Archive for June, 2013

Sarawak plunged into darkness

We were driving from Rinwood Pelita Estate in Mukah to Sibu when Adrian Wong noticed that a few sets of traffic lights at crossroads were out.

After a few phone calls and texts via whatsapp, we realised the whole of Sarawak was experiencing a blackout.

We slowed down and carefully navigate through the chaos at traffic light crossroads. We finally reached Kingwood Hotel in Sibu at 7pm. It was pitch black except for car lights at the streets.

The lobby was crowded with hotel guests as the rooms became hot and stuffy. Finding a place to eat proved to be a problem as most restaurants were closed and the handful that were opened, had long queues.

So, our last resort was “romantic candle light dinner” at the pasar malam. The hawkers there enjoyed brisk business.

It turned out to be quite good as there were so many finger foods to pick and choose from. Adrian bought a whole bagful of Sibu “kong piah”, which was lip-smacking delicious. It distracted me from feeling sweaty and tired — for a while.

After 5 hours of anxious worry and chatter, we all decided to go back to our hotel rooms and try to get some sleep even though it was stuffy. After settling into bed, the lights and air-cond suddenly came back on. Hooray!

This was a memorable assignment … I will remember this for a long, long while.

Multi-faceted barriers to trade

AT A CROSSROAD: The bigger the palm oil industry becomes, the easier it is a target for smear campaigns by rivals via political means. Planters urge the government to tackle barriers to palm oil exports in Malaysia’s free trade agreement talks with the European Union. OOI TEE CHING writes.

WELL-FUNDED environmental activist groups like World Wildlife Fund, Friends of the Earth, Greenpeace and Sawit Watch of Indonesia, have in the last 15 years or so, launched many campaigns alleging the expansion of oil palm plantations have destroyed forests in Indonesia, threatened many endangered wildlife and robbed indigenous peoples of their land.

A manipulative but favourite ploy used by environmental activists to discredit palm oil-producing countries like Malaysia and Indonesia, is to take satellite imagery of a small part of the country and magnify it as logged-over areas in a cynical and deliberate attempt to create the impression that the entire rainforest system is destroyed.

To put things in perspective, the oil palm industry in Malaysia accounts for 15.5 per cent of total land area and only 4.5 per cent that of Indonesia. 

Unknown to many, the environmental activists’ strident criticisms have created trade barriers to the global palm oil trade under the pretext of environmental activism. Indeed, this sits oddly with the fact that oil palm is one of the world’s most sustainable crops. 

Oil World, a Hamburg-based trade journal, noted that the oil palm tree is the world’s most efficient oil crop because one can harvest five tonnes of oil per hectare. This is 10 times more productive than soyabean planted in the United States and five times more than rapeseed, Europe’s main oil crop. 

Should alternatives to oil palms be grown, more land would be needed to produce an equivalent volume of oil to replace palm oil, likely resulting in further deforestation. 

In giving a better insight to the terminology “deforestation”, Sarawak Plantation Bhd chairman Datuk Amar Abdul Hamed Sepawi who studied forestry and was trained as a forester, cited the United Nation’s Framework Convention on Climate Change defined a forest as an area of 0.5 to one hectare having more than 30 per cent canopy cover and having a potential height of two to five metres.

“So, how can it be said there is deforestation when oil palms fit the United Nation’s definition of forest plantations like fir and cone trees in Europe? 

“How can it be said that planting oil palms is highly polluting when these trees, like any other forest species, produce oxygen for us to breathe?” he said in his keynote address before 1,003 delegates at a conference organised by the Incorporated Society of Planters (ISP) in Sibu, Sarawak, recently.

Last year, the Rainforest Foundation of Norway made sensational headlines when it alleged Norwegian Government Pension Fund Global (GPFG)’s investments in Malaysian and Indonesian plantation counters causes wanton deforestation.

GPFG sold off their shareholdings and in their annual report noted: “In the first quarter of 2012, we sold our stakes in 23 companies which by our reckoning, produced palm oil in an unsustainable manner…” 

Abdul Hamed caused a stir among the ISP delegates when he pointed out the elephant in the room. 

GPFG, which was previously known as The Petroleum Fund of Norway and derives its seed money from selling depleting fossil fuels, is throwing dirt at farmers who plant trees that sequester carbon dioxide. 

“We have two groups of people. One digs oil from the ground and the other harvests edible oil from above the ground. Yet, it’s the group that contributes to fossil fuel burning that is blaming environmental pollution on the other group who plants trees that clean up the air,” he smirked. 

Abdul Hamed moved on to highlight that the western environmental activists’ campaign against oil palm plantation expansion, in the name of “saving rainforests”, is actually a blatant violation of international norms and Malaysia’s sovereignty.

