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Archive for July, 2013

France promises no palm oil discrimination

KUALA LUMPUR: THE French government will not discriminate palm oil products from other vegetable oils, Prime Minister Jean-Marc Ayrault gave his assurance yesterday.

He said the French government had never been hostile towards palm oil, adding that he understood how important the commodity is to Malaysia and its people.

In a joint press conference with Prime Minister Datuk Seri Najib Razak at the Prime Minister’s Office, Ayrault pointed out that this is despite some initiatives taken by the French parliament members to impose a special tax on palm oil.

Last year, it was reported that the French Senate approved a quadrupling of the tax on palm oil despite protests from major producing nations including Malaysia.

The move was, however, rejected by France’s Lower House.

“The palm oil will not be treated differently from other vegetable oils and there will be no discrimination on palm oil,” said Ayrault.

“I know how palm oil is very important to Malaysia, given the number of people who rely on palm oil production for their living, particularly small producers,” he added. 

Najib, meanwhile, said Ayrault had assured him that there will not be any new tax for palm oil and the commodity will be treated pari passu as other vegetable oils in France.

Last Friday, the New Straits Times ran an open letter to Ayrault from the National Association of Smallholders Malaysia (Nash), which represents more than 300,000 small oil palm farmers across Malaysia, and the Malaysian Palm Oil Council (MPOC), the industry promotional body.

The letter touched on the ongoing campaign of misinformation by French companies and politicians against Malaysian-produced palm oil and it urged the French premier to put an end to such actions which are adversely affecting the country’s palm oil industry.

“Allegations about nutrition and the environment cannot be allowed to stand. The reality is that palm oil is the most efficient vegetable oil in the world, is 100 per cent free of dangerous trans-fats, a major catalyst for poverty reduction and increases prosperity in Malaysia and elsewhere in the world,” said both Nash and MPOC.

Malaysia, they said, far exceeds France’s commitment to conservation – preserving 56 per cent of forest cover compared with France’s 29 per cent, a commitment well above the United Nations’ target.

Free trade is a two-way street, Ayrault

Thibault Danjou is a French entrepreneur operating in Asia (Japan, Singapore) since 1993. Below is his opinion on trade liberalisation.

KUALA LUMPUR: FRENCH Prime Minister Jean-Marc Ayrault wants to sell French flagship aircraft to Malaysia, but doesn’t seem interested in Malaysia’s “red gold”.

Ayrault is touring East Asia and arrived in Malaysia yesterday for a two-day official visit.

These last few days, it has been rumoured in French media that Ayrault intends to make a case for Dassault Aviation fighter-aircraft Rafale, in which Malaysia has shown interest. 

Nuclear power station appears to be the other subject matter the French Prime Minister is ready to discuss.

Strengthening trade relations with one of our very first partners in Asia quite frankly seems like a jolly good idea. Our economic development is undeniably linked to our ability to export and the trade balance with Malaysia has just begun to even out.

We will offer French aircraft, French know-how in nuclear power stations just like we successfully have French cars or defense so far. 

Malaysia – and Southeast Asia in general – is a booming market. It is critical that we hop on the train while we can, rather than being stranded at the station.

But to make those deals, France needs to more clearly commit to the set of rules inherent to free trade. 

Ayrault will have to demonstrate to his Malaysian counterpart as a sign of good faith that France is open-minded and worthy of such good trade relations. 

It is obviously essential to remain as respectful and listen to the needs and wants of the countries with which we engage in international trade.

This hasn’t always been the case with Malaysia. For instance, just recently the National Association Smallholders Malaysia has published an open letter addressed to Foreign Trade Minister Nicole Bricq. 

About 240,000 farmers asked Bricq to join in their effort to put an end to French smear campaign against palm oil. According to them, large brands from the French food industry often rely on advertisement belittling palm oil as a mean to show corporate social responsibility.

On the spot, Bricq explained that French authorities were already looking into it and added that she would personally make sure to let Ayrault know about it. 

Weeks later, nothing seems to have been done. This sort of condescending, patronising attitude surely cannot be sustained.

