land has been converted to oil palm plantations but the United Nations points out that worldwide, poverty is a primary driver of deforestation, as people clear land for housing, subsistence farming and fuel wood.
Subsistence farming, gathering of fuel wood and unplanned urbanisation drive most global deforestation. Eradicating poverty is the solution to excessive deforestation, not limiting production of palm oil.
The campaign also jeopardises smallholders income, thus their ability to put food on the table for their families. Palm oil is a high-quality and low-cost vegetable oil, widely used in Malaysia, Indonesia, China, India and Africa.
Development agencies, such as the World Bank, rate oil palm as one of the most effective crops for raising living standards and promoted the industry in Southeast Asia as a poverty-reducing crop. Smallholders prosper when producing oil palm.
The WWF system raises costs and decreases the viability of small producers. It is also not working for big business.
In order to comply with RSPO requirements, large-scale growers must invest heavily in consultants, auditors and expensive management systems. Manufacturers, like Unilever, have to meet high cost of using more expensive WWF-approved palm oil and segregating supply chains.
Yet, there is little commercial benefit or return on investment. There is no demand among consumers for RSPO-certified products as a recent poll in Britain concluded.
Businesses went along with the RSPO model, thinking it would be profitable. It wasn’t. Only about 10 per cent to 15 per cent of palm oil produced worldwide is certified under the RSPO system, while only half of that is purchased.
Consumers in developing markets are only interested in low-cost, affordable palm oil. And in wealthy Western markets, consumers won’t pay a premium for the more expensive certified oil. Yet, WWF presses on, oblivious to the failing market demand for certified product and dire economic consequences for Malaysian farmers.
Clearly, WWF does not care. Its global policy is to prevent any conversion of forested land to other purposes, including farming, regardless of forests set aside for conservation. This further punishes the poor.
World Growth advocates that agricultural production must increase in order to meet global demand for food.
Currently, voting is done via manual balloting or show of hands.
The RSPO, which was formed in 2004, is seen as being lopsided against the growers, who come mainly from Asia. The other stakeholders are based in Europe.
On paper, the growers have four executive board positions from the 12 seats available. However, the other stakeholders, namely the food manufactures and non-governmental organisations, seem to have formed a cartel of their own within the RSPO.
“Already, growers are not adequately represented in RSPO’s decision-making process. So, it is only natural to question the proposal to vote electronically on lopsided proposals that seek to further burden oil palm growers,” said Malaysian Palm Oil Council chief executive officer Tan Sri Yusof Basiron.
“This clear case of biasness in RSPO will lead to undemocratic outcome that is not reflective of the voice of oil palm growers. As the sowing of seeds of discontent worsens, it can and will lead to more sorry state of affairs and eventually… its downfall,” he told Business Times in an interview.
On April 25, the RSPO will vote on proposals on minimising greenhouse gas (GHG) emissions from new plantings, implementing policies countering corruption, adopting human rights policy and banning the use of forced labour.
“While these proposals seem to imply stricter rules for altruistic intent, they are basically aimed at raising growers’ production cost at the discretion of RSPO’s decision makers and, thus, making palm oil exports uncompetitive,” he said.
It was reported that RSPO executive board president Jan Kees Vis said the revised criteria, indicators, and guidance will enhance the effectiveness and relevance of the Principles and Criteria, and help address the sustainability challenges facing oil palm cultivation.
In response, Yusof reiterated that oil palm planters do not agree to changes to the existing eight Principles and 39 Criteria.
In a separate telephone interview from Kuching, Sarawak Oil Palm Plantation Owners’ Association (SOPPOA) secretary-general Philip Ho concurred with MPOC.
“Lopsided decision-makings within RSPO is certainly not a yardstick for any organisation to be viewed as balanced in its presentation of views and opinions,” he said.
Ho cited RSPO’s proposal to impose GHG emission measurement for certification as akin to putting additional and unnecessary burden on oil palm growers when such demands are not imposed on other vegetable oil crops like rapeseed and sunflower.
“How come large cattle and sheep rearing activities, which cause tremendous GHG emissions into the atmosphere, are not subjected to these demands?,” he asked.
Indeed, worldwide areas planted under rapeseed, sunflower and corn far outnumber oil palm but these crops are not subjected to GHG emission checks for certification.
“Where is the justice and fairness in such a scenario? Why are oil palm growers singled out while other oil crop farmers in the developed world are not subjected to these same demands? Why are oil palm growers having to face double standards?” Ho questioned.
He went on to say SOPPOA members have always fully upheld Malaysia’s laws and stringent measures that are being implemented in the palm oil industry. “We do not agree to RSPO’s imposition of unreasonable and unjustifiable standards,” he said.
Currently, Al-Hadharah REIT has 12 oil palm plantations and three palm oil mills with a combined area of around 20,000ha.
Boustead Holdings, the parent of Al-Hadharah Boustead REIT, has an agriculture landbank of 81,333ha. To-date, more than 80 per cent of the landbank has been planted with oil palms.
Lodin, who is also Boustead deputy chairman and group managing director, expects crude palm oil (CPO) prices to rise to RM2,600 per tonne.
For the past seven months, CPO prices on the Bursa Malaysia Derivatives Exchange had been fluctuating between RM2,200 and RM2,500 a tonne.
“Since the start of the year, the CPO inventory level has started to come down from a record of 2.6 million tonnes to 2.14 million tonnes at end-March. If this trend continues, we can expect to see it coming down further to about 1.8 million.
“This, coupled with strong demand ahead of Ramadan month from Islamic nations and south Asian countries like India, Pakistan and Bangladesh, will be a boost to palm oil prices. As global demand starts to pick up and production comes down a little, we can expect palm oil prices to rise to about RM2,600 per tonne,” Lodin said.
While 19,945ha of Boustead’s 68,375ha planted area is injected into the Al-Hadharah REIT, he said, it is open to asset inclusion from other estate owners.
“We are open to acquire new assets to top up the REIT. It does not always have to be injected from Boustead. If there are any other estates that are profitable and interested to be part of the REIT, we are open to discussions. We prefer them to be in the right location and, of course, at the right price,” Lodin said after Al-Hadharah REIT’s inaugural annual general meeting here yesterday.
Also present were Al-Hadharah REIT chief executive officer Fahmy Ismail and executive director Daniel Ebinesan.
In raising yield at the Al-Hadharah REIT estates, Lodin said Boustead’s plantation team will continue its replanting programme to replace ageing trees with high-yielding hybrids and clones supplied by its associate, Applied Agricultural Resources Sdn Bhd (AAR).
AAR, an equal joint venture between Boustead Plantations Bhd and Kuala Lumpur Kepong Bhd (KLK), had been breeding hybrids for the past 25 years.
“Our high-yielding hybrid seeds are meticulously bred and cloned by AAR scientists,” Lodin said, adding the hybrids have proven track records of producing more than 35 tonnes of fresh fruit bunches with 23 per cent oil extraction rate.
That works out to be about nine tonnes of oil a hectare in a year or more than two times higher than the country’s average yield.
“AAR’s role has helped sow the seeds for good and stable dividends for the REIT unitholders every year since 2008,” he added.
In the long run, Lodin noted AAR’s palm breeding plan is to produce elite planting materials using marker assisted genome-wide selected palms. This, he said, will lead to a speedier and more precise prediction of superior parents for seed production.
“We hope to achieve better results this year as we step up the fabrication of the littoral combat ships,” said Boustead Holdings deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin.
Out of its six core businesses, oil palm planting is the biggest earnings contributor, followed by shipbuilding and property development.
Last year, Boustead’s earnings shrunk as palm oil prices fell. In the last six months, the third month benchmark palm oil futures on the Malaysian Derivatives Exchanges had been trading at low levels of between RM2,200 and RM2,500 per tonne.
The government had proposed the setting up of a consortium to re-ignite the country’s dying biodiesel sector by trimming national stockpile and supporting palm oil prices.
Named Biodiesel Malaysia Sdn Bhd, the consortium is 30 per cent-owned by Felda Global Ventures Holdings Bhd while Sime Darby Bhd will hold 20 per cent. The remaining 50 per cent is reserved for industry stakeholders, including plantation companies, biodiesel players and oil companies.
Asked if Boustead’s fuel retailing arm, Boustead Petroleum Marketing Sdn Bhd, is keen to take up a stake in Biodiesel Malaysia, Lodin said: “If the biodiesel distribution venture can bring in good returns, why not? We’ll need to assess the details”.
Last year, Malaysia produced about 130,000 tonnes of palm-based biodiesel, of which 100,000 tonnes were for domestic consumption and only 30,000 tonnes exported.
Lodin was speaking to reporters after the group’s shareholders meeting held here yesterday. Also present were chairman Jen. (B) Tan Sri Ghazali Che Mat, director Datuk Ghazali Mohd Ali, group finance director Daniel Ebinesan, heads of business divisions Laksamana Madya Tan Sri Ahmad Ramli Mohd Nor, Chow Kok Choy, Datuk Koo Hock Fee and Tan Kim Thiam.
To another query if Boustead’s banking arm, Affin Holdings Bhd, is still keen to acquire Hwang-DBS (M) Bhd, Lodin said the group had submitted its request to Bank Negara Malaysia to start negotiations.
“Hwang-DBS operations are complementary to that of Affin. We’re hopeful that we stand a good chance to be chosen as acquirer. We’re awaiting the central bank’s approval,” he said.
Affin’s major shareholders are the Armed Forces Pension Fund or Lembaga Tabung Angkatan Tentera (LTAT) (35.2 per cent), The Bank of East Asia Ltd (23.5 per cent) and Boustead Holdings Bhd (20.7 per cent). The Employees Provident Fund owns some seven per cent of the group.
On property development, Lodin maintained that Boustead’s RM160 million purchase of a 200-acre plot in Bukit Raja, Klang, is not a political bailout.
“It was a commercial decision and it worked out to be RM18.40 per sq ft, a fair price for our shareholders. We had actually set our sights on that land since 2005 as it is located next to our existing 700-acre plot. We’re looking to reap economies of scale in developing this 900-acre plot in the near future,” he said.
Asked if LTAT, which owns 61.8 per cent of Boustead, may want to loosen its grip on its flagship investment arm, Lodin, who is also LTAT chief executive officer, said: “It is good to have liquidity. LTAT will do so at the right time and right price and make some capital gains along the way”.
Unlike in Peninsular Malaysia, RE producers in Sabah have not been able to enjoy the deserving rate of 32 sen per kilowatt per hour (kWh) under the FiT. They, instead, have to contend with Tenaga Nasional Bhd (TNB)’s Small Renewable Energy Projects rate of 21 sen per kWh.
This is because under the law, RE producers in Sabah will only be eligible for FiT when the one per cent RE levy is collected by Sabah Electricity Sdn Bhd, a 70 per cent subsidiary of TNB, from heavy power users in Sabah.
