Last Updated on : Monday, 12 September, 2016 01:30:56 PM

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Felda Global Ventures Holdings Berhad (FGV) via its subsidiary Felda Palm Industries Sdn Bhd (FPI) launched its 4th Biogas Power Plant worth RM14 million at its palm oil mill in Felda Umas, Tawau, Tuesday, May 20, 2014

The plant is the fourth biogas plant that will have the capacity to supply clean electricity from renewable sources.

FPI (Felda Palm Industries) Biogas Power Plant was one of the first facilities to be fully operational in Sabah.

In operation since 2012, the power plant, which has a biogas digester lagoon, is able to generate 1,000 cubic metres of biogas per hour, supplying electricity to 3,000 households in the Felda Umas area, which has approximately 15,000 people.

Power generation projects from renewable sources (biogas) in palm oil mills could be a benchmark for the industry.

Renewable sources (Tenaga Boleh Baharu - TBB) from the waste of manufacturing activity to generate electricity could complement existing fuel mix while reducing greenhouse gas emissions

In the long term, generating renewable energy will be the best alternative source for electricity as well as lessen our dependency on fossil fuel.

The 2008 growth outlook for the biofuel/biodiesel industry of the Malaysian biodiesel industry would continue at a slower pace on account of high feedstock prices and thinner margins, and the industry is anxiously awaiting an official policy from the Government.

Malaysia expect stiff competition from Indonesia, whose producers currently enjoy a lower CPO price after the Malaysian government increased CPO export duty by up to 10%.

The Malaysian biodiesel industry currently depends on export. The expected strong growth in the edible oils sector, particularly from China and India, and the anticipated tight supply of oilseeds in 2008 would pose difficulties for the biodiesel industry in terms of competition for raw materials and their resultant firm prices.

However, for the world at large , the biodiesel industry would continue to flourish in countries that are prepared to subsidies or introduce mandatory blending ratios.

Both the public and private sectors carry out oil palm research and development (R&D).

The Palm Oil Research Institute of Malaysia (PORIM) was set up in 1974 and was merged in 2000 with the Palm Oil Licensing Authority (PORLA) to form the Malaysian Palm Oil Board (MPOB). MPOB now deals with all aspects of oil palm and palm oil development and provides regulatory, training and technical advisory services to all sectors of the industry.

Other research organizations that conduct research on oil palm and palm oil include :

1) Indonesian Oil Palm Research Institute (IOPRI)

2) Nigerian Oil Palm Research Institute (NIFOR)

3) CENIPALMA in Columbia

4) CIRAD in France

5) Bah Lias Research Station in Indonesia.

In Malaysia there are also many local plantation companies with R&D facilities such as :


2) Golden Hope

3) United Plantations

4) Applied Agricultural Research.

The intensive research on oil palm and palm oil globally accounts for its significant contribution and status in the oils and fat market.

In Malaysia, the success of the oil palm is attributed to many factors :

1) Favorable climatic conditions,

2) Well-established infrastructure,

3) Management skills and

4) Technology for oil palm cultivation and

5) A land ownership structure which favors estate type of agriculture.

Appropriate R&D in various disciplines such as crop physiology, agronomy, genetics, tissue culture and biotechnology, must be strategically planned and implemented.





To transform Sabah into a top economic performer in Malaysia, perhaps beyond. Where people are improvement minded, thirst and hunger to move up the value chain in all aspects of life.

Here, our central economic interest is on palm oil.

Palm oil gives Sabah a great opportunity to move up the value chain and prosper.

So long as Sabah act now to establish a competitive edge.

The key functions of the Palm oil Industrial Cluster (POIC) is commercialization of technology

POIC is to create jobs and wealth for Malaysia

POIC has the  potentially generate RM100 billion in the next 10 years. A figure five times more than the amount of the State GDP

Three confirmed biodiesel investors each worth RM150-200million and four more to sign up by end of 2006.

Including a large Korean firm wanting to produce half million tones of biodiesel! W

What POIC is trying to do for the next few years is  develop  basic infrastructure and advanced infrastructure based on industrial clustering

A key objective of POIC is to create investment. Most investors would probably want to keep their start-up cost at a level as minimum as possible.  POIC offer "low entry cost" to the companies. Instead of companies having to come up with infrastructures, POIC will come up for them.

POIC provide support services to allow the companies to go ahead with biodiesel. When a biodiesel plant comes in they can depend on certain infrastructures in POIC," Pang said.

Methanol is a key component to process crude pal oil into biodesel. Bulking tanks are needed for methanol.

Steam is another key input in the process of biodiesel production. Steam is needed to run boilers and boilers to run power plants. POIC is thinking of producing specialized infrastructures such as steam and bulking infrastructures to provide the support that will help companies reduce the initial cost of entry into the business and this is the idea of industrial clustering

As POIC will provide steam, biodiesel companies will be able to focus on producing methyl ether by sourcing steam from outside because producing steam is not their business

poic is not just providing industrial park with basic provisions like water and power but try to put in specialized infrastructures

The creation of POIC is actually a decisive industrial choice to do serious downstream business. And it has the benefit of being able to focus on adding value to basically one resource - palm oil.

But it takes vision and fortitude to act as quickly as the State Government did and put it in place. Dr. Pang sees it as a 'tyranny of the urgent' - do it now or else face demise.

Prompted by a disturbing realization the palm oil industry may repeat the fate of timber and cocoa if Sabah failed to act a third round.

Indonesia is known to be aggressively planting huge areas of oil palm, Philippines as well in smaller measures, Papua New Guinea and some South American countries too have joined the palm oil bandwagon.