Palm oil is such a tremendous part of Malaysian economy. It represents the livelihood of more than one million Malaysians. We simply cannot afford to overlook this issue. 

French Prime Minister, please take the demands of our international trade partners into account. Carefully listen to Malaysia just like you would the United States, Germany or China. Everything to help France win those wonderful international deals!

Sabah planters see better earnings

KUALA LUMPUR: Plantation companies in Sabah will see better earnings ahead as palm oil price there is set to rise from next month.

“Effective August 1, the Sabah crude palm oil discount from Peninsular Malaysia will narrow from RM100 to RM80 per tonne,” a source said.

“This means plantation companies like Hap Seng Plantations Holdings and IJM Plantations, whose earnings are Sabah-centric, should be seeing better earnings from next month,” the source told Business Times yesterday. 

When contacted, IJM Plantations Bhd chief executive officer and managing director Joseph Tek Choon Yee said, “Yes, we have already sealed sales contracts with our buying refineries in Sandakan for August 2013 with the revised discount.”

“We’ve been in discussion with the refiners for quite sometime, following the restructuring of the palm oil export duties since January 2013,” he said. 

“Although the narrowing of price discount is small, it’s a step towards the right direction,” he added.

Tek said planters in Sabah laud the narrowing of price discount amid the prevailing low palm oil prices.

It’s Lipstick Day!

It’s past mid-night and I can’t sleep. I thought about a friend who reads when he can’t sleep. Hmmm …I think I’ll write… I feel so restless. Here I am…. in front of my trusty little laptop and I google away. It turns out that today is LIPSTICK DAY.

Lovely….a day dedicated to a product that adds colour to your face. Although I’m not a fan of make-up, it’s nice to doll up once in a while.

Today’s lip products are not only available in all sorts of pigments and flavours, but are available in a variety of formations including sticks, glosses, glazes and balms. Besides adding a splash of colour, some lip products include anti-oxidants, emollients and offer sun-protection as well.

Well, if you’re wondering? …yea, there’s palm oil in lipstick.

Plan to produce 50pc more biodiesel

PASIR GUDANG, Johor: Malaysia is expected to produce 50 per cent more biodiesel this year to 375,000 tonnes this year, thanks to price differential between crude oil and palm oil prices that is favourable to exports. 

Currently, there are seven plants in Selangor and Johor that are in active operations, said Plantation Industries and Commodities Minister Datuk Seri Douglas Embas.

“Palm oil prices is averaging at around RM2,300 per tonne while petroleum is being sold at around US$108 per barrel. In view of this favourable price differential in the export market, our biodiesel industry is now able to churn out between 300,000 and 400,000  tonnes a year,” the minister told reporters yesterday after launching the Southern Region B5 rollout at a service station in Pasir Gudang, Johor. 

Also present at the ceremony were Plantation Industries and Commodities ministry secretary general Datin Paduka Nurmala Abdul Rahim, Malaysian Palm Oil Council chief executive officer Tan Sri Yusof Basiron and Malaysian Palm Oil Board (MPOB) director general Datuk Dr Choo Yuen May. 

Former formula 1 racing driver Alex Yoong was appointed B5 biodiesel spokesman.

 B5 is a blend of 95 per cent regular diesel with five per cent palm biodiesel. “In Malaysia, B5 is being subsidised at the pump in the central region of the country. We’ve spent RM74 million in B5 subsidies last year. 

“In the first half of this year the subsidy amounted to RM7.6 million,” he said.   

In a move to promote the usage of biodiesel two years ago, the government has started to subsidise the price differential between diesel and biodiesel through Automatic Pricing Mechanism. It was then reported the biofuel subsidy fluctuated between 5 sen and 7 sen per litre. 

At current palm oil and diesel prices, the subsidy has settled to around 1 sen and 2 sen per litre. 

MPOB said the B5 rollout in Johor involves 415 service stations and 37,270 tonnes of palm oil biodiesel will be used in a year. “This will contribute to a saving of 43.14 million litre of fossil diesel per year,” Embas said.   

Since June 2011, central region launches covered Malacca, Negri Sembilan, Putrajaya, Selangor and Kuala Lumpur. Now, with the addition of Johor, all five states will need around 150,000 tonnes of biodiesel per year to be implemented. This is about 30 per cent of the 500,000 tonnes per year of biodiesel required for nationwide implementation.

