Published on: Monday, June 25, 2012
Kota Kinabalu: DAP Sabah said the mushrooming of many commercial and residential projects in Lahad Datu POIC gives the impression that it has deviated from its palm oil role and turning to the property industry.
DAP Sabah Chairman, Jimmy Wong, said developers are seizing the opportunity to invest in the increasingly booming property industry in Lahad Datu, thus pushing the Rakyat even harder to purchase their own homes.
He said the key questions is whether the Government is really determined to develop downstream activities of palm oil industry or are they more interested in cashing out from the infrastructural development projects by pushing up the prices for big land banks during acquiring.
"As at March of this year, Pengah Property Sdn Bhd, a subsidiary of Kuala Lumpur based RENG Corporation Sdn Bhd, has bought 2.4ha to develop terraced and semi-detached industrial buildings priced between RM600,000 to RM1 million. Apart from Pengah, Sabah-based Bristeel Properties Sdn Bhd was also developing 196 units of shop office lots and 26 units of warehouses."
Wong said in 2010, the Mewah Group, a Singapore company with refineries in Malaysia, invested RM150 million to set up a 900,000 metric tons per year palm oil refinery at the Lahad Datu POIC.
"The refinery will be the biggest in Sabah and create about 200 jobs.
However, early this year, Mewah Group announced an investment of about US$145 million in a crude palm oil refinery, packing plant and related logistics facilities in Indonesia.
"Mewah also said it will delay the completion of its refinery in the POIC to prioritise its Indonesia refinery project. The company said the POIC project would be revived once there is a gap between refining capacity and sales," he said.
Wong, who is also Sri Tanjung Assemblyman, said the question is, why is there a gap between refining capacity and sales in Indonesia but not in Malaysia?
"The answer is tax structure for the industry. In September last year, Indonesia reduced its export duty on refined bleached and deodorised (RBD) palm olein in bulk to 7pc from 15pc, while the export duty on CPO is unchanged at 15pc to boost export of its processed oils.
"All CPO exports in Indonesia had to be taxed and there was no export duty exemption given such as the duty-free CPO export quota in Malaysia, as much as 3.5 million tonnes of crude palm oil," he said.
Wong said for Indonesian CPO producers, either they export their CPO and pay the export duty or they have to sell their CPO locally at CPO export duty countback price basis.
"For example, given changes in the tax structure, as at April this year, Indonesia's CPO available to its refiners is priced at about RM2,923 per tonne while Malaysian CPO to its refiners is about RM3,510 per tonne.
"Therefore, Malaysian CPO available to refiners is more expensive by about RM587 or US$192 per tonne," he said.
Wong said the government should realise the need to reform the industry's tax structure to counter new rates in Indonesia that improved the competitiveness of refiners there.
He said the government should end the short-term mindset and shift to sell more refined products than raw products.
"DAP would like to urge all the related authorities to respond to the status of the Lahad Datu POIC currently as examined by this study conducted by DAP Sabah Publicity Secretary, Chan Foong Hin," said Wong, adding that Chan is the CEO of Topinai Strategic Research Centre.
"Federal Plantation Industries and Commodities Minister Tan Sri Bernard Dompok, State Minister of Industrial Development, Datuk Raymond Tan Shu Kiah, and CEO of POIC, Datuk Dr. Pang Teck Wai, should address our concern on the current status of POIC," said Wong.
He said Sabah recorded RM16.75 billion in palm oil exports for the first nine months of 2011 and the oil palm industry contributed more than 30 per cent of the country's total exports last year.
"According to the Malaysian Palm Oil Board (MPOB), in 2009, Sabah had the largest area under oil palm cultivation of any state, at 1.4 million hectares out of a national total of 4.7 million. Yields, too, were generally stronger at an average of 4.3 tonnes per ha in 2010 - the highest of any state in the country.
"Palm oil, being one of the NKEA (National Key Economic Area) as classified by Pemandu, can be depicted as well-established sector which can drive the economic growth of the country, especially Sabah.
"The sector has been once recorded as the largest contributor to the state's GDP for the year 2005, before the international crude oil price booming.
Palm oil industry is crucial to the state as the state government derived between 40 to 50 per cent of the entire state budget from the sales tax it imposed on palm oil," said Wong.
He said despite being the state important industry, Sabah lags substantially behind in terms of the development in the downstream sector.
"As comparison, highly industrialised Peninsular Malaysia has recorded RM9,765 million in the downstream exports value, while Sabah only RM0.51 million. Approximate every one tonne of downstream product can bring in RM3,600 value of export.
"Let us focus on Lahad Datu POIC. It began with about 500 acres in year 2005 and will cover more than 4,000 acres when fully developed.
It's time now to revisit the glossy picture painted for the POIC," he said.
Wong said according to POIC CEO Dr Pang, as at March of this year, POIC so far had attracted about RM4.5 billion in investments and in February this year, Prime Minister Datuk Seri Najib Tun Razak had announced that the Federal Government will fund the construction of a RM400 million container port.
"Lahad Datu POIC has attracted 40 investors on the list.
But how many of them are really doing downstream activities?
By taking fertiliser (nine investors) and shipping, forwarding, warehousing, commercial (eight investors) and others as non downstream activities, surprisingly half of the investors are doing non-core business in POIC," he said.
Wong said for instance, both foreign and Malaysian investors were planning at least six biodiesel plants at the site with a combined capacity of more than one million tonnes per year but asked how many are in operation now.
"Global Biodiesel Sdn Bhd, SPC Biodiesel Sdn Bhd and Zurex Corporation Sdn Bhd (Refinery) has been built but not one in operation given no or low margin due to high crude palm oil and crude oil price.
"How many jobs have been created? How much revenue have been generated as compared to initial projection? Are the factories built for sight seeing?