FiT essentially guarantees RE producers a premium selling price over that generated from depleting and finite sources such as oil, gas and coal. Power generated from sustainable sources that benefits from FiT includes that of oil palm biomass, biogas, small hydro power and solar.
Since December 2011, heavy power users in Peninsular Malaysia using more than 350kWh or whose monthly bills exceed RM77, have been paying the one per cent RE levy to TNB.
The Sabah government, however, had appealed against collection of RE levy, saying it would be too taxing on heavy power users there.
Now that it has been over a year, the federal government indicated that the Sabah government seemed to have come around.
When met yesterday, Energy, Green Technology and Water Ministry secretary general Datuk Loo Took Gee said “the Sabah government has verbally agreed. We met up this week.”
She was speaking to reporters after representing Energy, Green Technology and Water Minister Datuk Seri Peter Chin in officiating at the launch of the Eco-B workshop organised by Malaysia Green Building Confederation.
Asked when Sabah Chief Minister Datuk Seri Musa Aman will sign on and allow TNB to collect RE levy from heavy power users in Sabah, Loo replied: “We’ll have to wait for the official letter from the Sabah state government”.
“There’s not much impact on monetary outflow despite a 20 to 25 per cent jump in their salaries,” said BNM’s assistant governor Dr Sukhdave Singh. He was responding to a question if Malaysia had experienced an outflow of more than RM2 billion following the blanket implementation of minimum wage law.
Previously, Malaysia Employers Federation (MEF) executive director Shamsuddin Bardan estimated that foreign workers, on average, send back some RM700 each month, which is half of their take-home pay that include overtime claims.
“With a conservative estimate of two million foreign workers here, that works out to be RM1.4 billion flowing out of Malaysia to their home countries every month. Starting 2013, with the blanket implementation of the minimum wage law, the outflow of money from Malaysia is likely to swell to RM2.1 billion every month,” Bardan reportedly said.
Sukhdave says one need to look at this comprehensively. Minimum wages are good for the economy and it ensures Malaysia achieves its high-income nation goal,” he said, adding that a blanket wage floor eliminates the price advantage that foreign workers have over Malaysians, thus creating greater job opportunities for locals.
“Small and medium enterprises and the plantation sectors say it erodes our competitiveness. If these sectors’ competitiveness is based on low wages, then that’s the wrong economic structure,” he said.
“The main objective of minimum wages is for low-income earners to be able to afford their basic living needs here,” he added.
The Minimum Wages Order 2012, which took effect from January 1 2013, requires employers with six employees and above to pay a minimum wage of RM900 a month in the peninsula or RM800 a month in Sabah, Sarawak and the Federal Territory of Labuan.
Sukhdave was speaking to reporters after presenting his views on the country’s economic performance at a seminar organised by the Malaysian Economic Association here yesterday.
When asked to comment on Goods and Services Tax (GST) and government subsidy reduction, he said this tax can be implemented in a manner with no significant loss to low-income earners’ welfare.
“As far as the government is concerned, many daily necessities like food products would actually be exempted from GST.
“As for subsidy rationalisation, you can physically transfer it directly to the lower income group. It would also significantly help offset any negative impacts of the subsidy rationalisation on the lower income households,” he said.
On the Economic Transformation Programme, Sukhdave said it has played a catalytic role in promoting private investment to the country’s economy.
The RM342 million is larger than the RM179.6 million net profit FGV made in the fourth quarter ended December alone, which had been dragged by lower crude palm oil (CPO) prices.
In its filing to Bursa Malaysia yesterday, Tradewinds said it had completed its purchase of 59.2 million shares from FGV at RM9.30 a piece worth a total of RM550.5 million.
FGV acquired the 20 per cent stake in 2010 from Grenfell Holdings Sdn Bhd at RM3.50 a share, totalling RM208 million cash.
With the completion of the deal, FGV has made a net gain of RM342 million or a return on investment of 264 per cent.
Grenfell is a company linked to the PPB Group Bhd, controlled by Malaysia’s richest man Robert Kuok.
FGV president and chief executive officer Datuk Sabri Ahmad could not be reached for comments, but last December said that proceeds from the sale will be used in its upstream sector – to buy more plantation land for rubber and oil palm in countries such as Myanmar, Cambodia and Indonesia.
“With proceeds of RM342 million, FGV can buy controlling stakes in many other companies,” said an analyst who declined to be named.
Syed Mokhtar announced last December his plan to take Tradewinds private, of which, sources said, will be restructured into four separate divisions – rubber, sugar, oil palm and rice.
The plan is expected to lead to the privatisation of both Tradewinds Plantation Bhd and the country’s sole rice importer Padiberas Nasional Bhd (Bernas).
The low-profile businessman and Malaysia’s seventh richest was taking over Tradewinds by offering shareholders RM9.30 for every share he did not already own in the company.
The vehicle for the deal is his private companies – Perspective Land Sdn Bhd, Kelana Ventures Sdn Bhd, Seaport Terminal (Johor) Sdn Bhd and Acara Kreatif Sdn Bhd – which would acquire all the shares they did not already own in Tradewinds by cash.
The whole privatisation deal is expected to cost RM2.5 billion.
Prior to the purchase of the 20 per cent stake, Syed Mokhtar directly and indirectly owned 42.97 per cent of Tradewinds, which in turn, had 69.76 per cent and 72.57 per cent control of Tradewinds Plantation and Bernas, respectively.
It was also reported that from January 2010 to date, FGV has received net dividends totalling RM46.3 million from the Tradewinds stake.
FGV is one of the world’s largest plantation company, owning over 850,000ha land in Malaysia, 500,000ha of which it leases and manages for the country’s 112,635 smallholders.
The plantation conglomerate, which produces over three million tonnes or 10 per cent of the world’s CPO output, is already flushed with RM4.4 billion cash, raised from its initial public offering in June last year.
In a statement yesterday, the trade body said this is to avoid any misunderstanding by the foreign workers and recurrence of riots in Muar.
Three days ago, Muar police foiled an attempt by 5,000 foreign workers from Nepal to hold a demonstration there. Muar police chief Assistant Commisioner Mohd Nasir Ramli said his men prevented them from gathering in front of a supermarket in Jalan Ali.
“We detained 106 people, including those believed to be the masterminds behind the gathering, for questioning and they were released at 1pm,” he had said. Last week, Muar police also arrested 32 Nepalese workers for rioting at a furniture factory over their salaries.
In view of these unfortunate incidents, the National Wages Consultative Council (NWCC) had two days ago, announced that small and medium enterprises (SMEs) are allowed to defer implementation of minimum wages for their foreign workers until the end of this year.
Employers of other sectors who are facing difficulties in implementing minimum wages may also appeal for deferment by submitting their applications to NWCC in Putrajaya by June 30 2013.
Following NWCC’s decision, employers in the SME sector are not allowed to make deductions from the foreign workers’ wages for the levy, cost of accommodation or other allowances.
Instead, they will be given more time to negotiate with their employees on ways to restructure their salary framework.
As for employers of big companies who have been implementing minimum wages for foreign workers from January 1, NWCC said they will be given blanket approval for deductions of levy and cost of accommodation.
NWCC said the amount of levy to be deducted is pro-rated monthly and it shall not exceed RM50 a month for each foreign worker. Both the deductions must be reported to the Labour Department.
However, under special circumstances and based on individual merits, the Labour Department may consider applications for cost of accommodation exceeding RM50 a month for each foreign worker, NWCC said.
The Minimum Wages Order 2012, which took effect from January 1 2013, requires employers with six employees and above to pay a minimum wage of RM900 a month in the peninsula or RM800 a month in Sabah, Sarawak and the Federal Territory of Labuan.
Its minister, Datuk Seri Liow Tiong Lai, said the mobile hospital would benefit those in the remote area as many of the injured or sick patients had to travel more than 100km to reach the nearest hospital.
The Lahad Datu health centre, nearer to Felda Sahabat, only provides outpatient treatment without warding patients.
The mobile hospital, which will be built beside the Lahad Datu health centre, will bolster treatments currently provided at a 12-bed mobile tent set up there.
Six groups comprising 44 medical personnel, specialists, pediatricians and psychiatrists from here will be deployed there.
Liow said safety would not be an issue as the mobile hospital would be located 6km away from the conflict zones and guarded around the clock by security forces.
He added that the ministry was monitoring the hygiene and sanitation levels at relief centres for displaced villagers to prevent any disease outbreak. Liow said vaccinations would be carried out to those at the relief centres.
It was previously reported that the ministry had allocated RM4 million to provide free medical treatment to those in the terrorist-hit areas of Sabah, including the security forces.
Since the government launched Ops Daulat offensive on March 5 to counter the terrorist threat, 56 Sulu gunmen had been killed while 10 security forces personnel died in the line of duty.
“No, there had been no force majeure invoked with regards to palm oil shipment from Lahad Datu,” said Palm Oil Refiners Association (Poram) chief executive officer Mohammad Jaaffar Ahmad.
He was responding to rumours of palm oil shipment cancellation in the midst of unrest in Lahad Datu.
In the frenzy of the Ops Daulat offensive launched last week, a news report stated that the government had ordered Kuala Lumpur Kepong Bhd (KLK) and other palm oil refineries in Lahad Datu to halt operations for a few days.
Soon after, another news report quoted a KLK official as stating the group’s estates and refinery operations were running as normal.
“We are monitoring the situation and will act accordingly,” the company official said.
Confusion arising from the first few days of fighting in Lahad Datu clouded price-sensitive information flow to many participants at the Palm and Lauric Oils Conference & Exhibition Price Outlook in Kuala Lumpur early last week.
When commenting on conflicting news reports concerning Poram members, Jaaffar noted that traders leveraged on volatile palm oil price swings in the futures market.
According to Malaysian Palm Oil Board, there are 13 refineries in Sabah with a total capacity of 7.73 million tonnes per year.
In Lahad Datu, there are five refineries under Felda Group, Wilmar International Ltd, KLK and Kwantas Bhd. These refineries get their palm oil supply from surrounding mills under Felda, Hap Seng Plantations, KLK, Sime Darby Bhd, Wilmar and IOI Corp Bhd, including independent mills.
In an interview with Business Times here yesterday, Jaaffar confirmed that Lahad Datu port was never closed to traffic despite the ongoing Ops Daulat offensive.
“Based on the feedback we received from our members, shipping activities in Lahad Datu are as per scheduled.
“There is no threat of ‘force majeure’ clause being invoked arbitrarily. Refiners are transporting their refined palm oil products to the port for shipment without any disruption,” he added.
Jaaffar explained that the force majeure clause in a contract excuses a party from not performing its contractual obligations due to unforeseen events beyond its control. These include floods, earthquakes and other “acts of God” as well as terrorist attacks.
When asked on exports outlook, Jaaffar expects Malaysia’s palm oil stocks to continue its downtrend.
“We are bullish on palm oil exports as they will pick up when the winter season is over in the Western hemisphere. In the mid term, we see consumers from China and India coming back into the market to replenish their stocks,” he said.
