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Archive for August, 2011

Malaysian commodities can withstand slowdown

August 29, 2011 Leave a comment
PUTRAJAYA: Malaysian commodities such as palm oil, tin and rubber play such a central role in the global economy that their prices are likely to hold up even in a global slowdown, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said last Thursday.

Chinese imports of palm oil are set to rise next month as buyers are stocking up, he said. Financial markets have fallen in recent days on concerns that an unfolding debt crisis in the US and Europe will stall global economic growth and slow demand for commodities.

“There will be some impact, but Malaysian commodities are key to this global market. Without rubber the auto industry cannot move, and the same be said with palm oil for the food sector and tin for manufacturing,” Dompok said in an interview. 

“In fact, we see palm oil demand increasing in September as Chinese importers stock up ahead of the mid-autumn festival and a week-long national holiday in October,” he said.

Palm oil prices are currently hovering around RM2,950 to RM3,000 – levels that Dompok expects will persist for this year. Benchmark Malaysian palm oil futures tumbled almost 2 per cent last Thursday after Indonesia changed its export tax structure for palm oil, making shipments from the world’s No.1 producer more competitive.

Malaysia, the second-largest producer of the edible oil, has a strict export quota for crude palm oil (CPO), because the government wants to encourage the development of high-value refined products and oleochemicals. Producers that do not have a licence to sell CPO overseas are often highly taxed. Exports of refined products enjoy tax-free status.

Malaysia’s CPO exports have risen above 250,000 tonnes a month for the past three months, fuelling speculation that its annual three million tonne quota will be breached.

“We can be flexible (on export quotas) as we want to keep the industry market-driven, bearing in mind that CPO is in high demand in Rotterdam,” Dompok said.

He ruled out scrapping the quota on CPO exports, a view shared by market players in Malaysia who are concerned about losing market share to Indonesia, which has slashed its export taxes for refined products.

“The race is on to develop high-end refined products,” said a dealer with an international trading house in Kuala Lumpur. “Malaysia understands the need to bend to market pressures with CPO demand in Europe and India, but it is aware that Indonesia wants to catch up in the refining sector with the recent export tax changes.”

Malaysia has developed its palm oil sector at the expense of the rubber industry, which has fallen to third place among the world’s largest suppliers.

Flagging output as farmers switch to lucrative palm oil has forced Malaysia’s large rubber products industry to import. Dompok said efforts were under way to ramp up rubber production with a replanting programme and to expand current acreage by 14 per cent over the next five years to 1.17 million hectares.

“We are taking a long-term view on commodities, whether its rubber or palm oil,” Dompok said. “Although the current economic growth issues and their impact on prices are immediate concerns, we have to think far, far ahead on growing the industries.” – Reuters

Penans to be resettled in 20,000ha forests

August 27, 2011 1 comment
This is written by my colleague Lian Cheng.

KUCHING:Two forest reserves of 10,000ha each is being proposed to be given to the Penan community who have been affected by the Murum hydroelectric project (HEP).

The upper Pelieran Forest Reserve has been proposed to be given to 183 Penan families who are to be resettled at Melalun, about 10km away from the HEP site. At present, these families are residing at Long Menapa (39 families), Long Luar (52), Long Tangau (28) and Long Singu (64).

The Danum Forest Reserve has been proposed to be given to Penans from Long Malim Penan (46 families), Long Malim Badeng Kenyah (35) and Long Wat (83) who will be relocated to Tegulang. 

“It takes a generation for the Penans to learn to be settled farmers. We cannot drag them straight into the 21st century. The forest reserves will serve as a transition for those who have yet to adapt to modern living,” said Land Development Minister Tan Sri Dr James Masing in an interview yesterday.

“It has been proposed that they should be given the forest reserves so that the older generation can continue with their traditional lifestyle there. With that, all 347 Penan families will have options. In addition to the forest reserves, it has also been proposed that each affected Penan family be given 15ha of land for them to generate income.”

Masing, who is Bakun Resettlement Committee chairman, is also the chairman of the Murum Resettlement Committee.

“All decisions have been reached after consulting the Penan community. It has never been the government’s intention to shortchange the Penans. Previously, we were ignorant of the problems that might crop up. We have erred in our judgment and we do not want to repeat our mistakes.”

He said the government was not only looking for the best way to solve the problems of the Penans affected by the Murum HEP, it was also visiting the 1,500 Penan families affected by Bakun HEP who were settled at Sungai Asap.

“We understand the 3ha given to each family is not enough to sustain their livelihood. Therefore, the government has decided to give them additional land for them to generate more income. I will seek RM76 million to buy a piece of land, measuring 3,000ha, which will be given to these families,” Masing said.

Govt to increase foreign worker levy by RM50 from Sep 2011

August 27, 2011 Leave a comment
PUTRAJAYA: The government will increase the levy for foreign workers by RM50 effective September 1, Home Ministry Secretary-General Tan Sri Mahmood Adam announced today.

