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S'pore firm assures Sarawak it will continue to buy crude oil

Publication Date : 07-03-2014


A senior state minister from Sarawak disclosed that Wilmar International Ltd, which kicked up a storm three weeks ago with its new outsourcing policy, has given the assurance that it would continue to procure crude palm oil (CPO) from planters in the state even though the plantations were on peat land.

Sarawak Land Development Minister Dr James Masing said Wilmar chairman and chief executive officer Kuok Khoon Hong wrote to him on February 14 stating that Wilmar’s policy would not affect the company’s purchase of CPO from corporations which had previously developed large tracts of peat land.

Masing told The Star's StarBiz yesterday that a Wilmar delegation was due to meet him here next week to further explain the company’s new policy.

The Sarawak government had voiced its grave concern over the serious implications of the Wilmar’s policy that was made public on December 5, particularly on prohibiting cultivation of oil palm on peat land and confining the opening up of oil palm plantations to only young scrub and cleared/open areas.

These prohibitions, according to Masing, tantamount to putting a complete stop to the expansion and growth of Sarawak’s oil palm industry.

Sarawak currently has about 1.2 million ha of oil palm estates, of which about 400,000ha are under peat land.

Masing said Sarawak planned to develop more peat land to increase the oil palm areas to 2 million hectares.

Sarawak Oil Palm Planter Owners’ Association (SOPPOA) had petitioned for the federal and Sarawak government to look into whether the Singapore-based Wilmar had abused its dominant position as a leading agri-business group and had breached the Competition Act 2010 by its decision.

Wilmar bought 45% or 1.4 million tonnes of the 3.1 million tonnes of CPO produced by Sarawak in 2013, making it the single-largest purchaser from the state for the past more than 10 years.

In his letter to Masing, Kuok had given the assurance that the company had the industry’s interest at heart.

“As we operate along the entire supply and value chain, it is in our interest to see the industry continue to grow, flourish and succeed.

“Our business is fully integrated and we are dependent on supply from many independent suppliers. It was never our intention to exclude suppliers or to put a stop to expansion and growth of the industry, especially in Sarawak where we have been operating for many years,” he added.

Kuok said Wilmar had already begun to engage many of its suppliers to see how it could help them meet the requirement of its policy in future. Last week, Wilmar officials met and briefed suppliers and oil palm planters in separate sessions in Sibu and Miri.

He said the company recognised that the indigenous communities depended on the native customary rights (NCR) land for their livelihood.

Kuok noted that Wilmar would develop a programme in collaboration with various stakeholders to help Sarawak’s smallholders and farmers to develop NCR land sustainably, irrespective of whether it was peat land or not.

“We will also look into working with your various government agencies to look into areas being proposed for oil palm development by the local communities,” added Kuok in the letter.

Masing said there were some 19,000 smallholders in Sarawak who depended on oil palm cultivation for a living.

Kuok hoped that the results on an ongoing study on peat land by the Sarawak Tropical Peat Research Institute that would be presented in 2016 would change the perception of stakeholders, especially in the European Union.

The institute operates a laboratory that conducts scientific research into the alleged emission of green house gases and all matters related to the sustainable conservation and management of peat land being developed into oil palm plantations.

Kuok also stressed the importance for companies to adopt sustainable practices in the cultivation of oil palm although it might cost more.


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