KDF chief executive Azila Abdul Aziz said the company had consistently chalked up close to 1.5 million contracts on the derivatives market, making up around 14 per cent of 9.6 million total trades.
In an interview with Business Times here, she said more funds are starting to use futures as a tool to hedge their investment exposure.
A more specific example would be the equity index futures.
The market currently trades less than one time of its underlying stock/equities market value. In other regional markets, futures trade three to five times more than its underlying value.
KDF’s reputation as the leading futures broker in Malaysia was reaffirmed by Bursa Malaysia last week when it won the best performer award at the Palm and Lauric Oils Outlook Conference 2013.
KDF is the top overall performer for 10 years in a row in attracting the biggest trades into Bursa Malaysia Derivatives Exchange.
Asked on factors that had driven consistent achievement, Azila attributed it to clients’ long-term rapport and strategic partnership with Deutsche Asia Pacific Holdings, which instantly raise the group’s profile among potential investors in the region.
“Our best clients tomorrow are the ones that are happy with us today,” Azila said, adding that human capital investment is also a key success factor. “We need to constantly keep up with changing market conditions. We hire candidates equipped with the right technical skills unique to the futures broking industry.”
“We also carry out an internal one-year management trainee programme that includes one-on-one mentorship and training by four highly experienced business managers. KDF employees are highly sought after by the industry, so we have to ensure that we retain our valuable talent,” she added.
On the outlook for the year, Azila said direct market access capabilities will help to improve and increase the number of products available for trading here.
“We see potential growth in attracting liquidity by leveraging on technology to improve market access. It will be the key enabler that drives volume growth, improve liquidity and governance,” she said.
This is to provide the enlarged group with sufficient funds to implement its expansion strategy and for working capital purposes.
“The proposed acquisition of Platinum Nanochem and the successful fund-raising represent a significant opportunity to enhance shareholder value,” Biofutures chief executive officer Joe Wong said, in a statement issued here today.
The enlarged group is poised for growth based on its established revenue generating business model and its ability to apply its Graphene production technology to a range of products targeting major markets in the near and longer term.
Biofutures International will be renamed Graphene NanoChem Plc after the completion of the acquisition and the placing.
Platinum NanoChem is a global nanotechnology company whose established revenue-generating business model is to design, formulate, manufacture and market a range of IP (Intellectual Property)-backed speciality chemicals and advanced materials including Graphene from waste feedstocks.
The directors believed that the acquisition offers an opportunity to enhance shareholder value and move Biofutures from its current position and considerable exposure to volatile commodity prices into the manufacture of added-value products with higher margins within niche markets.
The enlarged group will aim to exploit the global megatrend towards sustainability through the supply of waste-based, high-performance, cost-competitive products into global markets and to focus on the opportunities afforded by Graphene-enhancement.
Graphene NanoChem will be led by Datuk Jespal Deol who will be supported by a strong and experienced management team and staff with significant technical and business expertise, and a successful track record, in relevant industry sectors.
“We are delighted to be able to offer shareholders the unique opportunity to participate in our growth story as the enlarged group,” Jespal, who is currently chief executive of Platinum NanoChem, said.
“We have a clearly defined strategy to exploit our existing market positions and product portfolio within specialty chemicals, whilst driving our commercialisation strategy for Graphene-enhanced applications in niche markets.
“With the proven experience and expertise of the proposed management team and the funds raised to support this strategy, we look forward to the future with confidence,” he said.
Biofutures International, which was incorporated in England in February 2006, is the parent of Zurex Corp Sdn Bhd. In Lahad Datu, Sabah, Zurex owns and operates a 200,000 tonnes per annum refinery and has a licence to manufacture biodiesel from palm oil.– Bernama
KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV)’s two palm oil refineries in Felda Sahabat and Lahad Datu are working well and not affected by the skirmishes in the area.
FGV president and group chief executive officer Datuk Sabri Ahmad said the company’s two refineries are far from the conflict area, which is confined to around 2,000ha, or one per cent, of its oil palm plantations and land schemes.
“Our refineries are working well despite the security concerns,” Sabri said when presenting his paper at the 24th annual Palm and Lauric Oils Conference 2013, here, yesterday.
Sabri was commenting on the operation by Malaysian security forces to flush out Sulu terrorists around Kampung Tanduo.
In a research note to investors, CIMB also voiced its concern that FGV’s operations, such as the transport of crude palm oil to refineries, could be disrupted if the conflict in the surrounding areas of Lahad Datu prolongs.
Sabri said all plantation operations are going on as usual except for that one single area. “It is important that FGV continues with its operations because Felda Sahabat contributes 25 per cent to the group’s total crude palm oil production of 3.3 million tonnes a year,” he said at the sidelines of the conference.
On its expansion plans downstream, Sabri said due diligence works were being carried out, such as the opening of new oil palm estates in Indonesia. In Myanmar, it may set up rubber processing plants in the next six months.
“We’re in this business for the long term. Although Europe is facing recession, the demand for oleochemicals is sustained because they are a necessity. Oleochemicals are present in household cleaning products, toiletries, cosmetics and industrial and pharmaceutical items,” said KLK Oleo Group managing director A.K. Yeow.
He said the company has committed close to RM200 million to expand and upgrade its oleochemical facilities in Emmerich, Germany.
“By the third quarter of this year, our Emmerich capacity would have expanded to 250,000 tonnes a year,” he told Business Times at the sidelines of the Palm and Lauric Oils Conference and Exhibition 2013, here, yesterday.
Oleochemical production is mainly centred on the manufacture of fatty acids, fatty alcohols, methyl esters and refined glycerin. These are further processed into surfactants, soap and detergents, cosmetics, food emulsifiers, paints and inks, and lubricants.
The use of oleochemicals is very much stimulated by consumers wanting more renewable ingredients in their toiletries, cosmetics and household items.
Emery Oleochemicals Sdn Bhd group chief executive officer Dr Kongkrapan Intarajang said this has spurned innovative applications in biolubricants, green agro-solution and green polymer additives.
“Our higher-value oleo derivatives, which we supply to the personal care, automotive and construction industries, are doing well,” he said in a separate interview.
In view of good prospects in specialty chemicals, Emery Oleochemicals, an equal joint venture between Thailand-based PTT Chemical International Pte Ltd (now known as PTT Global Chemical) and Sime Darby Plantation Sdn Bhd, has pumped as much as €20 million (RM93.8 million) to expand its Loxstedt green polymer business located north of Germany.
Kongkrapan said the facility will also incorporate a technical development centre that will support product formulation for plastic additives, coatings additives and biolubricants.
“Second-generation biofuel, like bio-oil, is more environmentally friendly than biodiesel or bio-ethanol. This is because bio-oil is derived from biomass and this circumvents the food versus fuel dilemma,” said Lipochem Sdn Bhd managing director Koh Pak Meng.
Second-generation biofuels are a realistic alternative to the costlier fossil fuels. This is because bio-oil can be used to heat up water to produce steam to push turbines that generate electricity. This is a valuable means of replacing depleting fossil fuels like petroleum, coal and natural gas.
One can turn a wide range of agricultural waste like oil palm biomass into stable, concentrated bio-crude. This is then refined into bio-oil to replace fuel oil burnt in boilers.
Unlike the current burning of empty fruit bunches in oil mill boilers, Koh said bio-oil plants adopt the fast pyrolysis process, where biomass is heated rapidly to temperatures between 300 and 550°C at high pressure without any oxygen.
The gases released by the burnt biomass enter a quench tower, where they are quickly cooled and recycled back to the reactor as fuel.
“Bio-oil plants are the way forward as ithey are far more energy efficient and make the industry more carbon neutral,” he told Business Times at the sidelines of the Palm and Lauric Oils Conference and Exhibition POC2013, here, yesterday.
Currently, Lipochem’s demo plant in Klang is able to process five tonnes of dry biomass a day.
Koh said this plant, when scaled up 20 times to a commercial size of 100 tonnes a day, will cost around RM30 million.
“The return on investment for a typical 100-tonne-a-day bio-oil plant is around three years. It is a worthwhile investment.”
Koh said bio-oil has many of the advantages over petroleum fuels since it can be easily stored, pumped and transported. It can be combusted directly in boilers, gas turbines, used in slow and medium speed diesels for steam and power plants.
“Fuel oil is priced at around US$750A per tonne while bio-oil can be sold for US$375 per tonne. The price difference itself poses big potential for domestic use of bio-oil as well as for the export market.”
KUALA LUMPUR: Crude palm oil (CPO) prices are expected to trade as high as RM2,600 a tonne this year due to higher crude oil prices leading to more palm oil-based biodiesel use and demand overtaking supply.
CPO prices are hovering at the RM2,300 to RM2,400 level compared to an average of RM2,900 last year.
Industry specialists presented mixed views on the price outlook at the conclusion of the 24th annual Palm and Lauric Oils conference (POC2013), here, yesterday. This was attributed to factors like higher soyabean production in South America and the El Nino weather effects.
In his paper, LMC International Ltd chairman Dr James Fry had forecast CPO prices to touch as high as RM2,600 by June.
Crude oil is now more expensive than CPO and this may boost palm oil-based biodiesel use. “If I were Petronas or Pertamina, I would be rushing to buy local CPO to go into blending palm oil with diesel. This would help stocks decline and see CPO prices hitting RM2,600 by the middle of the year,” Fry told some 2,000 participants from more than 50 countries attending the POC2013.
Indonesian Palm Oil Board chairman Derom Bangun shared Fry’s views, saying global demand has already overtaken supply and there is higher use of biodiesel now in Europe.
“I expect CPO prices to touch around RM2,400 by June and slightly higher in the second half of the year,” said Derom.
However, London-based Godrej International Ltd director Dorab E. Mistry wasn’t so optimistic. He said the palm oil boom over the last five years is over as oil palm trees are expected to be at peak production by September 2014.
“I expect prices to be at RM2,300 and RM2,500 by end-April. However, it can go as low as RM1,800 if crude oil prices go as low as US$80 a barrel. June and July will be a critical point as to where CPO prices will be heading for the rest of the year,” said Mistry, who did not provide a forecast for the second half of the year.
He said plantation companies will continue to reap handsome profits irrespective of CPO prices as production costs are at around RM1,500 a tonne.
Headquartered in Miri, the group has planted close to 63,000 hectares with oil palms in Sarawak.
In an interview, SOPB group financial controller Eric Kiu Kwong Seng spoke of the company’s favourable tree profile. “As of December 2012, about 24 per cent of our planted area is of prime fruit bearing ages. As more young trees mature, we expect very good harvest prospects,” he told Business Times in an interview.
“By the end of this year, about 30 per cent of our total planted area will be of matured ages and bearing more fruit bunches,” he said when met at the sidelines ofPalm and Lauric Oils Conference and Exhibition (POC2013) here yesterday.
