Oil Palm Plantations in Sabah, Malaysia

Some of the large oil palm planters in Malaysia

Kumpulan Guthrie Berhad
Golden Hope Plantations Bhd.
Kuala Lumpur Kepong Berhad
IOI Corporation Berhad
Sime Darby Berhad
Kuala Sidim Berhad
Kulim (Malaysia) Bhd)
PPB Oil Palms Berhad
Tradewinds (M) Berhad
Highlands & Lowands Berhad
Austral Enterprises Bhd
Asiatic Development Berhad
TDM Plantation Sdn. Bhd
Hap Seng Consolidated Berhad
United Plantations Berhd
Pamol Plantations Sdn. Bhd.
Guthrie Ropel Berhad
IJM Plantations Sdn. Bhd

Oil Palm Plantation Companies

In 2000, a total of 3.4 million hectares of oil palm are planted in Malaysia. 60% were under private ownership including plantation companies.

The private sector is main driver for growth in palm oil industries from 1980 to 2000.

From 1980 to 2000 most of the new developments being in the states of Sabah and Sarawak.

Many present plantations started in early 20th century .

The pioneer planters were Europeans and Chinese.

Companies that could trace their roots to the colonial era include

1) Sime Darby Berhad which was founded by William Middleton Sime and Henry Darby in 1910.

2) Kumpulan Guthrie Berhad started in 1821 when Alexander Guthrie set up Guthrie & Co as a trading company and as agents for 12 British companies with plantations in the then Malaya.

3) Golden Hope Plantations Berhad had its beginnings in Harrisons & Crosfield which started as a tea and coffee trading company in 1844 until their transfer of ownership to the present company in 1982.

4) Kuala Lumpur Kepong Berhad also started as a UK domiciled company in 1906.

From the 1970s, several local plantation companies entered the industry such as :
1) Asiatic Development Berhad,

2) Austral Enterprises Berhad,

3) Hap Seng Consolidated Berhad,

4) IOI Corporation Berhad,

5) PPB Oil Palms Berhad ,

6) Tradewinds (M) Berhad

7) IJM Plantations Sdn Berhad.

Among the recent players, IOI Corporation Berhad has demonstrated the most impressive growth, starting with zero base, with an initial acquisition of a 1,214 hectare estate in 1983.

IOI acted through a series of acquisitions of established plantation companies over a 20 years to became a major plantation-based corporation with a total planted area of 100,954 hectares, in 2002 of with 98% have been planted under oil palms.

The acquisition of 27,880 ha from Dunlop Estates with 13 estates, 2 mills, 2 factories and a research station in 1990 was IOI’s most strategic thrust into plantations

Austral Enterprises Berhad’s (Austral) emergence as a major player was through the diversification strategy of its parent company, I & P Berhad, whose earlier core business was in property development. Austral spearheaded the commercial development in Sarawak and today has 14 estates covering a planted area of 31,588 hectares in the state, or 57% of the company’s total planted area of 55,267 hectares.

Asiatic Development Berhad (Asiatic) is another company that started from zero base, commencing business in April, 1980 with the acquisition of the Rubber Trust Group of 3 Hong Kong domiciled rubber companies with a total area of about 13,700 hectares of developed plantation land in Peninsular Malaysia. Through a series of acquisitions of plantation companies, had accumulated a sizeable land bank within a 20-year period, most of which is located in Sabah. Asiatic has a significant area under oil palm in the Kinabatangan District.

Hap Seng Consolidated Berhad (Hap Seng) and IJM Plantations Sdn Bhd are new players with plantations located entirely in Sabah.

Hap Seng’s plantations are mainly in the Kinabatangan District.

IJM Plantations which was incorporated in 1985 is the Plantations Division of diversified group, IJM Corporation Berhad (IJM). It has a total area of 19,914 hectares planted with oil palms in 14 estates near Sandakan, Sabah.

Commercial planting of oil palm in Malaysia began in 1917.

Large-scale of cultivation only started in 1960s following Malaysian Government’s crop diversification thrust strategy to reduce the country’s dependence on rubber. Rubber at that time was one of the two pillars of the Malaysian economy. The other being Timber.

The growth of the industry, in terms of planted area since then has been very rapid.

In 2001, the total area planted with oil palm was 3,499,012 hectares, :

59.9% or 2,096,856 hectares being in Peninsular Malaysia,
29.4% or 1,027,329 hectares in Sabah and
10.7% or 374,828 hectares in Sarawak.

The last decade had seen rapid expansion in the cultivated area in Sabah and Sarawak; while planting in Peninsular Malaysia had slowed down because of diminishing availability of new land for the crop.

The oil palm, Elaeis guineensis Jacq. is indigenous to West Africa.

Oil palm as a crop started in the South East Asia; the first introduction of the African oil palm was four seedlings from Mauritius and Amsterdam that were planted in the Botanic Gardens in Bogor in 1848.

The first commercial oil palm plantation was established in Sumatra, Indonesia by M. Adrien Hallet, a Belgian agronomist with interests in the Belgian Congo (Zaire).

The development of the industry in Malaysia is attributed to Frenchman, Henri Fauconnier and his association with Hallet.

In 1911, Fauconnier visited Hallet’s oil palm development in Sumatra and had purchased some oil palm seeds and these were planted at his Rantau Panjang Estate in Selangor.

He returned to Sumatra the following year to obtain seeds that he had selected together Hallet from Tanjong Morawa Kiri Estate for further planting.

With seedlings obtained from the 1911 and 1912 importation, Fauconnier established the first commercial oil palm planting at Tennamaram Estate, to replace an unsuccessful planting of coffee bushes (Tate, 1996).

The palm oil industry in Malaysia is classified into three distinct phases :
1) Experimental phase - 1900s to 1916
2) Plantation development phase - 1917 (Tennamaram Estate) to 1960s.
3) Expansion phase - 1960s to present.
4) Expansion to East Malaysia - 1970 expansion of large scale planting in Sabah and Sarawak
5) Off-shore - 1995 extended operations off-shore to Indonesia

In 1960s, a Malaysian Government diversification policy to reduce the dependence of the national economy on natural rubber, which had faced declining prices and competition from synthetic rubber.

In 1995 Malaysian extended operations off-shore to Indonesia where adequate supply of workers and availability of land and cost of production is lower than in Malaysia.

Following the recommendation of the World Bank Mission in 1955, the Malaysian Government decided to promote the planting of oil palm.

Federal Land Development Authority (Felda) was established in 1956 with the socio-economic responsibility of developing plantation land for the rural poor and landless. FELDA became a key driver for this effort till today.