KUCHING: Land and labour issues remain at the forefront of concerns among plantation players in Sarawak, outlines analysts at TA Securities Holdings Bhd (TA Research) .
The state government has ambitious target to develop the palm oil industry which includes increasing planted area to two million hectares (ha) by 2020 and three million ha by 2030 from a current 1.2 million ha.
“We believe Sarawak as a whole has a promising outlook as far development of palm oil industry is concerned, given the ample availability of land bank.
“That said, there are challenges that need to be addressed for stimulate further growth including executing effective measures to mitigate anti-palm oil campaigns, more proactive role and effective solutions to mitigate instances of natives – plantation companies dispute, and effective measures to overcome labour shortages,” TA Research said in its report yesterday.
In meeting up with Pelita Holdings Sdn Bhd (Pelita Holdings) recently, TA Research noted that out of the one million ha of land targeted to palm oil development until 2020, 40 per cent will come from native customary rights (NCR) and the balance from state government land.
“They also added that two key hurdles in developing NCR land are inconsistent or multiple land ownership claims, and landowners typically have to wait for up to 10 years before getting any dividends (as plantation companies usually utilise cash flow to repay debts before paying dividends).”
To combat this, Land Custody and Development Authority has proposed an ‘incentive scheme’ programme where under this scheme, the native will receive RM150 per ha per year for the first three years, and gradually increasing to RM750 per ha per year, depending on the age of the estates.
“This scheme will continue until the joint venture (JV) company’s dividends exceed the incentive payment,” TA Research said.
“So far, joint venture companies such as Boustead Pelita Kanowit Sdn Bhd has implemented this scheme. Management is targeting to implement this scheme throughout all the 42 JVs to develop NCR land,” TA Research noted.
Apart from the peat oil issue, another major threat to palm oil development in TA Research’s view is labour shortages.
For example, the research house observed that Jaya Tiasa’s Daro Jaya estate is understaffed by close to 30 per cent. The company has been increasing mechanisation to mitigate the labour shortfall.
“That said, after touring the estate, there is still considerable cap to estate productivity resulting from the labour shortage. Pelita Holdings too acknowledges the shortage and feels it remains a major hurdle going forward, especially given the state’s aggressive palm oil expansion plan.
“However, they highlighted that some measures are already being implemented, including getting federal government’s approval to hire workers from Bangladesh.”