SOPB’s aggressive plantings in 2007 have resulted in 80 per cent of its planted area consisting of young oil palms and primed to bear more fruit bunches. This means big earning’s growth potential in the next five years. To date, SOPB has planted more than 80 per cent of its 75,155ha landbank.
On the group’s refinery in Bintulu, Kiu said: “We started operations at the refinery in mid-2012. Following the government’s crude palm oil tax restructure early this year, the trading environment has become more conducive. We’re now running at full capacity”.
SOPB was set up in 1968 via a joint venture between Commonwealth Development Corp (CDC) and the Sarawak state government. In 1995, conglomerate Shin Yang Group bought CDC’s entire stake and is now the largest shareholder with 36.5 per cent while state-owned Pelita Holdings Sdn Bhd holds 28.9 per cent.
In its filing to the stock exchange, SOPB said its profits for 2012 fell 34 per cent to RM159.13 million on the back of RM1.31 billion revenue. Kiu attributed it to unencouraging performance to falling palm oil prices, lower cropping cycle after the bumper crop in 2011 and dilution effect from the young mature estate.
He said the group had in 2011, declared a payout 5 sen a share. Asked if the group is still able to match the same payout, he replied, “we’ll strike a balance of rewarding shareholders and retaining profits for business expansion”.
KDF is a joint venture between Kenanga Investment Bank Bhd and Deutsche Asia Pacific Holdings Pte Ltd.
This year, the Palm and Lauric Oils Outlook Conference (POC2013) carried the theme “Price volatility – Ride It, Manage It”, in view of the volatile developments in the global economy and their effects on futures markets.
“For the past 10 years, KDF has shown great fortitude in anticipating the fast-changing market and client demands as well as adopting and localising best practices from around the globe. The accolades awarded tonight to KDF is a reflection of the team’s commitment to excellence,” said K&N Kenanga Holdings Bhd group managing director Chay Wai Leong upon receiving the award from Bursa Malaysia Bhd chairman Tun Dzaiddin Abdullah.
In becoming an international financial player, K&N Kenanga has established its presence in Asia and Middle East, through direct equity participations and strategic partnerships in Vietnam, Sri Lanka and Saudi Arabia.
KDF chief executive officer Azila Abdul Aziz, who was also present said: “Last year, our business accounted for about 14 per cent of the total contracts volume on the Bursa Malaysia Derivatives. We’ve established a strong brandname in the Malaysian derivatives industry for almost a decade now. In the next five years, we are looking to realign our goals to better suit the current market environment, allowing on board diverse clientele base to enhance our income stream.”
Milan Jevtovic, a businessman from Serbia participating in the POC series for the first time, remarked that he was amazed at the ease and convenience of trading palm oil futures on the Malaysian Derivatives Exchange. His company, Coinix Montenegro d.o.o., had just engaged TA Futures Sdn Bhd to hedge on the commodities market.
Jevtovic also said he’s seeking possible partnerships with plantation giants like Felda Global Ventures Holdings Bhd, Sime Darby Bhd and IOI Corp Bhd to supply palm cooking oil to Serbia and countries like Romania, Bulgaria and Bosnia.
“My country has a population of 100 million and our staple kitchen ingredient is sunflower oil. Right now, there’s some small shipment of palm cooking oil and bakery fats into Serbia. Palm oil is an affordable and nutritious alternative to sunflower oil,” he said.
KUALA LUMPUR: MALAYSIA’S palm oil sector must go all out to boost its competitiveness as crude palm oil (CPO) prices are extremely volatile, fluctuating against a backdrop of uncertain supply and demand situation as well as strong competition from the world’s other 16 edible oils and fats.
Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said the global economic slowdown in the third quarter has contributed towards raising the domestic stocks level, which resulted in lower crude palm oil (CPO) prices compared with 2011.
In the last few months, CPO prices on the Malaysian Derivatives Exchange have been hovering between the RM2,300 and RM2,500 a tonne level compared with an all-time high of over RM4,000 in 2008.
“The government has implemented measures to enhance the competitiveness of the palm oil industry, including restructuring the export duty on CPO and providing replanting incentives beginning this year.
“This move is aimed at reducing the CPO stocks and strengthening its prices,” Dompok said in his keynote address here yesterday at the 24th annual Palm and Lauric Oils Conference and Exhibition 2013: Price Outlook 2013/2014.
He added that in situations of uncertainty, price discovery is necessary for the traders, especially in mitigating risk factors and Malaysia, as the preferred benchmark for the pricing of palm oil globally, has attracted strong attention from international traders.
Dompok said as at December 2012, foreign trading participation for crude palm oil futures (FCPO) contract was recorded at 30.2 per cent, an increase from 28.7 per cent in 2011.
He said Malaysia, which is the second largest producer of CPO after Indonesia, will continue to drive the growth by seeking opportunities to expand partnerships to strengthen connectivity with the rest of the world.
Malaysia recorded a palm oil production of 18.8 million tonnes last year, accounting for some 10 per cent of global palm oil output.
KUALA LUMPUR: CRUDE palm oil (CPO) production and sales from Sabah, accounting for 30 per cent of Malaysia’s total output, may be affected if the security situation brought about by the terrorist intrusion in the eastern part of the state continues.
However, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said palm oil refineries in Lahad Datu to date have not been affected as most of them are in industrial areas far from the conflict zones where the security forces are launching operations to flush out armed gunmen from the Philippines.
“No refineries have shut down and none have been affected as they are far from the hostilities,” Dompok told reporters here yesterday after launching the 24th annual Palm and Lauric Oils Conference and Exhibition.
Sabah is one of Malaysia’s top oil palm growing regions with much of the palm oil from the state shipped to China – the world’s second largest consumer of edible oils.
Meanwhile, CIMB analyst Ivy Ng in her research note on Monday said the situation there would affect the harvesting, transportation and sales of palm oil from Sabah.
She said a check with Felda Global Ventures (FGV) last Friday revealed that the company was not able to access its 1,000ha estates while Genting Plantations has suspended transportation of CPO from two of its five mills to Lahad Datu.
FGV owns 95,542ha of Sahabat estates which are close to where the intruders landed.
Ng said so far, the impact of this incident on CPO production is still minimal but if the crisis escalates, the impact would be significant.
“This is negative for refiners and planters in Sabah as productivity and shipment of CPO could be affected. For every one per cent change in fresh fruit bunch output, earnings may be dented by up to two per cent,” she said.
KL Kepong came second in terms of the size of its estate exposure in Lahad Datu. It has a refinery there while FGV has one in the Sahabat region.
“The concern for refineries near the areas where clashes have been reported is that planters may not want to transport their CPO to the refineries and may divert their production to other refineries in Sabah for security reasons,” said Ng.
However, she said if the matter is resolved quickly, the impact would be minimal or none as the planters could play catch-up on harvesting and shipments.
CIMB Research, she added, does not think the issue will impact CPO prices significantly given the high stock buffer in Malaysia and Indonesia.
Security forces in the early hours of Tuesday moved into Kampung Tanduo to end a stand-off with the armed intruders after violence killed at least 27 people and sparked fears of broader insecurity in the resource-rich area.
KUALA LUMPUR: MALAYSIA’S palm oil downstream players have appealed to the government to abolish duty free quota on crude palm kernel oil (CPKO) and waive the five per cent duty on refined, bleached and deodorised palm kernel oil (RBD PKO).
Palm Oil Refiners Association of Malaysia (Poram) chief executive officer Mohammad Jaaffar Ahmad acknowledged that while the government had lowered crude palm oil (CPO) tax at the start of this year, it has yet to consider other requests put forward by downstream players.
“Right now, RBD PKO is the only refined product in Malaysia that is still being taxed,” he said.
Jaaffar said Indonesia’s move to lower export duties on refined oils and fats in September 2011 had eroded Malaysia’s RBD PKO export competitiveness. Currently, Indonesia does not impose any RBD PKO tax, while Malaysia has a five per cent duty.
“Since Indonesia does not have any tax on RBD PKO, refiners here are at a disadvantage. We face unfair competition and loss of business opportunities,” he added.
Last year, only 258,640 tonnes of RBD PKO were exported, 40 per cent less than 363,690 tonnes in 2011.
Jaaffar was speaking to Business Times on the sidelines of the Palm and Lauric Oils Outlook Conference (POC2013) here yesterday. “Since we have not been able to export our RBD PKO competitively, there’s less demand for CPKO. This continues to pull the CPKO prices down,” he explained.
More importantly, Jaaffar said downstream players are also appealing to the government to abolish the export quota on duty free CPKO.
If the government were to do so, both oleochemical and specialty fats manufacturers will be able to procure CPKO from the market at a 10 per cent cheaper pricing. “This is what we want and it will be good for all downstream players,” he said.
Among the specialty fats producers that support abolition of duty-free CPKO quota are IOI Loders Croklaan, Premium Vegetable Oils, Cargill, Sime Darby Kempas, Intercontinental Specialty Fats and Fuji Oil.
Specialty fats are used by food companies to make margarine, coffee creamer, bakery fats, chocolate, ice cream, non-dairy cheese and infant milk.
In a separate interview, Malaysian Oleochemical Manufacturers’ Group (MOMG) chairman Tan Kean Hua said its members use as much as 1.2 million tonnes of CPKO a year.
“We prefer the 10 per cent tax on CPKO to remain unchanged. We need all the CPKO there is at competitive pricing. As for RBD PKO, we have no objection for the five per cent tax to be waived,” he said.
In an interview with Business Times here recently, Bursa Malaysia Derivatives chief executive officer Chong Kim Seng said some 2,000 delegates from more than 50 countries have confirmed their participation.
In view of the conference themed “Price Volatility – Ride It, Manage It”, he noted that many vegetable oil traders have been leveraging on futures markets as prices fluctuate on volatile global economic developments.
Delegates will be benefiting from insightful views on vegetable oils price trends. Among the notable luminaries attending are CME Group chief executive officer Phupinder Gill, Chinatex Grains and Oils Import & Export Co Ltd chief economist Xu Jian Fei and Indonesian Palm Oil Board chairman Derom Bangun.
For more than 20 years, the POC series have been able to attract top executives from major companies, traders and even foreign government officials to converge here and get a feel of where palm oil prices are heading.
Following the partnership between CME Group and Bursa Malaysia a few years ago, Chong said traders were introduced to palm oil contracts on CME Globex, the same electronic trading platform as CME Group’s existing suite of agricultural products.
Celebrity-status palm oil analysts Dorab Mistry and Dr James Fry are due to arrive here today and give their forecasts on Wednesday.
The palm oil industry has had a rough ride last year. From a high of RM3,600 per tonne in April 2012, crude palm oil prices tumbled to a low of RM2,200 in October.
Since then, prices have somewhat stabilised. Last Friday, the third month palm oil futures on the Malaysian Derivatives Exchange closed RM30 lower at RM2,367 per tonne.
When Malaysia first started the annual palm oil conference 24 years ago, the government had to pay for the participants’ hotel charges to start the ball rolling.
