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NEWS StarBiz, TUESDAY 15 MAY 20122

Help for palm oil industryGovt to announce measures to ensure its viability in the global market

By HANIM ADNANem@thestar.com.my

KUALA LUMPUR: The Governmentwill introduce new measures andncentives to ensure the long-termompetitiveness of thelocal palmoilndustry in the world market, said

P la nt at io n I nd us tr ie s a ndCommodities deputyminister DatukHamzah Zainudin.

He said an announcement wouldbe made soon but declined to givehe details.

The policy makers will be meet-ngthis week to decideon theproac-ive measures and strategies afteretting the feedback and proposalsrom the players in the upstream,

midstream and downstream sector,Hamzahtold reporters after openinghe two-day Palm industry Labour:

ssues, Performance and Sustainabilityeminar 2012 organised by the

Malaysian Palm Oil Board (MPOB)esterday.

He p oi nted ou t tha t theGovernment needed time to identify

nd analyse the respective proposalsnefforts tocomeup with a win-winolution for the all players.

For the past eight months, inde-pendent palm oil refiners had urgedhe Government tocomeup with anmmediate solution to help themounter the impact of the low palmil tax structure by Indonesia which

had affected their profit marginsnd made their business uncom-

petitive.The move widened the tax gap

between processed products andcrude palm oil (CPO), givingIndonesian refiners a feedstock-costadvantage over Malaysia.

Among the proposals made byPalm Oil Refiners Association ofMalaysia was the abolition of theduty free CPO export quota and

review of the CPO export tax policy.Earlier, Hamzah said the local oil

palm plantation was facing a severelabour shortage of 35,473 workers.

There is a need to undergo aparadigm shiftfrom onethatis heav-ily reliant on labour to mechanisa-tion as their industry progresses,headded.

In Malaysia, the plantation sector

is heavilyreliant on foreign workers.Of the total 491,339 workers in thesector, 76% are foreigners mainlyfromIndonesia,who were employedas fresh fruit bunches (FFB) collec-tors and harvesters, fertiliser appli-cators and weeders.

Hamzah said mechanisation suchas harvesting machine Cantas hasproven to raise worker productivityin harvesting FFB and reducinglabour.

Others include farm machineryGrabber, harvesting tools and fieldmachinery for FFB including for usein peat areas.

IOI Corp Bhd executive chairmanTan Sri Lee Shin Cheng said: For thetime being, the Government mustallow more foreign workers intoMalaysia to work as FFB harvestersand fruit collectors in our planta-

tions.Prior to the introduction of more

efficient mechanisation tools andmore locals become interested towork as a plantation worker, Leepointed out that the foreign work-force was inevitable.

MPOBchairman Datuk Seri UtamaShahrir Abdul Samad said issuesrelated to the plantation workershad become critical. even in middlemanagement levels such as supervi-sors, the gap are now filled by for-eign workers.

He also said MPOB was currentlytraining local youths to attract themto work in oil palm plantations.

Axiata faces headwinds fromweaker regional currenciesBy LEONG HUNG YEE

ungyee@thestar.com.my

PETALING JAYA: In line with con-erns over Axiata Group Bhds expo-ure to regulatory risks in certain

markets in south Asia, a Bangladeshidaily has reported that Axiatas unitRobi Axiata Ltd was liable to pay 1.5billion taka (about RM55mil) toBangladesh TelecommunicationRegulatory Authority (BTRC) forunpaid taxes.

BangladeshsThe Financial Expresseported Robi Axiata would have to

pay the government the amount in

unpaid taxes after it lost a legal bat-le against the telecommunicationsegulator.

The High Court ruled that Robihad no authority to deduct any

mount from any account includingaxes as the value-added tax, lateees and other taxes from thepectrum Assignment Fee or theicence Renewal Fee, as these exclu-ively belonged to the BTRC.

Thecourt also ruled that theoper-tor would have to pay a late fee of5% on the total payable amount as

penalty,Robi executive vice-president

Mahmudur Rahman was quoted byhe daily as saying it would takeurther action after getting a copy of

he judgement that would take

almost two weeks.Axiata is unable to comment at

present as we are waiting to receivefull details and certified copy of the

judgment from the court.Until this is received, it is not

possible to confirm details of thefinal amount which would be pay-able. Robi will however, considerits position regarding any furtherlegal avenues to resolve its con-cerns, Axiata Group said whencontacted.

While the judgement on Robiwould not impact Axiata Group,analysts said the telco would con-tinue to face the inherent risks offoreign exchange rate fluctuationsand regulatory changes.

Analysts said although there wereno major change on the regulatoryin recentyears, therewas still linger-ing issues on spectrum re-farmingand allocation.

CIMB Research downgraded

Axiata to neutral from outperform

given the sharp fall of the rupee,rupiah and Sri Lankan rupee inrecent months.

Additionally, regulatory risks inIndia and Bangladesh are rising withpotentially exorbitant spectrumprices.

