WRITTEN BY KATIE RICHARDSON

As a fervent leader in an industry coping with world-wide criticism and concern, Kulim (Malaysia) Berhad is determined to maintain sustainable initiatives and environmental preservation in its palm oil productions, as well as ‘commit to the highest standards in ethics, integrity and professionalism’

KEEPING PRODUCTION Prosperous

“The road to sustainability is not always easy, and setbacks

can occur,” remarks Kulim (Malaysia) Berhad’s chairman,

Kamaruzzaman Abu Kassim. “But, like our crops, we

continue to grow and increase yields for people and the planet. We

are poised for big changes ahead and we look forward to the new

challenges.”

Kulim (Malaysia) Berhad started its operations of a 190-hectare

rubber plantation in Johor, Malaysia in 1947 under the name Kulim

Rubber Plantations Ltd. A little over 20 years later, in 1970, the

company starting listing shares on the London Stock Exchange (LSE)

under the new name Kulim Group Ltd (KGL). A property portfolio was

next in line for the oil palm company just three years later, and KGL

expanded in the UK and with hotels in the Caribbean.

The group was incorporated and made public in 1975, and KGL

started developing into a subsidiary of Kulim (M) Bhd. Over the last

30 years, the group has continually expanded in the sector, diversified

its operations and consolidated its assets. Consequently, Kulim (M)

Bhd averages a five-year yield per hectare of 23.50 tonnes and is now

one of the palm oil industry’s most powerful players.

Supportable developmentThe company has stringent corporate policies concerning

sustainable development, and its main objective concerns maintaining

high yield levels while retaining best practice product extraction.

It is committed to a philosophy of total quality management, and

its ISO accreditation obtained by its own and contracted operating

units, reflects its concerns to adhere to extremely high product and

plantation standards. A culture of awareness is prevalent across all

organisations processes, and is designed to achieve both stakeholder

and customer satisfaction. As a result, Kulim (M) Bhd has received

several awards from international industry bodies, highlighting

its corporate commitment towards both sustainable business and

quality produce.

From planting and harvesting, to sterilisation and pressing,

Kulim (M) Bhd is dedicated to making the whole palm oil production

process sustainable. The company has made several changes and

implemented various measures in the last four years in order to

uphold the fundamentals of its sustainability strategy.

“We have divested our oleochemicals [chemicals derived from

plant and animal fats] business and are in the process of divesting our

foods and restaurants business,” says Kamaruzzaman. “We have also

acquired additional oil palm estates, allowing us to strengthen and

develop our sustainable agri-business model. Our commitments to

sustainable agriculture are now central to our business strategy.”

With the conviction of such strong corporate responsibility pledges

behind it, the group was one of the very first palm oil producers to be

certified to the Roundtable on Sustainable Palm Oil standard in 2009.

The company is also dedicated to its 30:30 initiate which aims to raise

fruit yields to 30 tonnes per hectare and palm product extraction

rates to 30%. Kulim (M) Bhd’s Sustainability Report 2010/2011 notes

“We know from surveys and focus groups that our employees are generally happy to work for us. We have focused on strengthening our decision making and management to allow for a better working climate.” Kamaruzzaman Abu Kassim, Chairman of Kulim (Malaysia) Berhad

KULIM

Palm oil production has come under fierce scrutiny in recent years, particularly regarding product extraction. The industry has been linked to serious environmental fears, especially habitat degradation; animal cruelty; indigenous rights abuses; and deforestation in the plantation areas.

Bhd also strives to be an employer of choice at a local level. In 2009,

the company pledged to do more for members of staff at the lower

end of the pay scale. “Since then, most of these employees have been

given the opportunity to earn additional income and housing and

facilities provided to our employees have also been upgraded,” says

Kamaruzzaman. “We are also focusing on end-of-career training,

contributing to fulfilling, active and decent retirement for our

employees.”

Alongside improvements to complex health and safety issues and

working conditions, another noteworthy endeavour for the company

is gender equality amongst its workforce. “Our Women OnWards’

initiative goes from strength to strength, increasing opportunities

for women at all levels,” says Kamaruzzaman. “We are also supportive

of the recommendations adopted by the Government and Bursa

Malaysia that 30% of decision-makers in PLCs should be female.

“Perhaps such targets will one day be obsolete, but our experiences

show that support and encouragement of women is crucial.”

Although hefty recruitment of oil plant workers is commonplace

in fast growing industries in Indonesia and Africa, Kamaruzzaman is

confident of retaining a valued workforce: “We know from surveys

and focus groups that our employees are generally happy to work for

us,” he says. “We have focused on strengthening our decision making

and management to allow for a better working climate.”

Recent developmentsIn August 2013, it was reported that Kulim (M) Bhd would raise

its stake in associate company New Britain Palm Oil Ltd (NBPOL) to a

controlling level after an impressive result in terms of yields and palm

product extraction. “When there are good business opportunities

and the timing is right, you should not miss them or let them go,”

Kamaruzzaman said at the time. “The offer to increase our investment

in NBPOL represents a vote of confidence. It also represents a vote

of confidence in the growth prospects of Papua New Guinea, the

Solomon Islands and the other markets that NBPOL serves.”

However, the Papua New Guinea government has since rejected

the bid as it wants to give more business opportunities back to its own

people. Minister for Trade, Commerce and Industry Richard Maru

announced in September 2013: “The government will in the future

ask Kulim to sell down some of its shares to the respective provincial

governments where the assets of NBPOL are located and the

Government will not allow anymore attempt by Kulim to buy anymore

shares from New Britain Palm Oil.”

However, lucrative prospects do remain on the horizon: as of

March 2014, Kulim (M) Bhd turned a particularly successful corner

after chalking a net profit of RM3.39m (£626,250) at the end of

the fourth quarter in December 2013, from a net loss of RM39.4m

(£7.28m) a year ago. The company also reported a 104% hike in net

profit for the full financial year in 2013, from RM211m (£38.97m) in

2012 to RM431m (£79.6m).

KULIM

that: “A voluntary standard, the RSPO’s international credibility and

commitment to stakeholder inclusion makes the certification credible

and robust, though there are always opportunities for improvements.

We believe that it represents the most responsible way to grow oil

palm. All our planted areas meet the stringent RSPO Principles and

Criteria for sustainable palm oil production.”

Workforce sustainment As well as demonstrating concentrated global efforts, Kulim (M)

“ Our commitments to sustainable agriculture are now central to our business strategy.”

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Kamaruzzaman says the oil

palm division will remain Kulim

(M) Bhd’s main business activity,

but it is actively looking at ways

to develop, strengthen and grow

operations. “We are continuously

exploring new land opportunities

from time to time for our oil palm

business both locally and abroad,”

he stresses. Although Kulim (M)

Bhd dissociated itself from an

Indonesian investment in 2007,

Kamaruzzaman does not dismiss

the possibility of returning, as

Malaysian landowner prices

were “too exorbitant” for oil palm

cultivation.

The company will continue

its strategy to capitalise on

new business opportunities,

particularly in the oil and gas

industry as well as selective

property development. “We

see Petroliam Nasional Bhd’s

Refinery and Petrochemical

Integrated Development or

Rapid project in Pengerang,

Johor, as a good platform to

offer support services to the

oil and gas players there,” says

Kamaruzzaman. Regardless of

acquisition or expansion plans,

it seems the group’s sustainable

development initiatives,

commitment to employees and

high yield levels will continue to

deliver successful results.

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KEEPING PRODUCTION Prosperous

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