Today, POC2013 can afford to charge people to attend and they still come despite the global economic downturn and high fees.
Although Malaysia is no longer the world’s biggest palm oil producer nor home to the world’s largest market for palm oil derivatives, palm oil prices continue to be quoted from Kuala Lumpur.
Traders like Bursa Malaysia’s convenient trading environment. In the past year, the stock exchange had introduced new services like NLTs (Negotiated Large Trades) and EFRPs (Exchange Futures for Related Positions) and launched OCPO (Options on FCPO).
Chong said these new initiatives have helped market participants to better leverage the use of futures and options for their price risk hedging and management.
Despite the unencouraging performance, president and group chief executive Mohd Bakke Salleh said he is hopeful of achieving a RM3.2 billion net profit for the year ending June 2013.
He also assured shareholders that the group is able to go on dishing out at least half of its profit to shareholders, as palm oil prices stabilise and are starting to stage a recovery.
Yesterday, the third-month benchmark palm oil futures on Bursa Malaysia Derivatives dropped RM9 to close at RM2,410 per tonne.
When asked for a forecast, Bakke said he is optimistic that “palm oil prices will average at between RM2,700 and RM2,800″ because global demand for the staple food ingredient still outstrips supply.
“In the first half of our financial year, plantations contributed almost half to our total profits.
“The gap between palm oil and soyaoil has widened to US$320 tonne, so the current attractive prices could give an incentive for consumers in India, China and Pakistan to make the switch.
“As prices is set to improve in the second half, we hope to do better,” he said at a briefing here yesterday.
Also present were group chief operating officer Datuk Abdul Wahab Maskan and group chief financial officer Tong Poh Keow.
“We are confident of riding out of the current challenging environment and reaping the benefits in the future when the global economy gets on the recovery path,” Bakke added.
Sime Darby proposed paying a lower interim dividend of 7 sen a share from 10 sen, previously. Asked if this means lower dividends for shareholders for the full year, Bakke said: “It may seem lower but I assure you we’re maintaining a dividend payout of at least half of our profits.”
The group’s property division suffered a 54 per cent decline in its second-quarter profit due to lower recognition from two mature townships in Klang Valley. Bakke, however, said the division’s take-up rate will pick up in the coming quarters.
“The launch of the Saffron Hills housing in Denai Alam, Selangor, has managed to garner a 92 per cent take-up rate to date, while the Battersea Power Station project in London has already sold 97 per cent of the first phase of its property offerings,” he said.
The first phase of the Battersea project will start construction in June, while the second phase will be launched towards year-end.
Sime Darby’s industrial division profit dipped 4.0 per cent to RM285 million, due to lower deliveries of heavy machineries to the oil and gas, marine and power generation sectors.
Profit from its motor division for the second quarter went up 7.0 per cent to RM164.6 million, thanks to overall strong sales of BMW, Peugeot and Hyundai models.
The group’s search for a foreign partner to grow its healthcare business into that of a regional player is still “work in progress”, said Bakke.
NGAI Wai Heng, a Cantonese, learnt to prepare sumptuous Hakka meals when she married Yee Yon Fah, the eldest son of a Hakka family.
Ngai, still living with her 90-year-old mother-in-law Thye Mooi Ying, explained that it is normal for the wife to follow and adopt the culture of the husband’s family.
The traditional Hakka reunion dishes that Ngai showcased when met in the presence of her still-discerning mother-in-law were ju geok chu (vinegar pork trotters), son pan ji (yam abacus beads) and kao ngiuk (sliced pork belly pot roast).
Both the meat dishes that Ngai prepared are meant to symbolise abundance and prosperity.
“There is a saying, ‘yao yu, yao yuk’, which means that there must be fish and meat on the table. That is what abundance is about,” she told Business Times in Petaling Jaya recently.
“There are many popular Hakka dishes served during reunion dinners and the selection is very much each family’s taste,” said Ngai’s husband Yee.
In his family, Yee said the son pan ji is a requisite Hakka dish eaten during major festivals, especially during Chinese New Year, because of its auspicious connotation that means wealth.
The yam dumplings are shaped to resemble Chinese abacus beads – a traditional calculator for one to count wealth.
To prepare the dish, the mashed yam and tapioca starch are kneaded into a dough before it is cut into bead shapes and boiled in water. The cooked pieces are then stir-fried with shallots, minced pork, dried shrimp, cuttlefish, sliced chilli and chopped parsley.
Ngai noted that she has been using palm oil for cooking for as long as she can remember because she finds this variant most suitable for stir-fry and deep-fry.
In fact, it was Thye who started using palm cooking oil in the 1970s to prepare meals when it became an alternative to the traditional but less healthy lard used by Chinese families.
Palm oil is able to withstand stir-fry heat better than other vegetable oils like olive, soyabean, corn, canola and sunflower.
“Palm oil can be better used for cooking at higher temperatures than other oils. Also, I find it very suitable when I do not want the flavour of …. say, for example, olive oil,” Ngai said as she flips the slightly chewy and bouncy son pan ji in her wok.
She was surprised to learn that while palm oil is the cheapest cooking oil in the world, it is nutritionally comparable to olive oil.
When it comes to keeping her cooking oils fresh, Ngai said whether it is palm oil, sesame oil or sunflower oil, they do not last forever.
So, what happens when cooking oil goes bad? Used cooking oil can turn rancid after a month or two, affecting the taste and quality of the food.
Ngai said she places her array of cooking oils in a dark cupboard, away from heat. “If you have oils that you do not use frequently, consider buying smaller bottles and marking the bottle with the date it was opened,” she said.
Nutritionally balanced and contains no cholesterol
UK-BASED food technology expert Kurt G. Berger said over the course of his research of more than 50 years, many people are unduly suspicious of palm oil, an ingredient many are still unfamiliar with. He tells Business Times in an interview that once the functional and economic advantages of this “more natural product” are explained, people will become more confident of the health benefits of palm oil in their daily diet.
Q: Why does palm cooking oil sometimes turn “cloudy”? Is the oil still safe for consumption?
A: Palm oil becomes jelly-like and cloudy when stored in the fridge, when all the other major vegetable oils remain liquid. This is due to its 50 per cent content saturated acids, mainly palmitic and stearic.
More importantly, the other half of palm oil’s fat content is monounsaturated and polyunsaturated – known to increase HDL, the “good cholesterol”, and can benefit the cardiovascular system.
Unlike other vegetable oils grown in temperate countries, palm oil contains the whole spectrum of Vitamin E, minerals, antioxidants and other phytonutrients. Its deep orange hue shows it is packed with beta-carotene, a Vitamin A variant.
Q: What is the world’s most consumed oil?
A: Today, palm oil is consumed by three billion people across 150 countries. Palm oil is mainly consumed as cooking oil. It is also the main ingredient of margarine and shortening. Last year, leading industry journal Oil World showed that global consumption of vegetable oils is around 180 million tonnes.
Of that volume, palm oil accounted for 30 per cent of the global market share, while rivals like soyabean oil only command 24 per cent and canola 13 per cent.
Q: Is palm oil less nutritious than other more expensive cooking oils?
A: Palm oil is nutritionally balanced. One tablespoon of palm cooking oil contains 120 calories and 13.6g of fat. With a balanced combination of polyunsaturated, monounsaturated and saturated fats, palm oil is made up of 44 per cent oleic, 10 per cent linoleic, 40 per cent palmitic and five per cent stearic acids.
While palm oil is the cheapest cooking oil in the world, it is nutritionally comparable to olive oil. It is packed with carotenes such as beta-carotene and lycopene – the same nutrients that give tomatoes, carrots and papaya their reddish-orange colour.
Palm oil has the richest natural source of the supervitamin E called tocotrienols. Olive oil does not contain any carotenes or tocotrienols, yet it is cleverly marketed as being heart healthy.
Q: How well is palm oil digested?
A: Once consumed, palm oil does not remain intact in our stomach for long. Once the enzyme pancreatic lipase comes into contact with the fats we consume, it breaks down the fat molecules into fatty acids and mono-glycerides, which are then absorbed by our intestines.
Palm cooking oil and margarine are 95 to 97 per cent digestible, which falls within the range of 93 to 99 per cent for most edible oils and fats.
Q: Does palm cooking oil contain cholesterol?
A: Like all vegetable oils, palm oil does not contain cholesterol. In fact, the US Food and Drug Administrator has allowed palm-based products sold under the Smart Balance brand (containing up to 50 per cent palm oil and 50 per cent local oils) to carry the US patented label “To help increase HDL (good cholesterol) and improve the cholesterol ratio (HDL/LDL)”.
CHOCOLATE, once a precious food reserved for royalty and the upper class is now an delectable treat for all, regardless of social status. One thing that has never changed throughout history is that chocolate is considered a food that stimulates passion.
“We can’t live without chocolate,” said Prakash Mathavan, Goodhope Asia Holdings Ltd’s director and chief operating officer of downstream businesses. “In good times, we celebrate and in bad times we seek comfort with chocolate,” he smiled with a hint of twinkle in his eyes.
In the olden days, the main ingredient in chocolates was cocoa butter. But after this commodity became very expensive and short in supply, chocolate makers turned to specialty fats.
He said confectionery makers nowadays like palm and palm kernel-based specialty fats because of the excellent gloss retention and flavour release.
“It also possess good ‘snapping qualities’ and, therefore, is ideal for moulded products like chocolates,” Prakash told Business Times in Kuala Lumpur.
Even though chocolate is regularly eaten for pleasure, there are potentially many health benefits. While, antioxidants present in chocolates protect the body from pre-mature ageing caused by free radicals, which can cause damage that leads to heart disease, flavonoids also help relax blood pressure through the production of nitric oxide and balance certain hormones in the body.
Prakash noted that when palm specialty fats are used to make chocolate, it facilitates good flavour release, exhibits outstanding mouthfeel and extends its shelf life.
The multi-billion dollar specialty fats market was pioneered by Loders Croklaan more than a century ago. Now, a unit of IOI Group, Loders Croklaan, is joined by AarhusKarlshamns and Fuji Oils as sizeable producers of specialty fats.
Newcomers that also want a bite of this profitable market are Goodhope Group, Mewah Group, Lam Soon Group and Sime Darby Bhd. As these companies seek to seduce and whet the world’s increasing love for chocolate, Malaysia has emerged the world’s export hub for specialty fats.
When describing specialty fats usage, Prakash said depending on the type of the fat and application, palm oil can be used as 100 per cent of the fat portion in chocolates or blended with cocoa butter.
Also present at the interview were his colleagues Ashok Chowdhury, Satish Selvanathan and Mayur Singh.
They noted that palm specialty fats are now increasingly used as substitutes for dairy fats such as milk fat and butter to make shortenings, ice cream, infant milk, mayonnaise and cheese.
Facts and figures on palm oil nutrition
* FACT 1: Palm oil is nutritionally balanced.