Soon, Malaysia may be dwarfed and no longer be able to claim the status of being the largest palm oil exporter in the world because there is a proliferation of "Me too" in the world of palm oil.

To tackle the survival question in this era of killer competition, a whole book has been written on 'Differentiate of Die'. But probably only seasoned economists would have the insight to see the critical nature of differentiation for Sabah at this juncture and act in time.

The hottest topic now is biodiesel. They don't sell the technology, they license it to you

With respect to R & D, probably no other institutions have done more than the MPOB. So it s quite rich in research information and technology.

Licensing is a form of technology transfer which MPOB provides.

Three companies which hold license to produce biodiesel. Malaysian Palm Oil Board (MPOB) developed the technology and the three companies which include Golden Hope, is renting the technology from MPOB.

For instance, any body who wants to make lipsticks of their own brand can walk into MPOB in Bangi, Klang Valley and there is a lipstick line they can rent from to produce palm-based lipsticks

There are quite a number of these incubator facilities such as sun cream, ice cream, etc

For technology transfer, there are formulations for sun cream etc which are very cheap.

Actually MPOB has a whole list of new technology transfer projects for 2006 for various functions such as dashboard cleaners, engine degreasers etc which companies can buy off by just contacting the relevant researchers who will give the formulation for something like RM3,000.

"Every year they have 40 to 50 new formulations," Dr. Pang said. "Plenty but hardly any body use them. Therefore what we want to do in POIC is to encourage people to come and we are now at a stage of determining how much cost to get things started because POIC is technology driven or value adding through technology."

Pang also cited University Malaysia Sabah, where one researcher had developed a roof tile using palm biomass which is cheaper and lighter which can be commercialized.

"We can bring this out, commercialize it. This is innovation and commercializing it," he suggested.

"And POIC is commercializing Malaysia's R&D and so we are proactive. When we brief investors, we take this technology to them and these are possible things we can do," Dr. Pang said. But the source of palm oil feedstock is one of the major concerns of POIC in the future, Pang said.

"If there is not enough palm oil you have nothing to talk about," he noted. But how?

Indonesia, southern Philippines and even Sulawesi come into the picture. Most existing Indonesian plantations are in Sumatra, most of their new planting is in Kalimantan.

"We have started talking to the Indonesian Ministry of Agriculture and Ministry of Forestry and we have some good idea we want to concentrate on the east coast of East Kalimantan where they have a few million tones coming up in the next few years," Dr. Pang said.

At the moment all the palm oil produced in Kalimantan is being shipped to Sumatra, Peninsular Malaysia, Bintulu and Surabaya in Java for further processing.

They are literally barged out because coastal waters off most Kalimantan regions are as shallow as just a few meters.

But there is a twist to the crude oil source.

Mindanao produces one million tones of coconut crude oil which has exactly the same properties as palm kernel oil needed to produce all the chemicals.

"This can be a feedstock for shampoo and many high value products, like Kao," Pang noted.

All this is an unprecedented initiative to take Sabah out of the economic rut.

"We produce 35per cent of the palm oil in Malaysia and there are 17 oleo chemical plants in Malaysia , none in Sabah. But for the first time, we are going to set up a system that encourages downstream processing of oleo chemicals and one oleo chemical plant cost RM200 to 300 million to set up.

If we can get some of these, it will add a lot of value, a lot of investment and the oleo chemical plants will be able to source some of these feedstocks from Kalimantan, the Philippines and Sulawesi.

Why ambitiously tag POIC as 'Rotterdam of the East'?

"We want to be the best and the most efficient in the region," Dr. Pang But is it for real?

Based on the land demand and supply figures, the supply of land up to Dec 2007 totals 800 acres but the demand is 1,530, from 32 biodiesel investors, 7 refineries, 1 bulking installation, 4 oleo chemical plants, 5 fertilizer companies, 4 palm kernel crushing plants and 2 biomass plants.

So, very keen interest and sells well.

In fact, three oleo chemical plants signed their sale and purchase agreement last week involving some 20 to 30 acres.

"The moment they sign they must give 10per cent deposit amounting to RM1-3 million and then 20per cent within two months. In other words, they must come up with RM10 million to buy land and additionally the machines," he noted.

"The machine makers will not sell unless you pay 20per cent of the total price and one set of biodiesel production machines costs something like RM80 million," Dr. Pang pointed out.

"So, we know they are serious because these companies have already placed orders for machines and the technology providers will not sell unless 20per cent or RM18 million parts hand.

Unless you are a serious starter to put this project together, you won't go through this process," Dr. Pang noted.

"We are expecting three to four more within the next month," he said. The early birds to sign up are seven to eight companies, "mostly biodiesel plants each of which cost RM150-300 million."


Particularly when POIC managed for the first time to persuade a big Korean investor to come in to build the largest biodisesl plant in Lahad Datu.

"They are targeting to produce half a million tones of it, they have also started ordering the machines and they are going to start piling next month," Dr. Pang beamed.

"This is what we are seeing in Sabah. POIC is going to be the largest biodiesel centre in the world. We want to develop this as the biggest palm-fed production centre in the world and we want refineries to come in so that we can get the oil," he said.

Just last week, a healthy doubter in Sandakan asked this good and pertinent question: Is the fuss on biodiesel a lot of hot air?

Judging from the serious confirmed large investments in POIC, it is for real.

For the first time, Sabah will probably not squander its precious primary resources to overseas and let every body else create the wealth.

In a nutshell, POIC is a product of learning a bitter lesson from the economic blunders from the past. It is correctly conceived and designed to create the wealth right in Sabah. In a world of cash economies, every body needs adequate money.


 | INDEX : New Oil Palm | September 12, 2016 01:30:56 PM

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