Interview: Emir Mavani
As many nations move to comply with greenhouse gas emissions targets, what is being done to promote Malaysian biodiesel?
EMIR MAVANI: Two pressures will drive this. First, since 2011 the Malaysian government has required the staged introduction of B5 – petroleum diesel blended with 5% palm-oil biodiesel – with full implementation throughout Malaysia set to be completed by the end of 2014. Second, the government is keen to do the same for B7 (blended with 7%) by January 2015, though it will first need feedback from interested parties such as the Japan Automobile Manufacturers Association, the Malaysian Automotive Association, vehicle manufacturers, the SIRIM technical committee, petroleum companies, and the Malaysian Biodiesel Association.
A few local firms, such as FGV, have already entered the market for biodiesel and are currently supporting the B5 mandate. We acquired our first plant in Kuantan and are looking to acquire another, having already made the first export shipment last year to the European market, thereby becoming the top Malaysian exporter of palm-oil biodiesel.
What opportunities exist for plantation operators in ASEAN, and what changes does further regional integration pose for the sector?
MAVANI: Major opportunities exist within ASEAN, as there are still huge plantation areas available; however, further regional integration could also raise sustainability concerns, which plantation operators would have to monitor. Palm oil in ASEAN is mainly managed by Indonesia and Malaysia, and assuming free movement within the single market and tariffs are removed, I could see a greater harmonisation of the industry. This means there will be Indonesian traders in the Malaysian plantations sector and vice versa.
There will also be consolidation, both in the upstream and downstream segments. The greatest consolidation will take place downstream, as land laws vary from place to place and affect the purchase of plantations. Investing downstream can also be a good asset play, because you can make one huge manufacturing plant and get your raw product from anywhere in ASEAN.
In what way will the Malaysian Sustainable Palm Oil (MSPO) certification present an alternative to that of the Roundtable on Sustainable Palm Oil (RSPO)?
MAVANI: When Malaysia began devising its MSPO certification, it was to complement the internationally accepted standard, the RSPO, and also to ensure that the local environment requirements and domestic standards were being met. This is similar to what Indonesia did with its “ISPO” standard. Most local players choose to comply with both, as some buyers expect adherence to the international standard.
The initiative’s aim is to differentiate Malaysian palm oil from that produced in other countries, while offering a similar but cheaper alternative to the RSPO. There are no big differences between the two except in how peat lands are managed: the RSPO is quite concerned with this, while the MSPO gives some leeway when planting and replanting on peat, provided that stipulated guidelines or industry best practices are followed.
How have uncertainties in the price of palm oil affected prospects for global producers?
MAVANI: Prices trended upwards in February 2014 because of the recent drought, but are stabilising. They fell in March from a high of RM3000 ($936.30) a tonne to RM2750 ($858.28) and, barring extreme weather, should stay between RM2500 ($780.25) and RM2700 ($842.67). Demand for palm oil, and its acceptability as a vegetable oil, is growing each year. Even now, demand exceeds supply. I see much potential for global trade since the oil palm plant is very productive and resilient, meaning it can resist a lot of external challenges. Pressure on cash crops like soy, canola or corn is higher than on long-term crops like oil palm. The latter, once planted, is in place for 25 years, making it potentially twice as productive as soy and canola.
You have reached the limit of premium articles you can view for free.
Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.
If you have already purchased this Report or have a website subscription, please login to continue.