One tablespoon of palm cooking oil contains 120 calories and 13.6g of fat. With a balanced combination of polyunsaturated, monounsaturated and saturated fats, palm oil is made up of 44 per cent oleic, 10 per cent linoleic, 40 per cent palmitic and five per cent stearic acids.
* FACT 2: Saturated fats are not necessarily bad.
Tropical oils have a bad reputation in cardiovascular health because they contain high levels of saturated fats compared with other vegetable oils.
Nevertheless, the January 2010 issue of the American Journal of Clinical Nutrition reported that there was no evidence to show that dietary saturated fat was associated with an increased risk of cardiovascular disease.
The effect of saturated fat should be seen in the context of a person’s overall diet and environment.
High intake of saturated fat associated to low intake in polyunsaturated fatty acids, consumption of sugary and salty foods, excessive alcohol intake, smoking and stress collectively trigger the onset of cardiovascular diseases.
* FACT 3: Poly-unsaturated oils are unhealthy when partially hydrogenated.
Many snack foods, like chocolate and confectioneries, require solid fats to give them structure and texture. This is achieved either by using saturated fats or partially hydrogenated polyunsaturated fats containing artificial trans fats.
For more than 50 years, artificial trans fats was the preferred choice. But following increasing awareness of the negative effects of these artificial trans fats in the last decade, many food scientists have turned to alternatives.
Health-conscious food producers have switched to palm oil and its solid fractions as they become convinced of its versatility and natural image.
More than 1,300 growers attended the general meeting held by Plentiful Gold-Class Bhd, the management company of CHGS, and cast their votes.
Lee, who is Plentiful Gold-Class chairman, had personally undertaken to pay RM25 million or the sixth year dividend of 12 per cent by August 8. “I am making this offer in my own personal capacity. We don’t pay out dividends because this scheme is a trust. But out of goodwill, I will fork out RM25 million.”
On top of that, Lee said he would personally guarantee that growers would receive their 100 per cent cash money due from the termination of the CHGS by August 8 instead of the two years stipulated in the circular.
“I will ensure that the growers are paid within six months. If the company cannot come up with the money within the six months, then I will find ways to repay them myself,” he said.
Soon after the poll results were announced, Lee said “this is a happy ending”, adding that the company has a lot of responsibilities going forward and delivering what has been promised.
“I hope the growers appreciate what I have done and understand my good intention.”
Lee noted that Plentiful Gold-Class had paid out RM78 million in dividends in the last five years. This means investors had seen a return on investment of 48 per cent.
Initiated in 2007, the CHGS had raised RM215.5 million. It is Malaysia’s first oil palm farm-sharing investment scheme.
Following the early termination of the scheme, Lee said the plantation land in Gua Musang, Kelantan will be put up for sale via an open tender at a reserve price of RM170 million.
Any difference between the sale price and the total buyback amount will be borne by the parent company, Bee Garden Holdings Sdn Bhd.
Investor Chua Geok Seng, 57, told Business Times: “I’m not losing any money but I’m a little disappointed that this guaranteed interest scheme ended so soon. I had wanted this to be part of my retirement plan.”
The restructuring of the crude palm oil (CPO) taxes also means better prospects for the exports.
“We should be able to do better than last year’s palm oil exports of RM71.5 billion. In 2012, palm oil prices were dragged down by a host of factors most of which were beyond our control. Now that we’ve restructured our crude palm oil (CPO) taxes, the prospects of higher exports lie ahead,” he said at the “Reach and Remind Friends of The Industry Seminar and Dialogue 2013” held here yesterday.
Since the start of the year, the government had set an export tax of between 4.5 per cent and 8.5 per cent on CPO versus 23 per cent previously. There is no tax on CPO, however, if the price dips below RM2,250 per tonne.
Palm Oil Refiners’ Association of Malaysia (Poram) chief executive officer Mohammad Jaaffar Ahmad, who was also at the seminar, concurred with the minister that brighter days lie ahead for refiners. “Our members are seeing better margins as they ramp up production,” he said.
Last week, the Indonesian government raised the CPO export tax to nine per cent for February from 7.5 per cent in January.
Jaaffar responded that this move could be a blessing for refiners here because it would mean CPO in Malaysia will be cheaper than Indonesia’s and this will spur interest from CPO-importing countries.
“More imports will mean less CPO stock in the country, which will ultimately raise the price of CPO. What we need now is to reduce our stock level to the manageable level of two million tonnes,” he added.
To a query if March is deemed to be another month of zero export tax on CPO, Dompok replied that palm oil prices seemed to have bottomed out and the only way prices can move is up. “Prices have started to improve in the last two weeks. Last Friday, it closed above the tax threshold of RM2,250 per tonne on the physical market,” the minister said.
Malaysia mooted the use of B5 (95 per cent diesel and 5.0 per cent palm oil) in 2006 and was supposed to implement its use nationwide by end of last year.
Last week, Felda Global Ventures Holdings Bhd (FGV) president and chief executive officer Datuk Sabri Ahmad urged the government to quickly implement the use of B10 biofuel so as to help lift weak CPO prices.
When asked to comment. Dompok said the government has spent over RM80 million to set up blending facilities nationwide. He then clarified that these facilities will be operational by mid-2014 and not by the end of this year.
Ensconced in his executive suite 32 floors above Hong Kong’s Victoria Harbor – the room decorated with a pair of elephant tusks gifted by the late Tunku Abdul Rahman, the first prime minister of Malaysia – the world’s 38th-richest person appears to have defied the aging process himself.
Kuok has accumulated a fortune of US$19.2 billion (RM59.52 billion) as of January 31, according to the Bloomberg Billionaires Index.
Trim, dapper and straight backed at 89, he shows no signs of stopping there, Bloomberg Markets magazine will report in its March issue.
This year, the media-shy Malaysian-born magnate will likely open his 71st sumptuously appointed Shangri-La. Six of them are scheduled to be opened in the third quarter alone, including one perched in the Shard, the 72-storey London skyscraper that’s the tallest office building in Western Europe.
Meanwhile, the public and private companies his family controls continue to pump money into his ancestral homeland, China, where his investments range from Beijing’s tallest building to cooking oil brands that have gained a 50 per cent market share in the world’s most populous nation.
One of Kuok’s companies, Singapore-listed Wilmar International Ltd, is the world’s biggest processor of palm oil and eighth-biggest sugar producer.
Others operate shipping and logistics businesses, a property portfolio stretching from Paris to Sydney and East Asia’s most influential English-language newspaper, the Hong Kong-based South China Morning Post.
“He’s so vital, so active and continues to be so personally powerful,” says Timothy Dattels, San Francisco-based senior partner at US buyout firm TPG Capital LP and a director of Kuok’s Hong Kong-listed Shangri-La Asia Ltd. “I can’t imagine a day without him at the top.”
Others can, which is why the question of succession looms over the Kuok empire as the patriarch prepares to mark his 90th birthday in October.
Through the unlisted family-owned holding company, Kerry Group Ltd, which he chairs, Kuok controls listed enterprises with a total market value of about US$40 billion.
As it stands, the family enterprises are seeking to recover from a rocky 2012 that featured some sharp share-price and profit drops.
In his first interview with Western news media in 16 years, Kuok, who has eight children and numerous other relatives sprinkled through his executive ranks, says he won’t be worried when that day eventually comes.
“Everything on earth is dynamic,” he says in perfectly enunciated English. “I can only give my children a message, not money. If they follow it, we can go another three or four generations.”
Relatives run the most important of the Kuok businesses.
Kuok’s second son, Khoon Ean, 57, heads Shangri-La Asia, of which the family owns 50 per cent.
A nephew, Khoon Hong, 63, co-founded and chairs Wilmar International, the largest Kuok-controlled company, with a market value of almost US$20 billion, in which the Kuok family controls a 32 per cent stake.
A daughter, Hui Kwong, 35, is executive director of SCMP Group Ltd, publisher of the 109-year-old South China Morning Post, which Kuok took control of in 1993, when he paid Rupert Murdoch’s News Corp US$349 million for a 35 per cent stake.
As to who will succeed the master, most investors in Kuok enterprises focus attention on his eldest son, Khoon Chen, 58, who’s known as Beau.
Robert declined to confirm that Beau, who is deputy chairman of Kerry Group, will succeed him.
“News hounds like excitement in their stories, whereas leadership of a business group is always a serious matter, and it would be wrong to put in writing any kind of assumption,” Kuok wrote in an email following the interview.
Beau, who has worked in his father’s businesses since 1978, is chairman of Kerry Properties Ltd. The firm, 55 per cent owned by Kerry Group, develops luxury apartments, shopping malls and offices mostly in China and Hong Kong.
“I know Beau and he has a good team,” says Peter Churchouse, founder of Hong Kong-based property investor Portwood Capital Ltd. “But you have to wonder whether the second and third generations have the entrepreneurial and trading instincts that the father has.”
The father’s instincts were honed over decades of personal and historical turbulence inconceivable to the generation vying to take over the family business.
That experience helped him become one of the first – and best-connected – foreign investors in China following Mao Zedong’s communist revolution.
“Robert is the best China watcher in the business,” says Simon Murray, chairman of Glencore International Plc, the world’s biggest commodities-trading company. “He understands the steel backbone of the Communist Party, but while other Hong Kong tycoons tend to be hugely subservient to Beijing, he is in no way obsequious.”
For all of Kuok’s prowess, 2012 was a tumultuous year for investors in his enterprises.
While Kerry Properties stock surged 57 per cent in Hong Kong last year – more than double the increase in the Hang Seng Index – Wilmar International’s shares plummeted 33 per cent, making it the worst performer in Singapore’s Straits Times Index.
The plunge wiped the equivalent of more than US$8 billion from the company’s market value – and almost US$3 billion from the family’s fortune. This year, Wilmar’s share price has rebounded, rising 14 per cent in January.
In any event, Kuok disputes Bloomberg’s valuation of his personal wealth at US$19.4 billion; he says it’s “a fraction” of that amount, though he does not volunteer an alternative figure.
Wilmar’s woes stem from its massive exposure to China, where its cooking oil brands – led by Jin Long Yu, meaning Golden Dragon Fish – grease half the country’s woks and where it gets 48 per cent of its revenue.
Beijing limited price increases on edible oils during most of 2011 and part of 2012, Wilmar said at the time.
Furthermore, the rising cost of soyabeans, which Wilmar uses to produce cooking oil, hit a record US$17.89 a bushel in September, squeezing earnings.
In the first nine months of 2012, profit fell 29 per cent to US$779 million from US$1.1 billion a year earlier.
Kuok’s Hong Kong-based companies have had a rough ride since the global financial crisis.
As of January 31, Shangri-La Asia and Kerry properties shares were both down 19 per cent compared with a one per cent increase in the Hang Seng Index.
Asked about such underperformance, Kuok says enigmatically, “It is right and proper for the investor to like or dislike a share.”
Underperformance isn’t the only problem at SCMP Group, whose share price had declined 69 per cent as of January 30 since Kuok acquired it. In 19 years, the South China Morning Post has churned through 11 editors, including one who served twice.