Mahmood said the increase was among initiatives proposed by the foreign workers laboratory in managing foreign workers, and that the decision was made after a careful evaluation, including taking into account the last increase in 2005.

However, new foreign worker applications received by the Home Ministry before September 1, would be charged the old levy, along with those who extended their temporary work visit pass. “The new rate is valid for temporary work visit pass applications that expires on or after September 1. New applications and extension of old temporary work pass included,” said Mahmood in a statement yesterday.

He said from September 1, the levy for agricultural sector and maids would be RM410, plantation (RM590), factories and construction workers (RM1,250) and service sector (RM1,850).

Mahmood said the new levy for Sabah, Sarawak and Labuan would be comparatively cheaper since the levy charged for construction and factory workers is (RM1,010) and RM1,490 for the service sector.

Meanwhile, Mahmood said that as of yesterday, 2,248,940 legal and illegal foreign workers had registered themselves through Immigration offices and managing companies set up nationwide. From the total, 1,242,813 were made up of illegal workers who were registered through the 6P amnesty programme. — Bernama

Europe slowdown hits palm oil exports

August 25, 2011 Leave a comment
This is written by Faisal Maliki Baskoro and published in Jakarta Globe.

JAKARTA: Indonesia may fall short of attaining its palm oil export target this year, should a slowing European economy drag down demand, the head of the country’s palm group said.

The Indonesian Palm Oil Producers Association (Gapki) had set its palm oil export target at 18 million tons this year, or 15 per cent higher than last year’s 15.6 million tons. However, its chairman Fadhil Hasan expressed concern about demand from its biggest buyers.

A worker unloads crude palm oil at Tanjung Priok port in North Jakarta. Indonesia may fall short of attaining its palm oil export target this year, should a slowing European economy drag down demand. (JG Photo/Safir Makki)

“If Europe continues to slow down, we may see exports drop slightly below our estimate, to 17 million tons,” he said. “The US economic slowdown will not have an adverse effect as our exports there are very small. But Europe is our second-biggest market as it buys 20 per cent of our palm oil exports,” he added.

He said that in the first half of this year, Indonesia sold 8.2 million tons of palm oil to overseas markets, 10 percent more than the 7.47 million tons sold during the first half of last year.

Despite Europe’s slow recovery, and activists smear campaigns on the supposed environmental impact of oil palm plantations, Fadhil said that Europe imported 1.6 million tons in the first half, 11 per cent higher than the same period last year.

Exports to India, the biggest buyer, are estimated at 6 million tons this year, while China, the third-largest market, is expected to import 2.5 million tons. Shipments to the United States are estimated at around 130,000 tons this year.

He said that demand for palm oil would remain strong in those countries, in line with their large populations. “Overall, we’re expecting export values to reach at least Rp180 trillion [US$21.1 billion],” Fadhil said. Last year, export by value jumped 60 per cent to US$16.4 billion.

Meanwhile, he predicts production will rise to 25 million tons this year, 5.9 per cent higher from 23.6 million tons in 2010.

Fadhil also said that the association would keep looking for new export markets. He cited Eastern Europe, Africa, and Latin America as potential markets. He said the shipping tax adjustment would assist in encouraging further exports.

“The government recently introduced a cut in palm oil export tax, to between 15 and 20 per cent. We believe that this will make Indonesia more competitive and increase exports,” he said.

Crude palm oil (CPO) prices, now at around US$1,075 per ton, are expected to continue to decrease in line with the decline in crude oil prices, and the coming harvesting season, he said. CPO sold for US$1,100 per ton in June.

Franky Widjaja, a deputy at the Indonesia Chamber of Commerce, said that the government could do better in improving Indonesia’s palm oil industry. “The industry could use better access to energy sources, raw materials, skilled labor, and infrastructure. Government and business players could also join hands in research and development,” he said. Franky’s family owns Sinar Mas Group, the biggest local CPO producer.

Indonesia’s US$700 billion economy is forecast to expand by 6.7 per cent next year from an estimated 6.5 per cent this year. Exports account for 29 per cent of Indonesia’s gross domestic product, while private consumption accounts for about two thirds.

IOI Corp’s Q4 nets RM548m profit

August 25, 2011 Leave a comment
KUALA LUMPUR: IOI Corp Bhd’s (IOI Corp) fourth-quarter net profit was flat despite revenue having increased by 41.4 per cent. Its plantation and property segments contributed higher profit but its resource-based manufacturing segment operating profit was down 37.6 per cent.

The plantation firm’s net profit for its final quarter ended June 30 was up 0.1 per cent to RM547.8 million compared with RM547.05 million a year ago.

The manufacturing segment reported an operating profit of RM84.6 million for last quarter compared with RM135.7 million a year ago due to lower sales as well as lower margins from oleochemicals and refineries.

