Sabah Poised to be World's 3rd Largest Palm Oil Producer

By Jailani Hassan LABUAN (Sabah,Malaysia), May 22 (Bernama) -- If Sabah were an independent country, it would be the world’s third largest pro­ducer of palm oil. Such a statement was an indication of how impor­tant the role palm oil has played in the state's growth to date - and what is in store for the future. According to the Malaysian Palm Oil Board (MPOB), in 2009, Sabah had the largest area under oil palm cultivation than any state, at 1.36 million hectares out of the national total of 4.69 million hectares (ha). Yields, too, were generally stronger at an average of 4.3 tonnes per ha in 2010 - the highest of any state in the fed­eration. Eastern Sabah has been identified as being an extremely good location for oil palm, particularly in Tawau, Lahad Datu and Sandakan. “This area is where most plantations and smallholders are located, with two major downstream projects provid­ing increasingly sophisticated downstream services for the sector,” said Jerel Soo, managing director of Fireworks Event (M) Sdn Bhd, an event management consulting group, specialising in palm oil exhibition. He said palm oil, being one of the federal government’s NKEA (National Key Economic Area), meant that this sector would receive special attention via incentives and programmes in the years ahead. “Therefore, we are in the move to help organise the largest Palm Oil Exhibition (Palmex) 2012 to assist in bringing in more business to the local players,” he said. Soo confirmed a total of 130 booths were taken up, of which more than 80 comprised overseas exhibitors. The Singapore Government has subsidised over 10 companies to help promote downstream technologies in palm oil industries. “The NKEA covers everything from growing trees to sophisti­cated downstream industries such as oleochemicals, alongside increasing the number of appli­cations for what was once seen as waste products like empty fruit bunches. “Expanding the sector further would mean tackling some major challenges, however. Issues such as the scarcity of land in Sabah, challenges in seeking skilled workers, lack of mechanisation and so forth were hampering the growth of this sector, and this need to be given special attention. “As far as we are concerned, to combat this, several key initiatives have been put in place under the NKEA via entry point projects,” he said. “It is noted and was made to understand that the government has an obligatory replanting scheme under way. Through this scheme, all trees over 25 years of age must be replaced with younger ones. "The MPOB would provide financial support for smallholders to do this, with the new trees to be of new strains, further boosting yields. Some RM1 billion (US$320.8 million) has been earmarked for this purpose," he said. All in all, Sabah’s oil palm industry is poised for major new developments that are set to impact industry players, from growers to exporters. Meanwhile, Soo said, downstream processes was another segment under palm oil which was receiving great focus. “It is learnt, however, the importance of the palm oil industry to Sabah cannot be merely measured by the direct revenue stream it generates as it has much more wide-reaching and important contributions to the state,” he said. “The palm oil industry will have to take a leading role be­cause of the linkages it has with other sectors - from energy to construction and manufactur­ing - and of course, due to the sheer size of the industry compared with the others in Sabah.” Palm Oil Industry Cluster of Sawit Kinabalu Bhd (POIC) Lahad Datu was also promoting industries that would use the large volume of biomass generated from Sabah’s oil palm plantations. One particular independent power producer has taken the initiative towards making POIC more environmental friendly by signing up to generate power and steam on site using biomass. “Investors such as these thus solve two problems for POICs: providing a reliable source of power and making use of the many forms of waste from palm oil processing.” As a result, Sabah’s POICs should therefore be able to look forward to varied investors knocking on their doors in years to come, in addition to adding value to the palm oil industry in their own backyards. -- BERNAMA