Prepare for Trouble, Make it Double: Anger in Malaysia after Double Standards by Government

In the past two weeks, Malaysians have taken to the social media to vent their frustrations over the handling of the surge of COVID-19. Prime Minister Muhyiddin Yassin who had built his legitimacy on his swift tackling of the COVID-19 earlier this year saw his popular streak came to a grinding halt. Public sentiment turned against him in what they perceived as double-standard when his cabinet members were not subjected to quarantine upon returning from campaigning from Sabah.

Khor Reports’ PolTracker team took this opportunity to analyse how selected hashtags are trending on Twitter. Head over here to read our results of this analysis.

SCMP: The Wrangling in Raub Struck a Stark Contrast to the Thai Durian Export Juggernaut

A legal battle is underway between Raub durian farmers and a state-backed conglomerate. The dispute involved allegations that the farmers were encroaching and converting state government land into illegal durian plantations, as well as accusations that the Royal Pahang Durian Resources (RPDR) was exploiting the small-scale farmers by demanding unreasonable yield targets in a deal to legalise them.

The conundrum now involves an enquiry by the Malaysian Anti-Corruption Commission (MACC), who are questioning the farmers over the aforementioned land encroachment.

A recent SCMP article by Tashny Sukumaran covered the story in more detail, in which our principal Khor Yu Leng was quoted.

The wrangling in Raub struck a stark contrast to the Thai durian export juggernaut, said economist Khor Yu Leng, noting that Thailand had recorded almost US$1 billion in sales to China from March to June.

“Trade is just getting its footing and it would be unwise for people to try and muscle in,” she said.

While Malaysia has pinned great hopes on its new channel of frozen durian exports, the word from some eyeing volume to China is for volume to be flattish against 2019. Last year, China approved Malaysian imports, although this appeared to be delayed; durian insiders said there were some wrangling on the Malaysia-side over who would be allowed to export under the then-Pakatan Harapan administration.

This came as surprise as Malaysia is coming up from almost zero-base; tackling the China market seemed to offer enough room for all enterprising exporters. More recently, wrangles have appeared in the Raub area, which also supplies the famed Musang king (mao shan wang/MSW) durian. The previously described legal saga has unlicensed farmers fearing lopsided terms with a joint venture durian concessionaire-cum-marketing wannabe. In the meantime, the Thai durian export juggernaut has powered ahead with almost USD1 billion in sales to China in March-June, a record sales volume with unit prices doubling in the last two years.

ForFreeChoice: Higher Saturates in Palm Oil-Free Foods

Last year, a consumer rights think-tank called ForFreeChoice Institute released an interesting finding: palm oil-free foods have higher saturates and are less sustainable compared to their palm oil counterparts. The Italy-based organisation compared the total and saturated fat contents per 100g of both the palm oil and palm oil-free version of the 96 products. Interestingly, the result was that most of the palm oil-free products recorded a higher average of saturated fat levels in comparison to their palm alternatives.

Average levels of saturated fats by category (Source: ForFreeChoice)

Average levels of saturated fats by category (Source: ForFreeChoice)

The organisation claims that this finding further substantiates its longstanding opinion that “food brands are profiting from ‘free-from’ fake news”, thus misleading consumers, with Giacomo Bandini, a senior research fellow at ForFreeChoice Institute, explaining that:

There is not much difference in the amount of saturated fats [between palm oil and palm oil free products]… [Cheese flavoured potato crisps are] the most evident exception, but that is the only one.”


BFM: Thorny Dispute Over Unlicenced Durian Farming

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Segi Enam Advisors principal Khor Yu Leng was invited on BFM to talk about unlicenced durian farming in Malaysia. This follows the slew of allegations from unlicenced Musang King farmers against the Royal Pahang Durian Resources PKPP Sdn Bhd, who claimed that they had been pressured into entering unfair contracts with the state-linked company. Click on the following link to listen to the podcast: Thorny Dispute Over Unlicenced Durian Farming.

Unlicenced Musang King farmers in Pahang are crying foul over a legalisation scheme by private state-linked company Royal Pahang Durian Produce-PKPP Sdn Bhd, which stipulates a yearly rent and a flat rate for durians. We speak with Khor Yu Leng for her insights.

Image Source: EPA-EFE; produced by: Loo Juosie; presented by: Lee Chwi Lynn

SIIA Haze Outlook 2020: Policy Directions for 2019-2020

The risk assessment on the possibility and severity of a haze this year made in the SIIA Haze Report 2020 (authored by the Singaporean Institute of International Affairs (SIIA) and Segi Enam Advisors) involved analysing the recent policy directions undertaken by the Indonesian government.

