PETALING JAYA: Plantation companies with large oil palm estates in Sabah are back on high alert mode following the stricter enhanced movement control order (EMCO) lockdown in Lahad Datu, Tawau, Kunak and Semporna, say industry players.
The escalating Covid-19 cases in the four affected districts had resulted in non-essential businesses to be shut down for 14 days starting Sept 29. Initially, Kunak authorities had declared that oil palm estates and mills there were not allowed to operate during the shutdown period.
But after a series of appeals by the local planters and the Malaysian Palm Oil Association (MPOA), the lockdown was lifted and Kunak estates and mills were back in operation effective yesterday (Sept 30). Despite the “one-day” shutdown for planters and millers in Kunak, there is still a lingering fear that the Covid-19 pandemic outbreak will continue to persist in Sabah.
The Malaysian Estate Owners Association (MEOA) president Peter Benjamin(pic) told StarBiz that “if the lockdown happens again and estates cannot operate, it will have a huge impact on plantation companies, particularly in crop losses.
“And after the lockdown is lifted, there will also be a hefty cost of cleaning up (the unattended estates).” Therefore, the authorities should allow planters to operate but “at reduced capacity to restrict the movement of workers in their estates and mills”. Back in March, Tawau and Lahad Datu became the first casualties of a Covid-19 lockdown within the plantation sector in the country.
Temporary suspension was imposed on the oil palm estates there for seven days starting March 25, while the palm oil mills were closed for five days starting March 27.
At that time, both MPOA and MEOA had warned that Sabah will likely suffer a loss of revenue of about RM860mil if the oil palm estates and mills in the state were shut down for one month. This will also result in a loss of about 7.5% or RM57mil in sales tax revenue to the government, which could be used to support the fight to contain the coronavirus outbreak. Sabah has about 1.54 million ha of the total oil palm planted area in Malaysia as at end-December last year.
According to analysts, plantation companies with huge landbank in Sabah include IOI Corp Bhd (59%), (IJM Plantations Bhd (41%), FGV Holdings Bhd (31%), Genting Plantations Bhd (29%), Kuala Lumpur Kepong Bhd (16%) and TSH Resources Bhd (15%).
One analyst said that currently, there will be no significant impact on the planters with operations in the four affected districts in Sabah as “they are now allowed to operate at about 50% capacity or more depending on the decision by the respective district authorities.”
MPOA CEO Datuk Nageeb Wahab noted that the productivity situation is still okay as the latest lockdown only lasted for one day in Kunak.
However, he cautioned that the future risk for planters in Sabah is that should the local authorities decide to reinstate the MCO again especially during the current peak production season.
This will definitely disrupt the critical harvesting, crop evacuation and the palm oil milling operations, thus affecting planters’ bottomline, added Nageeb.