KUALA LUMPUR: Sime Darby Plantation Bhd (SDP) will progressively shift its focus to India and China and away from the European Union (EU) market as the two nations offer significant potentials to the company, said group managing director Datuk Mohamad Helmy Othman Basha.
He said the company is looking for more partnerships and business opportunities in China and India and does not rule out the possibility of supplying ingredients to the final product suppliers in the two countries.
"We are also working with some other parties, but India is where we believe there is huge potential. So we will be looking at more (business opportunities) by forming partnerships with domestic businesses as the demand for vegetable oil is high," he told Bernama on the sidelines of the Malaysian Palm Oil Board (MPOB) International Palm Oil Congress and Exhibition (PIPOC 2023) here.
PIPOC 2023’s theme "Navigating Uncertainties, Building Resilience” reflects the industry’s concerted efforts in addressing global challenges and striving for greater heights.
Mohamad Helmy underlined that amid the EU's tough regulations on palm oil, Malaysia's export volume to the trading bloc has been continually falling over the years.
"We want to send a message to different governments, regulators and lawmakers in Europe. We have other choices and other options. The consumption is declining and why should we put a lot of effort just to satisfy this smaller market, whereas in India, it's been growing.
"The export volume going into the EU can be easily fulfilled by corporations like Sime Darby. We have a sophisticated system to trace where the oil is coming from. The EU is discriminating against smallholders since the output of small farms is harder to trace,” he added.
He reiterated that the EU remains an important market for SDP, whereby the group, alongside its contractors and vendors, are adhering to the stringent standards set by the lawmakers.
"It is not a problem for us to meet whatever regulations they impose, even with the EU Deforestation Regulation (EUDR). We have been complying with this rigorous standard, and 100 per cent of Malaysian palm oil going into the EU is certified by The Roundtable on Sustainable Palm Oil.
According to a report by the MPOB, India maintained its position as the largest Malaysian palm oil export market in 2022 for the ninth year consecutively since 2014, with 2.89 million tonnes or 18.4 per cent of total Malaysian palm oil exports, followed by China at 1.76 million tonnes (11.2 per cent), and the EU at 1.47 million tonnes (9.4 per cent).
Malaysian palm oil exports to the EU fell by 10.1 per cent to 1.47 million tonnes in 2022 from 1.64 million tonnes in 2021.
Meanwhile, Mohamad Helmy remarked earlier in his presentation on "Building Resilience in a Volatility, Uncertainty, Complexity, and Ambiguity (VUCA) World", that an organisation must be adaptable and prepare for uncertainties.
"You must prepare your organisation for the changes that will occur as well as the problems that you will encounter. You can overcome these adjustments since the organisation is adaptable. So, that's how you prepare, there's no other way. You must maintain the highest standards while pushing the boundaries," he said.
Using COVID-19 as an example, he stated that during the peak of the pandemic, most countries protect themselves by closing their borders, which affected the companies.
"As for SDP, we are preparing by making certain that no stone is left unturned in our efforts to find solutions...solutions that can make activities, tasks, or work easier in our plantations. We have spent about RM50 million on research and development and came up with automation concepts and prototypes, some of which have already been implemented on the ground.
"This is related to foreign labour too, for instance, 80 per cent of palm oil industry workers are foreigners, and at SDP, we are currently at 65 per cent and we are targeting to reduce that number to 50 per cent by the end of next year," he said.
To recap, SDP’s downstream arm, Sime Darby Oils International Ltd, which sealed a collaboration with Guangxi Beibu Gulf International Port Group Ltd, sees the cooperation as targeting a combined trading volume for shortening and refined palm oil of approximately 500,000 tonnes a year.
As for India, SDP and Godrej Agrovet Ltd (GAVL) have committed to agricultural innovation and sustainable food production by signing an agreement to enhance India’s role as a major vegetable oil-producing country.
Under this landmark partnership, SDP will supply high-quality oil palm seeds to GAVL’s oil palm business unit and later set up a state-of-the-art seed production unit in India. SDP and GAVL will also explore other possible collaborations that will bring mutual benefits to both companies.
In 2024, SDP will provide India with 1.3 million germinated seeds, sourced from its operations in three countries - Indonesia, Malaysia, and Papua New Guinea. - Bernama