Naturally, much of the analysis was focused on the Peatland Restoration Agency (Badan Restorasi Gambut or BRG), the agency first set up by President Joko Widodo in 2016 with the mandate to re-wet 2.67 million hectares of peatland across seven provinces by 2020. By end-2018, BRG reported that it has restored 780,000 hectares of peatland, although observers have pointed out that the lack of transparency and independent monitoring made it difficult to verify that claim (Jong, 2020; Gewin 2020).

BRG’s ambitious goal to re-wet 2.67 million hectares of peatland required the corporation of several agencies and a funding of at least 39 trillion rupiah (USD2.73 billion) (Jong, 2018) (Photo credit: BRG)

BRG’s ambitious goal to re-wet 2.67 million hectares of peatland required the corporation of several agencies and a funding of at least 39 trillion rupiah (USD2.73 billion) (Jong, 2018) (Photo credit: BRG)

Recent policy efforts are also aimed to halve the number of hotspots from the 2015 count by 2019, beginning with ensuring that 2.4 million hectares of peatland remain unburned and identifying up to 731 villages as fire-prone communities (Coordinating Ministry for Economic Affairs of Indonesia/KKBP et al., 2017). The government has taken various measures in attempt to achieve this objective, including upgrading early fire responses, increasing the enforcement of existing laws regarding forest concessions, and developing adequate infrastructure (such as water management systems) in fire-prone areas.

Read the full report for more information: SIIA Haze Report 2020

Chain Reaction Research: How does the Palm Oil Spot Market Contribute to Deforestation?

On 22 July, Chain Reaction Research (CRR) held a webinar to present their findings on a rather interesting subject matter: spot markets.

The spot market refers to one-off transactions that occur outside of long-term contracts, and are typically used by suppliers to get rid of surplus stock and buyers to plug shortfalls in capacity. This is antithesis of the usual business models of long-term contracts, and while transactions made via the spot market are estimated to be much fewer compared to the those long-term contracts, the spot market does pose some degree of risk to No Deforestation, No Peat, No Exploitation (NDPE) compliance.

Here are a few key points and findings by CRR:

  1. Unsurprisingly, there is little transparency by companies when it comes to disclosing information regarding spot market transactions. A good case study would be Sime Darby—between 2017 and 2020, seven non-compliant suppliers entered the company’s supply chain via spot purchases, one of which was PT Saraswati Utama, a company that was heavily linked to illegal deforestation. Sime Darby acknowledged the purchase, but maintained that since it was made on the spot market, it does not have any real link to PT Saraswati Utama.

  2. Purchases made by companies on the spot market appears to be opportunistic in nature rather than a preferred business strategy. Genting and Sawit Sumbermas Sarana are two examples of companies that use the spot market but are currently adopting different business models. For suppliers, however, the spot market can be a viable business model, even if the purchases made are materially insignificant for the buyers. An example would be Palma Serasih, a company suspended from the NDPE market after being found to have cleared 6,500 ha of forestland in East Kalimantan between Jan 2016 and May 2020. In the first quarter of 2020, Palma Serasih’s biggest buyers were LDC and Sime Darby, with Sime Darby confirming that it made two spot purchases of insignificant material from Palma Serasih earlier in 2020.

  3. CRR identifies spot markets as a threat to NDPE compliance due to: 1) the lack of transparency; 2) information on the supply base not being provided until after the purchase is made; 3) the nature of a one-off transaction negates the incentives for a supplier to comply with the NDPE; and 4) the limited incentives to commit to NDPE since companies can still generate enough revenue from spot market transactions alone, i.e. Palma Serasih.

BFM: 'Sawit Anugerah Tuhan': Do Palm Oil Campaigns Work

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Last week, BFM invited our principal, Khor Yu Leng, to give her opinions on palm oil campaigns and their effectiveness in increasing demand for the ever-popular vegetable oil. Click on the following link to listen to the podcast: 'Sawit Anugerah Tuhan': Do Palm Oil Campaigns Work?

Campaigns with an underlying message of reform seem to have better traction, i.e. engagement factor is higher, compared to those without, which tend to be more emotive but less clear on what it represents.

Campaigns with an underlying message of reform seem to have better traction, i.e. engagement factor is higher, compared to those without, which tend to be more emotive but less clear on what it represents.

