KUCHING: Sarawak needs to set up more palm oil refineries to boost capacity as the uptake of crude palm oil (CPO) from mills would be sharply reduced once the Wilmar International Ltd-owned refinery in Bintulu stops buying CPO produced from oil palm estates on peat swamp land and forest areas from 2015 onwards.
Sarawak Oil Palm Planter Owners Association (Soppoa) secretary Philip Ho urged the big players having the financial muscle to invest in more such refineries.
“The way forward is for local CPO producers to quickly build refineries to cater for CPO volume currently sold to Wilmar,” he told The Star yesterday.
Land Development Minister Tan Sri Dr James Masing said Wilmar had informed the state government of its latest policy decision in a letter sent to him on Dec 5.
Masing believed that Singapore-based Wilmar had been pressured by non-governmental organisations (NGOs) in Europe to come up with its latest policy on CPO produced by oil palm trees on peat land and forest areas.
The state government, according to Masing, might lose some RM400mil in sale tax revenue a year from oil palm products following Wilmar’s decision.
Ho said Wilmar’s refinery Bintulu Edible Oil was buying some 1.75 million tonnes of CPO or more than 50% of the 3.3 million tonnes produced by the state annually.
There are currently more than 40 CPO mills in the state. Bintulu Edible Oil manufactures palm olien, palm fatty acid and palm stearin.
There are currently four other palm oil refineries in operation in Sarawak. These are owned by Sarawak Oil Palms Bhd (SOP), BLD Plantations Bhd, Sime Darby Bhd and Assar Senari. It is understood that the Rimbunan Hijau (RH) group has been granted a licence sometime ago by Malaysian Palm Oil Board (MPOB) to set up a refinery in Bintulu.
The RH group has major interests in oil palm industry as three listed companies under its control are involved in oil palm cultivation.
These are Rimbunan Sawit Bhd, Jaya Tiasa Holdings Bhd and Subur Tiasa Holdings Bhd.
SOP, which owns six CPO mills, is investing in an additional production line in its refinery in Bintulu to raise processing capacity.
Ho said Wilmar’s decision would certainly affect the state government’s plan to expand its oil palm plantation area as some plantation companies had suspended their plans to open up more peat land for planting.
“They are now adopting a wait and see attitude,” he added.
Sarawak has some 1.6 million ha of peat land, out of which some 500,000ha have been cultivated with oil palm. The government plans to develop 1.2 million ha with oil palm and other agricultural crops.
Ho said palm oil estates on peat land were located in the coastal belt between Lundu and Lawas.
Soppoa had recently urged industry players, including government-linked companies like Salcra, to stay united to face the issues and challenges together.
Masing said Wilmar’s policy had a disastrous effect on the state because it would stop the government’s programme on poverty eradication among rural people.
According to him, there are more than 17,500 smallholders and some 300,000 people in rural areas who are involved in planting oil palm.
He said Sarawak would find other buyers, including from India and China, if Wilmar was firm on its decision.