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Business |
Malaysian oil palm group eyes
expansion
KUALA LUMPUR: Kulim (Malaysia) Ltd
plans to double its oil palm land size in Papua New Guinea to over
80,000ha in the next 10 years from the present 44,714ha.
The plantation group has been happy with its returns from its
investments in PNG and the Solomon Islands, leading it to dispose
of 63,260ha plantation estates in Kalimantan, Indonesia recently.
It expects the higher yield from its PNG and Solomons land to
quickly replace the production from Indonesia.
“We have been bombarded with questions on our decision to get out
of Indonesia when many other planters are starting to grow big in
the republic,” managing director Ahamad Mohamad said.
He said many failed to realise that Kulim had better alternatives
– in the form of its existing vast oil palm plantation investments
in PNG and the Solomons.
“It is not a question of getting out of Indonesia. We have
calculated the numbers by comparing potential returns in
Indonesia, PNG and the Solomons based on planting an additional
20,000ha for a 20-year period,” he told a newspaper here.
For Indonesia, Kulim has capped its potential return at US$122
million (K380 million) based on crude palm oil (CPO) price of
US$550 (K1,713) per tonne while the group’s potential return in
PNG was higher at US$187 million (K583 million).
Mr Ahamad said: “The big disparity in the returns based on our
calculations was the main reason why we want to get out. Why waste
efforts in Indonesia when we can concentrate in PNG and the
Solomons where we can get higher returns?
“For Kulim, investments in PNG and the Solomons have been good and
hopefully will continue to give good returns in years ahead.”
He said the group was also looking at acquiring either green
fields or existing oil palm plantations overseas.
“These acquisitions will have to have more hectarage than the
plantation assets we sold (in Indonesia) and an announcement will
be made later this year,” he said.
He said investments in oil palm plantation in Indonesia would no
longer be in the group’s immediate planning horizon.
Mr Ahamad said that the group had about 6,590ha in the Solomons
and planned to increase it to about 15,000ha.
“We are in active discussions with landowners in the Solomons who
seriously want Kulim to help develop their land. Many are
impressed with our oil palm plantation there.”
He pointed out that Kulim’s future growth in planted areas would
be largely driven by its overseas operations.
He said Kulim had introduced a system whereby landowners in PNG
and the Solomons would be paid about US$35 (K109) equivalent per
ha per year.
In addition, they will be paid quit rent and about US$0.03
(K0.934) for one kilo of fruits they harvest.
 
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