Food for thought as Lim takes Ekovest into farming

EKOVEST's Lim Kang Hoo: (pic) “We have enough experience and the manpower to go into agriculture, aquaculture and also the downstream businesses in a very big way. “We are going to do all these using high-tech tools and concepts. We’ve already started in Johor and we’re just about to begin in Pahang, ” says Lim.

TAN SRI Lim Kang Hoo is a household name when it comes to mega infrastructure projects and property development.

Ekovest Holdings Bhd, his construction and property development arm, has taken on huge projects such as the flagship Duke Highway, government buildings in Putrajaya and the fitting-out works of the Petronas Twin Towers, just to name a few.

So when Lim and Ekovest, whose names are so deeply embedded in construction and infrastructure, bought into PLS Plantations Bhd, many could not fathom what his game plan was.

Ekovest bought 23.42% into PLS Plantations in March last year. It has since nudged its stake up to 32.84%. This has surprised many.

Lim now has plans to engineer a move using Ekovest to take full control of PLS Plantations.

On Tuesday, Ekovest entered into agreements with three related parties to purchase an additional 24.54% equity interest and 4.35% of the group’s warrants for RM85.75mil, which would eventually make PLS Plantations a subsidiary of Ekovest with a 57.38% stake.

While Lim had actually made his fortune from the construction business, Lim came from the humble roots of plantations, where he learnt true grit and perseverance.

“Some even scolded me, questioning why I would go from construction of highways into the plantation business?

“Actually my background is in agriculture first, before I went into infrastructure and building, ” he tells StarBizWeek in an interview.

Farming has been in Lim’s blood since he was young as he used to tap rubber and plant fruit trees. At the age of 13, he was selling durians.

Lim sees huge opportunities in agriculture and feels this is a good proposition for Ekovest so that it is not solely reliant on being a master developer or being involved only in constructing infrastructures.

“This is about food security. Everyone in the world needs this. We’re going into at least a few hundred thousand acres, that is our target.

“We will do it via a public-private partnership model because the government knows what I’m doing. My model is always with the government, ” he says.

From an economic standpoint, this makes sense because there is a serious need for Malaysia to improve its self-sufficiency level.

There has never been a more urgent need to start improving on this ever since the Covid-19 showed how global supply chains can be disrupted at a whole new level.

The inability to be self-sustaining in terms of food production would lead to a nation being at the mercy of importers.

According to a report by Bank Negara last year, Malaysia is a net food importer, with imports forming about a quarter of total food supply.

Malaysia’s food import bill rises by an average of 6.5% annually from RM30bil in 2010 to RM50bil in 2018.

Data compiled by the Statistics Department showed that out of 42 agricultural commodities that were covered, 24 of them recorded a self-sufficiency ratio (SSR) of more than 100%.

Among items with the highest import dependency ratios (IDR) are mutton (87.9%), beef (76.6%), ginger (84.3%), chili (73.6%), round cabbage (65.4%) and mango (73.5%).

For context, durians have an SSR of 105.2% and an IDR of 1.8%.

And it is in the King of Fruits that Lim sees a potential jackpot due to its huge prospects in China.

China imported 600,000 tonnes of durian last year, valued at RM7.24bil.

In 2018, Malaysia exported 3,200 tonnes to China, in the form of frozen durian pulp and paste, amounting to RM175mil.

Figures from the Chinese Embassy in Malaysia show that Malaysia’s exports to China just for the first quarter this year was RM94mil, equivalent to that in the same period last year, despite the pandemic and off-season period.

PLS Plantations has been a loss-making company for several years and in its latest results for the first quarter ended June 2020, the group posted a 139% year-on-year (y-o-y) jump in net profit to RM2.19mil, which it attributes to the increase in both the sales volume and average selling prices of palm oil fresh fruit bunches (FFB), sale of frozen durian products to overseas customers, especially in China, and the sale of fresh whole durians.

“We have enough experience and the manpower to go into agriculture, aquaculture and also the downstream businesses in a very big way.

“We are going to do all these using high-tech tools and concepts. We’ve already started in Johor and we’re just about to begin in Pahang, ” says Lim.

He also points out that the plantation and agriculture industry is capital intensive.

A durian tree, for example, takes six to seven years to deliver its yield.

“If you plant 100,000 acres of durian, it involves billions of ringgit. All the investments here are in billions. It’s very capital intensive.

“We already have 5,000 acres (2.023.43ha) of durians planted and we have acquired Dulai Fruits Enterprise Sdn Bhd, which is doing all the downstream business because we need their expertise, ” he says.

PLS Plantations owns 70% in Dulai Fruits, a company that produces fresh whole fruits, frozen durians for the local and export markets and durian paste for the dessert manufacturing market.

Be it agriculture or aquaculture, Lim says the business model that will be taken on is that of an off-taker with a government-linked company, by helping small farmers commercialise.

Without an off-take company, Lim says the country’s produce, such as the vegetables from Cameron Highlands, would get dumped every day.

“Whatever that comes out from the farm, we will off-take, be it vegetables, poultry or livestock.

“This includes whatever we produce in our plantations involving a few hundred thousand acres, ” he says.

In Lim’s words: “I am a farmer and I’m going back to farming in a very big way”.

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