By Kamil Ridzuan
IJM Plantations is the 55%-owned plantation arm of IJM Corporation Berhad and one of the most efficient upstream oil palm planters in Malaysia.
A relative newcomer to the plantation sector, IJM Plantations Group started in 1985 with operations predominantly based in Sandakan, Sabah before the company expanded organically to the surrounding areas. It was listed on Bursa Malaysia on July 2, 2003.
Today, its fully-matured estates in Sabah span over 25,000 hectares of planted acreage. IJM Plantations has also expanded its operations to Indonesia, and in just five years, its acreage there has expanded to over 30,000 hectares of oil palm located in East Kalimantan and Southern Sumatra.
The Group’s focus on operational excellence is set on the belief and practices in nurturing sustainability through the implementation of four pillars, namely: productivity and innovation; care for environment; investment in people; and returning to the community.
Today, the company employs close to 10,000 people with present market capitalisation close to RM3 billion.
To find out more about the company and its plans, Business Circle chats with IJM Plantations chief executive officer and managing director Joseph Tek Choon Yee (pic).
Business Circle: What are IJMP’s plans for the immediate future?
Tek: IJM Plantations is committed to complete its Indonesian expansion project in both plantation development and mills establishment for the year and coming years.
We plan on having a 40,000 hectare plantation and have already established one palm oil mill with work on the second mill having started. In 2015, we will also start work on a third mill. If we come across good opportunities, we will consider acquisition of more land bank in both Malaysia and Indonesia.
BC: How much do you plan to spend?
Tek: We will need to expand in the range of RM150 to 200 million per year in the next two to three years to complete our project in Indonesia.
BC: If you are buying land, how many hectares?
Tek: Our target is to establish an oil palm operation in Indonesia to the size of about 40,000 hectares. We will focus on securing sufficient land bank for this purpose and work towards realising performance excellence in our operations with high yields and overall efficiency.
BC: How much do you plan to replant? What is your age profile?
Tek: We plan to replant around 800 to 1,000 hectares per year. The average age of our Malaysian palms is about 14 years, whereas most of the planted areas in Indonesia are with young palms just coming into maturity or of pre-prime age.
BC: How do you benchmark against other plantation players?
Tek: We are among the top in the plantation industry in terms of crop and oil yield. Over the last six financial years (2009-2014), our average oil yield in Malaysia was 5.4 tonnes per hectare per year derived from average fresh fruit bunches yields of 25.5 tonnes per ha per year and oil extraction rate of 21%.
BC: Briefly describe your Group’s socio-environmental footprints?
Tek: Sustainability is a journey which involves inculcating and living out the right values and practices across our organisation.
The overall business objective is to enhance shareholders value and sustain profitability while balancing operational agenda with socio-environmental stewardship.
The Group employs a myriad of best practices across our supply chain while continuing to pursue various initiatives ranging from sports, health, education, cultural heritage, conservation, volunteerism, engaging people-asset and other stakeholders in a wide range of collaborations.
BC: What will be your game changer?
Tek: Our crop production in Sabah is expected to be sustained as we undertake a progressive and pragmatic replanting programme. We will continue to drive towards sustaining our yield productivity achievement. On the ground, we have rolled out site-specific mechanisation for better crop evacuation and continue to fine-tune other processes throughout our supply chain, which we believe will bring our targets to fruition.
On the Indonesian front, with the maturing palms from an area of 10,700 hectares and also bigger areas coming into production this year, crop production will “shift gear” into a higher production phase. We are looking at doubling our crop production in Indonesia this financial year. Hence, we expect to benefit if the palm product prices are favorable.