The government has unveiled the new "Sawit Anugerah Tuhan" campaign to replace “Love My Palm Oil”. But are these campaigns actually effective in promoting demand for the oil? We speak to Independent Political Economist, Khor Yu Leng for her thoughts.

Produced by: Kelvin Yee

Presented by: Kelvin Yee, Hezril Asyraaf

Thanks to a listener (a palm oil industry executive) who wrote in with his feedback: “Liked your comments, always well articulated, interesting that "sustainable palm oil" enjoys higher engagement rates than "love my palm oil" campaign. My teenage kids wouldn’t buy into the love message. They are too aware of human impact on the planet. Sustainable palm oil is the better message. I agree with you on the (importance of the) promise or the journey.”

T&E: Palm-based Biofuels In the EU and #NotInMyTank

In recent news, Transport & Environment (T&E) reported that palm oil is being used more as biodiesel than as food products within the EU. The European-based campaign group explained that the EU is experiencing a rise in vegetable oil use for energy production in the past 10 years, with 2019 being the “all-time high of 4.5 million tonnes in 2019 and that “[i]n contrast, the use of palm oil to make food dropped to an all-time low of 2.8 Mt”. It also provides an interesting map graphic (immediately below) showing palm biodiesel producers across Europe.

Following this, T&E and several other organisations have begun a #NotInMyTank movement on Twitter in attempt to urge European governments to stop its support for food-based biofuels, which includes those from palm and soy origins.

Oil Palm Demand in Pakistan

A Globoil India interview with Mr Rasheed Janmohammed, a specialist in the edible oil businesses in Pakistan, revelaed that the demand of edible oils in Pakistan has not decreased throughout the Covid-19 pandemic, despite the widespread closure of the food service and hotel industries (HoReCa) within the country. According to Mr Rasheed:

Our citizens have great quality of doing charity. Due to COVID-19, most of the Industries other than essential commodities were closed. The main sufferers were the laborers and lower middle class people. The citizens of Pakistan took the challenge and supply of ration was in abundance. This also increased the demand of Edible Oils as practically everyone was keen to carry out this noble gesture.

A review by the Malaysian Palm Oil Council (MPOC) painted a slightly different picture, of a near 10% or 133,844 metric tonne decline in Pakistan by the end of May 2020 compared to May 2019. MPOC stated that the decline is most likely due to supply chain disruptions caused by the six-week lockdown enforced in Pakistan, a precaution that adversely impacted the oils and fats trade.

SIIA Haze Outlook 2020: Recent Literature Findings

Continuing from our work on the Haze Outlook 2020 published on 23 June 2020, Segi Enam reviewed in brief the recent literature pertaining to Indonesian and Malaysian peatland and fires. In the past couple of years, there were nearly 150 research papers and articles published, with almost half focusing on fire occurrences. A smaller, but significant portion of these articles area also on peatland management and mapping, as well as people-related topics including agricultural livelihood and health impacts.

One of the more notable studies centred on early fire warning systems, including using ground sensor technology to collect environmental data (Kadir, Irie, and Rosa, 2019) and improvement to Indonesia’s current Fire Danger Rating System using satellite data to identify fires caused by human activity (Sanjaya et al. 2019). Some academics have also evaluated the effectiveness of fire control regimes within the local communities, a few of which were by Watts et al. (2019) and Yamamoto, Takeuchi, and Köhlin (2020), whereby it was found that economic incentive is required to ensure the efficacy of community-based fire prevention policies.

A significant number of academics have also recently been diving into the issue of peatland mapping and analysis via satellite imagery, including major researchers in peatland research. Vernimmen et al. (2020, along with notable authors Hooijer and Page), for example, have been addressing the mapping of deep peat carbon stock from aerial and field measurements, and found that occurrences deep peat in eastern Sumatra were previously underestimated in earlier mapping exercises. Other relevant research papers further explored the subject matter, with one suggesting the use of an open digital mapping methodology in order to combine open data, field observations, and factors already known to affect peat thickness (Rudiyanto et al. 2018).

Findings by Vernimmen et al. (2020) showcasing the peat thickness measurement in selected areas of Bengkalis and Kubu Raya.

Findings by Vernimmen et al. (2020) showcasing the peat thickness measurement in selected areas of Bengkalis and Kubu Raya.

In summary, most of the recent literature on peat offer suggestions on improvements to existing research efforts and current peat management framework. Overall, regardless of the topic of the paper, the common conclusion is that much more still needs to be done when it comes to managing peat.