“Many people unsuspectingly believe Greenpeace, Friends of the Earth and Wetlands International are protectors of the world’s forests but … let me ask you … are they bringing their own governments to justice for deforesting 90 per cent of their country’s landmass? Are they lobbying for reforestation of deciduous forests in their own countries?” he asked.

By criticising the virtues of oil palm planting and ignoring the evidence that economic development leads to better environmental protection, Abdul Hamed said it is questionable whether these activists’ true commitment is to the environment or to erection of trade barriers to benefit rapeseed farmers who are already heavily subsidised by the European Union (EU) government.

This hand-in-glove fit is also seen in the activists’ campaign against palm oil imports, especially for biofuels, which is very much aligned with the EU’s Renewable Energy Directive that seeks to discriminate against palm biodiesel.

Skilful in communication and blackballing tactics, these activists have also harassed oil palm planters into submitting to the standards and criteria of which they dictate, such as the Roundtable on Sustainable Palm Oil (RSPO). 

Abdul Hamed described these mercenary activists as whistleblowers, judge and jury, all rolled into one — a stark contrast to the check and balance that corporates undertake in the name of justified return on investments to shareholders. 

“Why should our oil palm industry submit to principles and criteria governing our country’s land resources that is being pushed by green activist-driven organisations such as the RSPO? 

“Where is the respect for Malaysia’s laws enacted by Parliament and state assemblies that had shaped good agriculture practices, workers’ rights and sustainable return on investments for farmers?”

Abdul Hamed noted that France’s smear campaigns of “no palm oil” on food packaging and environmental activists’ incessant harassment for oil palm planters to cough out tonnes of money to be RSPO-certified has restricted market access for palm oil. 

“Is RSPO the EU’s “Trojan Horse” meant to hoodwink plantation corporates into surrendering their rights of redress with the World Trade Organisation that promotes fairness in free trade?” he asked.

Abdul Hamed reiterated the oil palm is an economic security crop. This is because Malaysia’s annual US$25 billion (RM79.75 billion) palm oil exports support some two million jobs and livelihoods along the sprawling value chain.

More than 40 per cent of oil palm planters in Indonesia are smallholders whilst in Malaysia they contribute to 38 per cent of the country’s palm oil output.

Last year, Malaysia and Indonesia earned some US$45 billion from exporting more than 40 million tonnes of palm oil all over the world, data from industry regulators of both countries revealed.

Oil World confirmed that in 2012, Malaysia and Indonesia shipped out the bulk of 41.8 million tonnes of palm oil, or 61 per cent of the 68.2 million tonnes of vegetable oils traded globally. Soyabean, rapeseed and sunflower oils, however, only commanded 27 per cent of market share.

Interestingly, Oil World’s data also showed that while the vegetable oils market had doubled in size since 1990, people around the world have chosen palm oil over other oils. Among 17 major vegetable oils traded in the world, palm oil consumption exceeded soft oils like soyabean, rapeseed and sunflower.

In the last two decades, global palm oil consumption expanded three times. Rapeseed oil purchase, however, only increased by 2.5 times and soyabean oil’s popularity just doubled.

“We’re at a crossroads. It’s time for oil palm planters to adapt to the fast-changing world of ruthless vegetable oil politics if we want to stay relevant in this market,” Abdul Hamed said. 

He then highlighted Malaysia’s neighbour has its own certification called the Indonesian Sustainable Palm Oil (ISPO) that is structured around a more commonly acceptable definition of sustainability and good agricultural practices. 

“Indonesia has embarked on ISPO to retain its sovereignty and bring discrimination against palm oil exports to the World Trade Organisation to achieve liberal trade that thrives on healthy competition. What about Malaysia?” he asked. 

‘Fall in commodity prices will pose immediate risks’

This is written by my colleagues Zaidi Ismail and Rupa Damodaran.

KUALA LUMPUR: A significant decline in commodity prices will pose immediate risks for Malaysia, the World Bank says.

It says moderating demand from China and weak growth in advanced economies, combined with expanding supply from surging investments over the past five years suggest downside risks for commodity prices.

“Although Malaysia can cope with additional declines in prices, sharp downward movements could potentially lead to deficits in the current and fiscal accounts as well as slower economic growth from delays in energy related investments,” the bank said in its eight Malaysia Economic Monitor report.

Themed “Harnessing Natural Resources”, the report was launched last night by Minister in the Prime Minister’s Department Senator Datuk Seri Abdul Wahid Omar.

In his speech, Abdul Wahid said Malaysia will prudently manage its natural resources towards achieving a sustainable and a high income nation by 2020.