On top of the B5 subsidies, the government has also allocated around RM50 million for in-line blending facilities at depots owned by five oil companies, namely; Petronas, Shell, Petron, Chevron and Boustead Petroleum Marketing.

Among depots in the central region that is being fitted with blending facilities are Klang Valley Distribution Terminal, Tangga Batu, Port Dickson, Westports and Northport. In Johor, all three depots are located at Pasir Gudang.

Analysts mixed over RM1.2b offer for Pontian

This was written by my colleague Zaidi Isham Ismail.

KUALA LUMPUR: ANALYSTS are mixed over the RM1.2 billion price tag offered by Felda Global Ventures Holdings Bhd (FGV) for Pontian United Plantations Bhd.

Pontian is mainly involved in oil palm cultivation, extraction of crude palm oil and palm kernel, general insurance, property investment and money lending. It has 16,187ha of oil palm plantation land, mainly in Sabah. Last year, Pontian reaped RM39.48 million in net profits.

RHB Research Institute thinks the price is too steep, while MIDF Research believes it is fair.

RHB analyst said the valuation seems high based on Pontian United’s 2011 and 2012 net profits of RM71.7 million and RM39.5 million, respectively, translating into price-earnings ratios of 16.9 times for 2011 and 30.7 times for 2012.

“More importantly, its landbank is priced at RM74,765 per ha, which looks expensive, even higher than the valuation of RM69,300 per ha for IOI Corp Bhd’s attempted purchase of Dutaland estates in Sabah in 2011,” RHB analyst added.

RHB Research said FGV is under pressure to put its net cash hoard of RM5.8 billion as at end-first quarter of 2013 to good use. “The cash is becoming a drag on earnings,” the analyst said.

In recommending a “neutral” call on the stock, RHB analyst estimates that the acquisition could potentially add 2.0 to 2.5 per cent annually to FGV’s bottom line.

MIDF Research, however, is more optimistic on FGV’s move. “We are positive on the news. However, there’s no change to our forecasts pending results of the offer. We maintain a ‘neutral’ recommendation on FGV with a target price of RM4.76.” 

Two days ago, FGV told the stock exchange that it offered to buy all shares in Pontian United for RM140 apiece. The deal is expected to be completed by the end of this year.

MIDF said the RM140 per share translates into RM75,000 per hectare, which is considered fair for a local plantation estate. “Although the purchase price is slightly higher than the IOI Corp offer, it is still fair for a brownfield estate in Malaysia.”

“Assuming full acceptance and completion of the exercise by end of this year, the acquisition will increase FGV’s 2014 earnings per share by 3.5 per cent,” MIDF analyst said.

‘Consult all stakeholders before concluding TPP’

KUALA LUMPUR (Bernama): The government should hold consultative sessions with national-level chambers of commerce and affected stakeholders before concluding the Trans-Pacific Partnership Agreement (TPP).

In a statement yesterday, The Associated Chinese Chamber of Commerce and Industry of Malaysia (ACCCIM) said an advisory committee system, like the US’ be set up so that meaningful consultations could take place. 

“ACCCIM is of the view that the government needs to ensure the costs to Malaysia will not outweigh the benefits,” it said. 

It said the idea of free trade was important to a trading nation like Malaysia, with possible main benefits to the Malaysian companies to expand market opportunities and for the country to attract foreign investments. 

However, TPP could interfere with the efficient supply chain developed in Asia if China remained excluded, it said.

“The TPP should also include the provision of special and differential treatment as provided in the World Trade Organisation to increase trading opportunities for developing countries,” it said.

ACCCIM said the government must give due consideration to national interests over that of foreign, especially in non-trade-related issues. 

The TPP is a multilateral free-trade agreement that is currently participated by 12 countries with a combined market of 793 mil-lion people and gross domestic product of US$27.5 trillion (RM87.73 trillion). 

TPP would eventually be the largest free-trade bloc in the world and participating countries include some of the world’s most robust economies, and represents more than 40 per cent of global trade.