And although Kuok says his news executives publish without fear or favour, present and former staff members have publicly complained that the paper sometimes self-censors stories it thinks the Chinese government wouldn’t like.
If that’s true, it might be a first for Kuok, whose life story has been one of single-minded achievements.
The son of Chinese immigrants who had settled in British-controlled Malaya, Robert Kuok Hock Nien – his full name – grew up speaking his parents’ Chinese Fuzhou dialect, English and even Japanese during Japan’s wartime occupation of the region.
Significantly, given the role China would play in Robert’s life, his mother encouraged him to achieve fluency in Mandarin and embrace his Chinese heritage.
Kuok’s parents ran a shop that sold rice, sugar and flour. Kuok recalls living with the smell of his addicted father’s opium pipe in his nostrils.
Still, there was enough money for Robert to progress from a local English school to Raffles College in Singapore, where fellow students included Lee Kuan Yew, later the founder of modern Singapore.
Kuok never finished his studies. In 1941, Japanese troops stormed through the Malay Peninsular and in February 1942 captured Singapore.
Kuok took a job with Mitsubishi Corp. With Japan’s defeat in 1945, his family resumed doing business under the British.
In 1949, after his father died, Robert; a brother, Philip; and other relatives founded Kuok Bros Sdn Bhd, which later specialised in sugar refining.
Philip went on to become a Malaysian diplomat, and a second, much-admired brother, William, took an entirely different path again by joining the communist revolt against colonial rule. In 1953, William Kuok was killed by British troops in a jungle ambush.
Robert Kuok, by contrast, used his English-language skills on visits to London to learn the sugar business, while remaining based in Malaysia and later, Singapore.
During the Cold War, he traded with both Western and communist blocs, meeting Cuba’s Fidel Castro and doing business with China’s Mao from as early as 1959.
In 1973, with China in the grip of the Cultural Revolution, Kuok was summoned to Hong Kong for a furtive rendezvous with two of Mao’s trade officials.
They confided that China was facing a sugar shortage. Kuok stepped into the breach, transferring his headquarters to Hong Kong that year.
It was a prescient move. In 1976, Mao died, and in 1978, Deng Xiaoping tore down the so-called Bamboo Curtain, initiating reforms that sparked 34 years of surging economic growth.
In 1984, Kuok opened his first Shangri-La on the mainland. The following year, he partnered with China’s foreign Trade Ministry to begin building the China World Trade Centre in Beijing.
In 1988, at his nephew Khoon Hong’s suggestion, he branched out into edible oils. By 1993, Coca-Cola Co was impressed enough with Kuok’s China connections to form a bottling joint venture with him.
That lasted until 2008, when Coke bought back Kerry Group’s stake for an undisclosed amount, both companies pronouncing the outcome a success.
The family’s history of that period harbours an enduring mystery: a 16-year parting of the ways between Robert and Khoon Hong, who in 1991 left the Kuok Group to set up Wilmar with Indonesian entrepreneur Martua Sitorus.
It wasn’t until 2007 that Robert acquired a 32 per cent stake in Wilmar and injected most of his agribusiness into it. Neither Robert nor his nephew would discuss the split.
For all his triumphs in the capitalist world, Robert Kuok says the biggest influences on his life were his devoutly Buddhist mother and his communist revolutionary brother, William.
Kuok says he has tried to pass on those values by not cocooning his children in privilege. Nor, he adds, does he place much emphasis on scholastic qualifications, including MBA degrees, when hiring senior staff.
Among members of the extended family, Kuok speaks highly of Khoon Hong, his nephew at Wilmar.
The perils of succession are acute in Kuok’s bailiwick, according to researchers at the Chinese University of Hong Kong.
Their study of 250 family-controlled businesses in Hong Kong, Singapore and Taiwan from 1987 to 2005 shows that stocks typically plunged 60 per cent over an eight-year period before, during and after a founder’s relinquishing control.
Joseph Fan, the finance professor who led the research, attributes this wealth destruction to the inability of the patriarch to pass on, even to family members, his most valuable, intangible assets, including relationships with governments and banks. “The founder is the key asset,” Fan says.
That’s why, Fan says, so many tycoons remain at the helm of their businesses well into their 80s and don’t disclose succession plans.
TPG Capital’s Dattels says succession isn’t a concern when it comes to the Kuok businesses. ”There’s only one Robert Kuok, there’s no doubt,” he says. “But he has instilled his business philosophy deep into the family. With what he has built, they are |well set to continue, whatever happens.”
Back at his Hong Kong headquarters, Kuok asks an assistant to bring him a favourite quotation. Written by his mother in Chinese and engraved on a steel plate, the aphorism reads: ”If my children and grandchildren can be like me, then they don’t require material inheritance. But if they are not like me, then of what use is my wealth to them?”
Those words beg the question investors in Kuok’s far-flung businesses are asking now more than ever: How like Robert Kuok are his heirs?
Effective January 1, the export tax on CPO has been lowered to between 4.5 per cent and 8.5 per cent, from the previous average of 23 per cent. It is being fixed on a monthly basis.
The CPO tax re-structure has, to a certain extent, allowed refiners in Malaysia to market cooking oil, oleochemicals, specialty fats and biodiesel at competitive prices in the global marketplace.
Singapore stock exchange-listed’s Mewah International Inc’s planned Lahad Datu refinery had been left idle for more than a year.
Back in October 2011, the Indonesian government created an unlevel playing field when it widened the export tax gap between crude and refined palm oil there.
As the second biggest player in Malaysia after Wilmar Group, Mewah Group has the capacity to process 2.8 million tonnes of palm oil a year.
“Now that Malaysian government has finally responded by restructuring the CPO tax to make it favourable for refiners here, the Lahad Datu plant is being revived,” a source said.
“It’s quite a sizeable refinery, at 2,000 tonnes per day. When it is commissioned towards the end of the year, Mewah’s total annual refining capacity in Malaysia will swell from 2.8 million to 3.3 million tonnes,” the source said when met at the ICIS Asian Oleochemicals Conference here yesterday.
The two-day conference is being organised by UK-based Reed Business Information. Also present at the conference were KLK Oleochemicals Group managing director A.K. Yeow and Khoo Kiak Kern, managing director of Desmet Ballestra Southeast Asia.
Desmet Ballestra, the global leader in edible oils technology, has gained much business as downstream investors in Indonesia and Malaysia put up more refineries and upgrade existing oleochemicals, specialty fats and biodiesel plants.
“The job orders for refineries in Indonesia are super-sized. We are talking about those that are capable of churning out 2,000 tonnes of oil per day, so as to reap economies of scale,” said Khoo.
“Similarly, the new oleochemical plants are much bigger, some of which designed to produce 500 tonnes a day.”
Energy efficiency and water-saving features are also incorporated into the new plant designs, Khoo added.
Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said the move would take effect immediately on new foreign workers as well as foreign workers seeking to renew their working passes, wage passes or social visit passes.
He said the ministry’s move was to aid employers in reducing their financial burden, following the implementation of the minimum wage policy, which made it mandatory for them to increase their employees’ wage.
“This move was aimed especially at small- and medium-sized enterprise employers,” he said yesterday.
“The decision to make foreign employees pay their own levy will not burden them as the levy rate only cost them between RM34.16 and RM154.16 monthly,” said Husni, adding that this was in comparison with the increased wages enjoyed across the board of between RM300 and RM500.
He reiterated that the implementation of the minimum wage policy had also entitled workers, including foreigners, to enjoy other perks such as increased overtime payments, which would bring their overall average pay to between RM1,200 and RM1,500.
The levy collection was introduced in 1992 and paid for by the employees themselves. The charges were imposed on the workers because of the expenses borne by the government for providing general facilities, namely healthcare, roads and other amenities enjoyed by the foreign workers with Malaysians.
In April 2009, the government reverted the levy. The decision was made to control wage payment for the increasing number of workers back then, which had increased by that time.
“However, through various measures to improve the system, mainly the Registration, Legalisation, Pardons, Monitoring, Enforcement and Deportation (6P) Programme, the management of these workers were revealed to be in order and well monitored.”
KUALA LUMPUR: MALAYSIA must implement the use of B10 biofuel now to help lift weak crude palm oil (CPO) prices as well as reduce national stockpile.
The B10 is a mixture of 90 per cent diesel and 10 per cent palm methyl ester, which can trim carbon emissions in the environment as well as reduce dependency on fossil fuels.
Felda Global Ventures Holdings Bhd (FGV) president and chief executive officer Datuk Sabri Ahmad said the government must start using B10 because current low CPO prices may weaken further by October, if no positive measures are taken soon.
October, November and December are traditionally high production months for oil palms, which may put a dent on CPO prices. The commodity is currently hovering at RM2,400 a tonne compared with an average of above RM3,000 last year.
“Once B10 is implemented, it can take out one million tonnes out of the 2.6 million stockpile.
“This will help stabilise CPO prices which are currently on a downtrend,” Sabri said during a visit to the New Straits Times Press headquarters here yesterday.
Malaysia mooted the use of B5 (95 per cent diesel and 5.0 per cent palm oil) in 2006 and was supposed to implement its use nationwide by end of last year.
But to date, the green oil has yet to be used on a large scale due to the high cost of production, heavy subsidies incurred by the government, as well as poor demand from export markets.
In June 2012, the Plantation Industries and Commodities Ministry announced revival of the plan and to ramp it up to B10.
Currently, the ministry is in consultations with various parties to revive the programme, which covers the central region such as Putrajaya, Malacca and Negri Sembilan, Kuala Lumpur and Selangor. It will power up government vehicles before being sold at petrol stations nationwide. Sabri said industry players are currently undertaking a study on how it can assist the government to implement the B10.
This year, Sabri said FGV, which is the world’s largest producer of CPO, expects to maintain its performance. FGV made a lower pre-tax profit of RM900 million in the third quarter ended September 2012 compared with RM1.5 billion a year ago, due to lower CPO prices.
Having raised RM4.4 billion from its initial public offering in June last year, FGV plans to use a portion of the proceeds to buy agriculture land in Myanmar and Mindanao in the Philippines to plant rubber and oil palm trees.
The exemption, to be effective March 1, covers vegetable oils such as soyabean oil and fractions, palm oil and its fractions, safflower oil and its fractions, coconut oil, palm kernel or babassu oil and its fractions, as well as fats and oils, animal or vegetable and their fractions.
Matrade’s trade commissioner in Mexico, Remee Yaakub, advised Malaysian firms planning to enter the Mexican market to capitalise and strategise effectively as they have to compete with regional players.
“Malaysian companies may collaborate with local partners to introduce products through new product launches. With palm oil included in the exemption, they may introduce the health benefits of palm oil and market their products through an assertive awareness promotion,” Remee said in a statement. —Bernama
Planters, especially smallholders who depend on contractors hiring foreign workers to harvest fresh fruit bunches, are feeling the brunt of the minimum wage policy. This is because their income has dwindled as palm oil in the futures market continue to trade at a low price band of between RM2,200 and RM2,500 per tonne, in the last four months.