Malaysia has been able to fully leverage on its endowments both in terms of natural resources and human capital. 

“Natural resources is one of the key factors for our success, with rubber, palm oil and oil and gas,” he added.

Meanwhile, the World Bank economist Frederico Gil Sander said not many countries have a good story like Malaysia, where investments totalled more than the 100 per cent of what was taken out of the ground.

The government encouraged commodity sectors to move downstream and industrialisation more broadly by easing foreign investment in manufacturing, reforming regulations and creating tax incentives.

National oil company Petronas acted as an oil fund as it kept some export earnings overseas and made significant direct investments domestically in downstream industries as well as in production abroad. 

“This reduced the flow of foreign exchange into the economy (thus reducing exchange rate pressures), supported downstream diversification and built assets to provide for future generations,” he noted.

Firms refute illegal burning allegations

KUALA LUMPUR: Three Malaysian plantation companies refuted allegations that they are involved in illegal burning of forest and peat lands in Riau Province, Indonesia, which is causing the current haze situation.

Sime Darby Bhd, Kuala Lumpur Kepong Bhd (KLK) and TH Plantations Bhd have each issued statements yesterday, refuting allegations of involvement in open burning activities in Indonesia and thereby causing widespread haze which is enveloping Sumatra, part of Malaysia and Singapore.

Last Saturday, Indonesian Environment Ministry had named eight companies that are being investigated for contributing to the haze by scorching their land in Riau and Jambi.

Another 14 companies are also being investigated for burning, but have not been named yet.

Meanwhile, Bernama quoted Association Plantation Investors of Malaysia in Indonesia (Apimi) as saying that Malaysian companies are not at fault in clearing land in Indonesia and causing fire. 

Apimi executive secretary Nor Hazlan Abdul Mutalib said open burning in oil palm plantations owned by Malaysian companies was carried out by local smallholders in the land allocated to them.

Yudhoyono apologises to Msia and Spore on haze

JAKARTA: Indonesian President, Susilo Bambang Yudhoyono has apologised to Malaysia and Singapore over the haze emanating from forest and peatland fires in Sumatra, which has affected air quality in the two countries.

“As the president, I apologise for what has happened and  hope for understanding from our friends in Singapore and  Malaysia,” he told a news conference at the president’s office here Monday evening.

“For sure, what has taken place is not on purpose,” he  said.

Yudhoyono said at the moment, the areas affected by fires  in Jambi, Bengkulu and Riau had been declared as districts under disaster emergency and the central government had  deployed maximum manpower to fight the calamity.

He said Indonesia was fully responsible for overcoming the  problem and was confident that this would be done soon.

Yudhoyono pledged that Indonesia would put out every  spot of fire burning in Indonesian forests by carrying cloud  seeding apart from mobilising fire-fighting personnel on land  including from the armed forces.

At the news conference, the Indonesian President also  ticked off several government officials of the republic for mentioning the names of plantation companies believed to  have started the fires which he said should not have been divulged.

“From what I monitor daily, there were statements made  by some officials which according to me should not have been  delivered as such,” he said. He said the companies concerned involved had not been  determined and government officials should refrain from issuing such statements.

“Even if the companies were negligent, it is not necessary  to name them…or the fact that they are owned by our neighbouring countries. What is more important now is to focus on overcoming the fire disaster that has dragged on for a week,” he said. — Bernama

China’s Uighur community want palm cooking oil

KUALA LUMPUR: CHINA-based Firat International Trade Co Ltd, the main distributor of palm oil in Xinjiang, expects to distribute 100,000kg of Malaysian palm oil-based cooking oil per month in the province.

This translates into monthly sales of around RM10 million.

Firat director Elmurat Eli said the company intends to make Urumqi, the capital city of Xinjiang, as the distribution hub for the central region of China and Commonwealth of Independent States (CIS) countries.

“Xinjiang has a Muslim majority population and Malaysia is well known for its halal food, including cooking oil. 

“The Uighur community in my home country China are always active in exploring halal food. After scouring several destinations, we decided to import 100 per cent of Malaysia’s palm oil-based cooking oil which is certified halal, affordable and nutritious,” he said at a briefing yesterday. 

A Turkic-speaking people of interior Asia, the ethnic Uighurs live, for the most part, in north-western China and are staunch believers of the Quran.

The Xinjiang province has a population of more than 25 million people, of whom 65 per cent are Muslims.

He said Xinjiang will indirectly facilitate re-exports of palm cooking oil to neighbouring countries like Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan and Uzbekistan through Firat’s distribution hub in Urumqi.

“We are thankful to Malaysian Palm Oil Board and Malaysian Palm Oil Council for their technical assistance and Malaysian Intellectual Networking Association for establishing this business tie-up with Al-Kaleej Industries Sdn Bhd,” he added.