Group revenue for the final three months surged 41.4 per cent in the quarter to RM4.3 billion from RM3.06 billion previously, IOI Corp said in its results announcement yesterday.

For the 12 months ended June 30, IOI Corp’s net profit rose 9.2 per cent to RM2.22 billion from RM2.04 billion, while revenue increased 28.8 per cent to RM16.15 billion from RM12.54 billion.

Earnings per share were 8.54 sen compared with 8.57 sen, while net assets per share was RM1.87. The company declared a tax-exempt second interim single-tier dividend of 9 sen per 10 each, to be paid on October 7 this year.

On its current year prospects, IOI Corp said the global economic growth had recently shown signs of slowing down. This would make the new financial year a challenging period for business corporations. “The group is optimistic that it will perform satisfactorily in the new financial year,” IOI Corp added.

Aussie govt to oppose palm oil labelling Bill

August 25, 2011 Leave a comment
MELBOURNE: The Australian Government will oppose a Liberal-National Party coalition-supported anti-trade Private Member’s Bill on compulsory palm oil labelling as it would breach Australia’s obligations under the World Trade Organisation (WTO).

Trade Minister Dr Craig Emerson told Parliament on Tuesday, the Bill, sponsored by independent Senator Nick Xenophon and the Australian Greens, was likely to pass the House of Representatives with the support of the coalition.

Emerson said the Bill passed the Senate following the personal intervention of coalition leader Tony Abbott, who is widely tipped to be Australia’s next prime minister.

“Coalition members of the relevant Senate inquiry joined with Labor senators in recommending against the Bill, but their position was reversed following Abbott’s personal intervention,” he said.

He said all of Abbott’s instincts were interventionist and protectionist. “This latest anti-trade move by the coalition comes hard on the heels of the Shadow Agriculture Minister’s Bill seeking to overturn a WTO ruling that New Zealand apples be allowed into Australia subject to scientifically-based quarantine conditions,” he said.

Emerson said the government refused to deal with the coalition on the apples Bill and would not negotiate with Abbott, who is also Opposition leader, on the palm oil Bill.

“Abbott wants to load up food processing companies with a A$150 million (RM468 million) cost burden and risk a trade war with Malaysia and Indonesia,” he said. He said Abbott’s personal support for yet another anti-trade, anti-business Bill showed how reckless he was on economic and trade policy.

Both Malaysia and Indonesia had warned they would take action against Australia at the WTO if the Bill were passed. — Bernama

2nd appeal against Aussie Bill

August 19, 2011 1 comment
This is written by my colleague Rupa Damodaran.

KUALA LUMPUR: The Malaysian palm oil industry yesterday made a second appeal to the Australian Parliament not to go ahead with its proposed palm oil labelling Bill.

The legislation will not only undermine a central pillar of the Malaysian economy but would also be a sharp reversal from years of liberalised trade between both economies.

Malaysian Palm Oil Council CEO Tan Sri Yusof Basiron said the Bill would threaten the future of the industry, not just palm oil producers. “It will punish our farmers with an indirect trade barrier, even though the alleged deforestation or orang-utan habitat destruction – the mitigation of which is the prime objective of this Bill – are nothing but non-government organisation (NGO) myths,” he said.

He was making a presentation before a public hearing of the Australian House Standing Committee on Economics to provide testimony and answer questions regarding the Food Standards Amendment (Truth in Labelling – Palm Oil) Bill 2010.

Palm oil has raised hundreds of thousands of small producers from poverty and provides them and their families a sound future, education and a better standard of living.

This is the second time Yusof is presenting Malaysia’s case to the Australian legislators.

In April, Malaysia successfully raised its objection to the legislation, saying it is based on misleading claims and aimed at harming its largest agricultural export – palm oil. Although the Community Affairs Legislative Committee recommended that the Bill not be passed, the Australian Senate chose to go ahead, and it is now being brought to the House of Representatives before it is passed as a law.

Malaysia recently completed a high-level ministerial, parliamentary and industry visit to Australia, led by Plantation Industries and Commodities Minister Tan Sri Bernard Dompok, to Victoria and the New South Wales to address the many misconceptions being spread about the palm oil industry.

“We believe, regretfully, that this Bill is targeted at Malaysian palm oil, because of the two major countries capable of supplying palm oil, Australia chooses to import almost 100 per cent of its palm oil from Malaysia.”

He also noted that the Bill has been significantly expanded to include any food and non-food products containing or made with the use of palm oil or any of its by-products, making it no longer appropriate to be considered a “food labelling” Bill.

Yusof told the committee that the proposed law violates several principles of the WTO as well as terms of the Asean-Australia-New Zealand Free Trade Agreement. “Claims of the imminent extinction of the orang-utan are without merit and also ignore efforts in Malaysia to preserve the lives and habitats of the country’s 16,000 orangutans, through the establishment of wildlife sanctuaries, megawildlife preserves and rehabilitation centres for displaced orang-utans.”