Axiatas share price is facingheadwinds in the form of weakerregional currencies and rising regu-latory risks in Bangladesh and India.Thisis ontop ofthe slowing revenueand profit growth of its operatingunits, namely Celcom Axiata Bhdand PTXL Axiata Tbk, asthe industrymature, it said.

CIMB Research said in the firstquarter, the currencies of Axiataslargest overseascontributors depre-ciated sharply quarter on quarteragainst the ringgit.

Weaker currencies crimpedAxiatas ended Dec 31, 2011( FY11)revenue growth by 2.5% to 5%.

Based on the currencies year-to-date performance, we estimatethe dilution to FY12 revenue to beat double this q uantum, itadded.

CIMB Research said an average10% devaluation of the regional cur-rencies would trim about 3% fromits core earnings per share and 4%from our sum-of-parts-based targetprice.

Its units in Bangladesh, India,

Indonesia and Bangladesh contrib-ute an estimated 34% of AxiatasFY12 core net profit and 37% of oursum-of-parts valuation.

Additionally, the research housewas also concerned over the risingregulatory risks the companyfaced.

The Indian regulator has recom-mendeda very high reserve price fortherevoked 1800MHzspectrum andis restricting the supply of spec-trum.

In addition, the auction for 3Gspectrum in Bangladesh is looming,soon after Robi paid a hefty sum to

renew its 2G spectrum.The indicative price is US$300milfor10MHz of spectrum, a little high-erthan theUS$276mil that Robipaidto renew its 2G spectrum, it said.

In FY11, Axiata reported a netprofit of RM2.34bil on the back ofRM16.4bil turnover.

This year the headline key per-formance indicators (KPI) for reve-nue is for a 5.3% increase in its reve-nue growth.

Axiata failed to meet all its head-line KPI in FY11 mainly due to sig-nificant foreign exchange transla-tion differences, challenging com-petitive environment in all markets,as well as lower-than-expectedmarket growth in Malaysia and

Indonesia.

Useful gadget:Hamzah holding a Cantas motorised cutter which has raisedworker productivity in harvesting FFB.

I

Until this is received,it is not possible toconfirmdetails of thefinal amountwhichwould be payable. AXIATA GROUP

Executive EditorERROL OH

Deputy Executive EditorSOOEWE JIN

Associate EditorsYAPLENGKUEN

HAFIDZ MAHPAR

Editor (News)RISEN JAYASEELAN

Editor (Multimedia)JOSEPH CHIN

Email: Starbiz@thestar.com.myTel: (03) 7967 1388Fax: (03) 7957 0694StarBiz, Menara Star15 Jalan 16/1146350 Petaling Jaya

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pendent refiners are dependent onlocal and imported CPO feedstockespecially from Indonesia.

Last year, Malaysia imported 1.30million tonnes of CPO, mainly fromIndonesia, to support its refiningutilisation rate.

By opting for CIPROM, the sourcesaid the Government will not needto abolish the duty-free CPO quotaand reduce the CPO export dutystructure.

It would increase the cess collec-tion among big planters as proposedby some quarters.

A London-based consultancy firmhired by MPOB has suggested sev-eral options, including for Malaysiato continue maintaining its currentpolicy while increasing its CPOexport quotas slowly, and to matchin full the incentives by theIndonesian export tax structure byadapting Malaysias current CPOexport tax rules to offset the advan-tages enjoyed by Indonesian export-

ers.

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cies.The election was held18 monthsbefore a national vote in whichMerkel would be fighting for a thirdterm.

Commodities were also sold-down on concerns of slowingdemand from China. The Chinesecentral bank said it would lower thereserve requirement ratio for banksby 50 basis points as of May 18.

US light crude oil fell US$2.19 toUS$93.94 and Brent US$1.78 lowerat US$110.48. Gold spot fell 1.18% orUS$18.68 to US$1,560.68. Crudepalm oil for third-month deliveryfell RM95 to RM3,180, the lowestsince Feb 13.

Among the key regional markets,Japans Nikkei 225 was the onlymarketin thepositivezone,up 0.23%to 8,973.84, Hong Kongs Hang Seng

Index fell 1.15% to 19,735.04,Shanghais Composite Index lost0.6%to 2,380.73, South Koreas Kospidown 0.18% to 1,913.73, TaiwansTaiex 0.33% lower to 7,377.18 andSingapores Straits Times Indexretreated 0.67% to 2,864.12.

The ringgit weakened to a low ofRM3.0853, a level reached onJan 24,before ending at 3.0826 at 5pm.

BAT was the top decliner, downRM1.60 to RM51.80 while SAMEngineering lost 47 sen to RM3.18and MBM Resources 33 sen to RM5.

Plantations were the major losersdue to the fall in crude palm oilprices. Tradewinds Plantations lost36 sen to RM5.53, SOP and KLK 26sen each to RM6.20 RM23.20 and

Kluang 20 sen to RM2.60.

> FROM PAGE 1

SlowingdemandfromChina

RefinersdependentonCPO feedstock