KUALA LUMPUR: As an initiative to revitalise the palm oil and related
industries, RM297mil will be set up for the enhancement of productivity
by encouraging replanting activity to replace aged trees with high
quality new clones under the Budget 2011.
Besides, a sum of
RM127mil is allocated to support domestic oleo derivatives companies as
well as a sum of RM23.3mil to expand downstream palm oil industries
including production of vitamins.
ECM Libra head of research
Bernard Ching said the RM297mil allocated to encourage replanting
activity by replacing aged trees with high-quality new clones was
generally in line with Pemandu’s suggestion that replanting activities
should be prioritised.
The current replanting back log at the moment amounted to 365,414ha (7.6% of total Malaysia hectarage).
This is the amount of replanting that Pemandu hopes to achieve over the next three years and amounts to some 91,353ha per annum.
He
said the RM297mil budget divided by 91,353ha amounted to an allocation
of RM3,251 per ha, higher than the previous allocation of RM1,000 per ha
of replanting.
“It is not clearly spelt out yet how this
RM297mil will be allocated but nonetheless, it is more generous that
previous replanting allocation of roughly RM50mil for 200,000ha. To
note, replanting costs still stand at roughly RM12,000 per ha,” he said.
On
the oleochemical industry allocation of RM127mil, he viewed minimal
impact to listed plantation players, adding that it would likely help
smaller players to expand further downstream and value add to their
businesses.
An analyst from a local brokerage said the initiative
of setting up the RM297mil fund was positive for the industry but it
would likely benefit the small companies in general.
“This might
benefit those small companies that don’t have access to good clones and
seeds. However, we have to wait for the detail for the allocation in
order to see the impact to the industry,” she said.
She said it was hard to judge whether the RM127mil allocation would be in terms of tax benefits or funds for companies to apply.
However,
she said the RM23.3mil allocation to expand downstream palm oil
industries including production of vitamins might be a research and
development fund for the industry.
Source : The Star
