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Sarawak oil palm firms want probe into S'pore corp for anti-competitive behaviour
Publication Date : 18-02-2014
Sarawak planters, reeling from Singapore-based Wilmar International Ltd’s decision to stop buying from them, are crying foul, contending that the decision by the latter breaches anti-competition laws.
The Sarawak Oil Palm Planter Owners’ Association (SOPPOA) has urged the Federal and Sarawak state governments to look into whether had abused its dominant position as a leading agribusiness group.
Wilmar recently decided to stop buying crude palm oil (CPO) produced from oil palm in forest areas and peat land in Sarawak from 2015.
SOPPOA sent a memorandum to the Plantation Industries and Commodities Ministry and the Sarawak Land Development Ministry last week, urging them to look into whether Wilmar had infringed Competition Act 2010 by its actions. The Act has a provision to investigate actions that can be considered an abuse of a dominant market position.
According to SOPPOA secretary Philip Ho, Wilmar, which owns Sarawak’s first palm oil refinery set up in Bintulu over a decade ago, buys more than 50% of the 3.3 million tonnes of CPO produced in Sarawak annually. This makes Wilmar the largest CPO buyer in the state.
“There is a likelihood that Wilmar’s policy may trigger other Roundtable on Sustainable Palm Oil (RSPO) members to adopt similar policies and further restrict market accessibilities for Sarawak palm oil. Ultimately, this will drive prices of CPO from Sarawak down, with discounts being the norm expected by international players,” he told The Star's StarBiz on Monday.
SOPPOA urged the Malaysian federal government to consider the interests of non-RSPO members in the industry in Sarawak, as they would face challenges stemming from Wilmar’s policy.
Land Development Minister Dr James Masing, who was informed of Wilmar’s decision to the state government via a letter on December 5, said Sarawak might lose about 400 million ringgit (US$121 million) in sales tax revenue a year from oil palm products as a result of the multinational company’s policy.
Wilmar owns the Bintulu edible oil plant, which manufactures palm olien, palm fatty acid and palm stearin.
Masing had briefed the state cabinet on the matter and replied to Wilmar’s letter. He said the state government would not bow to Wilmar’s pressure, as it would affect more than 17,500 smallholders and some 300,000 people in rural areas involved in oil palm planting.
Ho said SOPPOA had requested the federal ministry to consider certain export tax-exempt quotas and/or rebates for Sarawak’s palm oil industry for the next five years to allow adequate time for those planting in peat and mineral areas affected by Wilmar’s policy to find alternative markets.
SOPPOA said there was a need for the ministry to explore new international markets in China, Pakistan, India, Bangladesh and Africa, as such alternative market outlets were crucial for Sarawak’s oil palm industry.
SOPPOA has also urged the federal authorities to raise the volume of Sarawak CPO to be allocated for biodiesel production in the country. He said Sarawak had about 1.6 million ha of peat land, and the state government had plans to open 1.2 million ha for plantations and agriculture projects. So far, 500,000ha have been planted with oil palm.
SOPPOA has called on the federal authorities to fast-track the implementation of the proposed Malaysian Sustainable Palm Oil to enable planters in the country to be certified under the national scheme for benchmarking in the international market.
“It is also seen as prudent for the Government to actively engage with its Indonesian counterpart to consolidate the palm oil industry with a united stance, as both nations are major suppliers facing discrimination from the big buyers. The setting up of an Asean Sustainable Palm Oil standard is also viewed as a move in the right direction for the industry in both countries to benchmark the commodity internationally.”
SOPPOA has asked the federal ministry to mediate a meeting between major Malaysian palm oil players, federal and state governments, as well as the association with the objective to move forward in the spirit of “One Malaysia”.
It said the Sarawak oil palm growers should not be left in the cold and that they needed the continued support of major palm oil players.