PETALING JAYA: Food inflation and higher outflow of money are the consequences of the implementation of the minimum wage law, which came into force four weeks ago.
From January 1, employers must pay a minimum wage of RM900 a month in Peninsular Malaysia and RM800 a month in Sabah, Sarawak and Labuan.
In an interview with Business Times here recently, Malaysia Employers Federation (MEF) executive director Shamsuddin Bardan estimated that foreign workers, on average, send back some RM700 each month, which is half of their take-home pay that include overtime claims.
“With a conservative estimate of two million foreign workers here, that works out to be RM1.4 billion flowing out of Malaysia to their home countries every month.
“Starting this year, with the blanket implementation of the minimum wage law, the outflow of money from Malaysia is likely to swell to RM2.1 billion every month,” he said.
The government’s decision to introduce the monthly minimum wage, as part of its efforts to propel Malaysia into a high-income nation, may also result in higher food bills.
Right now, employers in food and beverage businesses have yet to feel the brunt of the minimum wage law.
“Come July 1, they will no longer be exempted. Small entrepreneurs such as restaurant hawkers, wet market and stall operators will then seek to pass on the extra cost by raising food prices. That is when we will experience costlier teh tarik and roti canai,” Shamsuddin said.
Another side effect of the blanket implementation of the minimum wage law is that local workers’ interests are being undermined. ”A Malaysian gets the same basic wage of RM900 but a foreign worker enjoys free housing, water, electricity and transport. For the same minimum wage, a local does not enjoy these benefits,” he said.
In view of this, the MEF is appealing to the government that such subsidies and benefits as provided by employers be included in the minimum wage to rebalance the interests of local workers.
Members of the Malaysia Corrugated Carton Manufacturers’ Association (MCCMA), which are predominantly small and medium enterprises, have seen half of their profits shaved off as a result of the minimum wage law.
“We are at a crossroad. How are we going to survive? Those who are not financially strong will have no choice but to close shop and relocate to a more competitive and business-friendly environment like Myanmar,” MCCMA chairman Henry Low reportedly said.
Similarly, the Malaysian Rubber Glove Manufacturers Association (Margma) said in a statement the minimum wage law had forced glovemakers to increase glove pricing by up to 7 per cent.
“The direct cost on labour will add another US$1.25 (RM3.80) per 1,000 pieces of gloves. We hope our overseas customers will be able to accept the costlier pricing,” said Margma president Lim Kwee Shyan.
Shamsuddin said if the government allows employers to factor amenities costs into the minimum wage, the money will be spent in Malaysia instead of being repatriated to the foreign workers’ home countries.
Apart from easing employers’ burden, the move will have a multiplier effect on Malaysia’s economy as it will generate higher domestic demand for house rentals, food and beverages, and public transportation, he said.
Shamsuddin noted that since April 2009, employers have been made to pay foreign workers’ levy to the government. “The government imposes foreign worker levy as a form of income tax it is entitled to collect. Since local workers pay income tax, it is only right that foreign workers do the same, too,” he said.
Separately, the Malaysian Trades Union Congress (MTUC) Sarawak Division secretary Andrew Lo, in a statement, said “the proposal to include amenities costs would encourage unscrupulous employers to continue to employ more foreign workers at huge social, security and cost to the country.” The MTUC is the umbrella body representing workers in the private sector.
The sukuk was oversubscribed by more than 10 times, with orders amounting to more than US$8 billion, said the country’s largest conglomerate.
It priced its inaugural US$400 million five-year sukuk issue at 2.053 per cent a year, and its US$400 million 10-year issue at 3.29 per cent a year.
It achieved the lowest ever coupon rate by any corporate issuer globally in the US dollar sukuk market, reflecting the strong demand for both offerings.
The transaction was closely watched as Sime Darby is the first Malaysian issuer and the first sukuk issuer globally in 2013 to tap the international US dollar debt capital markets.
The issues, which are part of a US$1.5 billion multi-currency sukuk programme that Sime Darby established earlier this month, will be listed in both Malaysia and Singapore.
“I think demand for the issues will remain strong. It’s a rare sector as most issuances are in the banking sector. Plus, demand always outstrips supply in the sukuk space,” a chief investment officer who helps manage fixed income funds told Business Times.
The sukuk programme was accorded an “A” rating by both Fitch Ratings and Standard & Poor’s Ratings Services, and “A3″ by Moody’s Investors Services.
Sime Darby, which is among the top three largest plantation firms in the world, plans to use the net proceeds from the issues to finance the group’s capital expenditure, working capital requirements and general corporate purposes.
By geography, the five-year issue attracted 184 orders across Asia (83 per cent) and the Middle East/Europe, while the 10-year issue attracted 192 orders across Asia (57 per cent) and Middle East/Europe.
“We are extremely pleased with our debut issuance and the robust investor response we have received.
“The confidence the market has placed in us is clear testament to the strength of the group, especially in the longer term,” said its president and group chief executive officer Datuk Mohd Bakke Salleh in a press release yesterday.
He said the transaction also represented the lowest ever US dollar coupon in sukuk format by an Asian issuer, and the lowest ever by a Malaysian borrower in the US dollar market, in both the five-year and 10-year tenures.
Citi, HSBC, Maybank and Standard Chartered were the banks involved in the transactions.
LAST week, opposition leader Datuk Seri Anwar Ibrahim outlined Pakatan Rakyat’s policy in taking care of oil palm planters’ interests, should the opposition come into power at the federal level.
In his bid to win the hearts of oil palm planters, which make up a significant vote bank, Anwar unwittingly struck a raw nerve when he lobbied Malaysia to stop planting oil palms on peat soil, pending studies on carbon emissions and sequestration.
When met at Putrajaya yesterday, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok, who is also Penampang Member of Parliament, rejected Anwar’s lobby.
“This is not acceptable. Anwar’s lobby for a moratorium seems to be echoing that of western environment non-governmental organisations’ (WENGOs) mantra,” he told Business Times after officiating at the close of “Branding of Malaysian Palm Oil” workshop yesterday.
Time and again, WENGOs like Greenpeace and Wetlands International, and their local affiliates, have claimed that oil palm planting on peatland causes tremendous pollution in the form of greenhouse gas (GHG) emission when water is drained from the soil.
These groups, however, fail to provide any credible scientific evidence to support their allegations.
“For Anwar to lobby a move that echoes the WENGOs’ shows that he is not guided by logic. How can planting oil palms be highly polluting when these trees, like any other forest species, produce oxygen for us to breathe?” he asked.
“Sarawak is Malaysia’s final frontier in oil palm planting. If Anwar is a responsible lawmaker serving the best interest of the rakyat, he should go to Sarawak and see how the oil palms, nurtured with good agricultural practices, are thriving on peatland,” Dompok said.
The minister also said GHG emission is not really an issue as Malaysia is a net carbon sink country with more than 80 per cent of tree cover provided by permanent forests and plantation crops, including oil palms, rubber, cocoa and coconuts.
Dompok then sought tighter support from media practitioners to convey the facts and figures of sustainable practices by oil palm planters to quash baseless claims by irresponsible people who have vested interests to lobby against oil palm planting in Sarawak’s 1.6 million hectare of peatland.
In a separate telephone interview from Sarawak, Kapit Member of Parliament, Datuk Alexander Linggi, concurred with Dompok that it is of national economic interest that progress studies of sustainable peatland farming is communicated to the relevant channels and done in a timely manner so that investors understand how best to optimise what is available in Sarawak.
Linggi spoke of higher economic potential of oil palm planting compared with other cash crops.
“Nobody criticises pineapple planting on peatland. So, why are there unfair attacks from environment activists when my people want to plant oil palms?” he asked.
“The oil palm is an economic security crop for Sarawak and the country,” he said, in reference to Malaysia’s annual US$20 billion (RM60.8 billion) palm oil exports which support some two million jobs and livelihoods along the sprawling value chain.
Johor Bahru Member of Parliament Tan Sri Shahrir Abdul Samad, who is also chairman of the Malaysia Palm Oil Board, noted that zero burning, good water management and palm nutrition are imperative when planting oil palms in peat soil.
“The intensity of drains depends on the topography of the field and planting density but the primary objective is to keep the water levels at 50 cm to 75 cm from the surface at most times,” he said.
This is achieved through a series of stops, weirs and water-gates. Periodic flushing of the acidic and excessive storm water during the rainy season is also carried out, he added.
Shahrir highlighted that in Peninsular Malaysia, oil palms planted on peat soil by United Plantations Bhd is being carried out in an environmentally sustainable manner, even after three generations.
KUALA LUMPUR: The RM5.2 billion privatisation of KFC Holdings (M) Bhd and its parent QSR Brands Bhd will be completed on Monday, subsequently paving the way for the de-listing of both firms.
QSR Brands managing director Datuk Ahmad Zaki Zahid said KFC and QSR shareholders will be paid on January 23 and January 25, respectively.
“The RM5.2 billion privatisation cost is being paid by Johor Corp Bhd (JCorp), the Employees Provident Fund (EPF) and CVC Capital Partners,” Ahmad Zaki told reporters here yesterday at the launch of Pizza Hut’s latest offering, the Golden Harmony Feast.
He, however, declined to comment on how much each party will get from the privatisation exercise as well as the delisting date.
UK-based CVC Capital Partners in December 2011 had teamed up with JCorp and the EPF in a massive RM5.2 billion buyout offer for KFC and QSR, which was approved by the shareholders of both listed firms.
KFC and parent QSR Brands will be taken private by Massive Equity Sdn Bhd at RM4 for each KFC share and RM6.80 for each QSR share, which also include RM1 for each KFC warrant and RM3.79 for each QSR warrant.
Massive Equity is a special-purpose vehicle owned by the companies’ ultimate parent JCorp, private equity firm CVC Capital Partners and the EPF.
JCorp and CVC made the buyout offer in December 2011 with the EPF joining in the bid later in May.
The privatisation of both companies is the largest private equity deal in Southeast Asia. Stocks of both companies have been suspended since January 4 to facilitate the capital repayment.
Ahmad Zaki said QSR Brands, which is the franchisee for Pizza Hut, plans to spend RM35 million to open 45 new Pizza Hut restaurants and upgrade 12 existing ones nationwide this year.
He said with the expansion plan, Pizza Hut will have a total of 300 branches by year-end. He also said the restaurant owner and operator is also upgrading its online order and delivery system that had started last year. It is expected to be completed and operational by the second quarter of this year.
“We hope to receive online orders up to 30 per cent of total orders from 12 per cent, at present,” said Ahmad Zaki.
Pizza Hut has allocated RM1.3 million to promote the Golden Harmony Feast, in conjunction with the Chinese New Year next month. This meal comprises a Golden Crab Claw pizza, a Golden Platter and the Fizz Golden Passion drink.