Elmurat said the first shipment of two container loads of cooking oil, brand-named Melor, to Xinjiang will dock at Tianjin seaport next month, in time for Ramadhan.

Designer seeds for fruitful returns

Many people are not aware that there are companies which are specifically set up to breed oil palm trees and produce superior seeds for farmers. Why is there a need for such companies when a farmer can collect seeds that fall to the ground? It’s because these seeds, which are second generation, will not grow into trees that are exactly the same as the original.

What oil palm tree breeders do is they select good mother palms and match-make them with good father pollens so as to produce good babies. So, among “good” characteristics these agronomists target in their breeding process are for the trees to yield fruits that are super-oily, short in stature (for easy harvest), resilient against disease and able to withstand drought.

 It’s important that farmers plant good seeds obtained from tree breeders in order to get good returns. This is because seeds collected from the ground (which are usually sold at dirt cheap price) will only grow  into “bad” trees and not yield the amount of fruits like the original tree, no matter how much fertiliser the farmer feed the “bad” trees.

To all the first time oil palm planters out there, do remember….good seeds are not cheap and cheap seeds are usually no good.

New threats to palm oil

This is written by columnist Dr Ahmad Ibrahim.

HIDDEN AGENDA: Under the guise of saving the environment, some nations’ laws impede the import of palm oil

KUALA LUMPUR: Remember the much publicised London raid on the palm oil giant Guthrie in 1981? According to records, it took only about four hours for the transfer of ownership to take place. Malaysia eventually succeeded in taking over the 100-year-old company built during the colonial era.

From then on, Guthrie grew to become a respected global player in the palm oil business, managed fully by Malaysians. It is now merged into the Sime Darby conglomerate. And Malaysia has single-handedly turned palm oil into a leading oils and fats commodity for the world.

Malaysia and Indonesia now together control about 90 per cent of the world’s palm oil production. And palm oil dominates the international trade in edible oils, exporting to literally all corners of the world.

Looking back, this might have been difficult if that historic London dawn raid had not taken place. Even to this day, competing oils have tried all sorts of tactics to suppress the global expansion of the palm oil industry.

However, despite the growing popularity of palm oil among consumers and manufacturers worldwide, competitors have not stopped thinking of new ways to deny palm oil its rightful place in global trade.

Palm oil is, for example, the preferred oil in frying because of its unique heat stability. In China, Korea and Japan, instant noodle makers use 100 per cent palm oil. In the USA and European Union (EU), palm oil has emerged as the preferred fat for the manufacture of margarine and shortening.

But this is more to do with the health benefits of a trans fat free product offered by palm oil.

In fact, consumers should thank palm oil for the findings on the deleterious nature of trans fats.
This came about when scientists were looking for the scientific explanation as to why palm oil, despite its higher content of saturated fats, did not raise cholesterol when consumed.

That was when they found the real culprit, trans fats from partially hydrogenated liquid oils. The rest is history. Now all nutritional labels, especially in the West, carry warnings on trans fats content, which is good news for palm oil. 

But the enemies of palm oil are not giving up easily. Their latest attempt is disguised under the widely popular sustainability agenda.

Nowadays, it is easy to sell any idea which promises to help develop solutions for the global sustainability challenge. All you have to do is to come out with convincing arguments that a crop like oil palm is bad for climate change and has to be policed using the many sustainability criteria.

Actually, the palm oil industry in Malaysia has no real problem with that. The problem starts when the criteria imposed become unrealistic and irrelevant. 

In fact, before all the hue and cry over sustainable palm oil, Malaysia had long embraced the commitment to adopt environmentally sustainable management practices for oil palm.

The industry has long implemented biological control of pests, zero burning techniques in oil palm replanting, effective treatment of palm oil mill effluents, recycling of treated water for irrigation, conversion of biogas into energy and many more.

And sustainability is not just about the environment. We must not forget the other two pillars of profit and people.

Admittedly, oil palm is one crop which reaps considerable income. It has also helped alleviate the country’s hardcore poverty through land schemes like Felda and Felcra.

However, recent developments in Europe suggest that we may soon again lose control over its destiny. Already we are seeing laws in the EU enacted to deny the export of our palm oil for biofuel to the EU.

All are under the guise of the environment and sustainable development. The Renewable Energy Directives (RED), for example, have classified palm oil as not meeting the criteria for sustainability.

But the criteria for assessment keep changing. New elements such as land use change are introduced to make it difficult for palm oil.

Though we do recognise the noble intentions of sustainability to guide future global growth, it can also be abused. Is colonisation coming back to haunt palm oil-producing nations under the guise of the environment?