Archive for February, 2013

Sime eyes RM3.2b net profit

February 28, 2013 Leave a comment
KUALA LUMPUR: Sime Darby’s net profit for the three months ended December 2012 fell 36 per cent to RM708.5 million from RM1.1 billion, a year earlier. This was the group’s third consecutive quarter of declining profits.

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.

Cooking sumptuous feast with palm oil

February 23, 2013 Leave a comment
As families gather for Chinese New Year reunion dinners, a housewife tells OOI TEE CHING that the traditional dishes are best prepared with palm cooking oil.

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 makers find passion for specialty fats

February 14, 2013 Leave a comment
DESIRABLE INGREDIENT: Valentine’s Day is a celebration of love and romance. Apart from flowers and candlelit dinners, there’s that almost obligatory gift of chocolates. A specialty fats maker tells Ooi Tee Ching that palm oil is being increasingly used to make chocolates all over the world.

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.

CHGS investors terminate scheme

February 10, 2013 Leave a comment
Seri Kembangan, Selangor: NINETY-NINE per cent of the Country Heights Grower Scheme (CHGS) investors yesterday voted for early termination of the scheme and accepted Tan Sri Lee Kim Yew’s proposed RM25 million goodwill payment.

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.”

Palm oil exports to do better this year

February 5, 2013 Leave a comment
PUTRAJAYA: PALM oil exports for this year are expected to improve as prices are beginning to climb, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said.

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.

Robert Kuok says empire can last generations

February 3, 2013 Leave a comment
HONG KONG (Bloomberg) — WHEN billionaire Robert Kuok introduced a luxury hotel brand in 1971, he named it Shangri-La, after the fictional utopia in which inhabitants enjoy unheard-of longevity.

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?

Mewah revives RM200m Lahad Datu refinery plan

February 3, 2013 Leave a comment
KUALA LUMPUR: MEWAH Group, Malaysia’s second biggest palm oil refiner, has revived the installation of its RM200 million refinery in Lahad Datu following the government’s decision to restructure crude palm oil (CPO) tax.

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.