Ta Ann transforming S’wak Plantations towards better growth and profits
PETALING JAYA: The ongoing transformation of Sarawak Plantation Bhd(SPB) undertaken by timber and plantation group Ta Ann Holdings Bhd is steadily heading towards better growth and sustainable profits.
Ta Ann emerged as the largest shareholder in SPB when it acquired a 30.39% stake in the plantation group in March last year.
When contacted, Ta Ann group managing director and CEO Datuk Wong Kuo Hea told StarBiz that “as both Ta Ann and SPB are involved in the oil palm industry, managing one or multiple plantation companies is not an issue.
“SPB has its primitive superior conditions in terms of good land bank which, in turn, offers a strategic logistic advantage that is hard to find elsewhere in Sarawak.
“However, the record shows that SPB’s production performance in the past was way below the industry average due to multiple factors,” said Wong, who is also SPB’s executive director.
SPB is one of the pioneer players in the palm oil industry in Sarawak. Currently, the group has a total land bank of 46,248ha, of which 1,855ha is under the Native Customary Rights (NCR) scheme. In addition, 370ha are under joint-venture developments with a government statutory body. The group owns 20 oil palm estates with a total planted area of 35,893ha as at Dec 31, 2018. It also owns and operates two palm oil mills, with a total operating capacity of 120 tonnes per hour in Niah and Mukah.
After being appointed as SPB executive director last year, Wong said he “make sure that good agriculture practices and sustainable oil palm practices are applied throughout to bring SPB’s performance to realign with or even beyond the other palm oil industry players”.“Given Ta Ann’s over 20 years of experience in managing oil palm plantations, especially in the peat areas, we transferred our technical ‘know-how’ to focus on field improvement, managing its efficiency and cultural transformation to change the bureaucratic management system to ensure an efficient and productive management system,” he explained.
Ta Ann to date has a land bank of over 87,000ha, of which almost 70% is believed to be NCR land.
In comparison, Wong noted that Ta Ann’s plantation is more than double the size of SPB in terms of hectarage
“Ta Ann’s yield per hectare is above industrial average, as it is harvesting 100% of its planted areas, while SPB is facing issues like accessibility problems and lack of maintenance of its field conditions.
“However, these issues have been rectified after one year of hard work under SPB’s new management team.
“The fresh fruit bunch (FFB) production for the first quarter of 2019 showed 20% growth compared with the corresponding quarter in 2018. This is the direct result of the improved field conditions and infrastructure, fertiliser applied as well as increased number of harvesters,” added Wong.
He stressed that “I have leveraged on the strength of both companies and taken the best action to achieve the best performance.
“During this challenging time, it is the right opportunity to also re-look our own operational efficiency and adopt cost-saving measures. We are also restructuring the reporting line to improve efficiency,” he said.
On the performance of SPB this year, Wong noted that “my philosophy for oil palm plantation management is a hands-on approach through ‘walking and checking the field’, which has proven to be the most efficient way of managing plantations”.
“Ta Ann also shares the same vision and mission to transform SPB into a performing investment holding company that can reach greater heights through changing the company culture via “knowing how” and implementing new strategies.”
Wong is beginning to see improved results and expects to see the full results after two to three years of continuous hard work.
“I have full confidence in transforming SPB into one of the plantation industry leaders.
“After one year, the transformation of SPB is almost done, with strong support from executive chairman Datuk Amar Abdul Hamed Sepawi, other board members on the restructuring plan as well as full cooperation from the new management team.
“Though it is a heavy task, I believe we can make it,” he added.
Meanwhile, Wong noted that Ta Ann’s performance this year is dependent on “the market price, which is the key factor impacting the performance of the timber and palm oil businesses”.
“However, this is not within our control and subject to external market factors,” he added.
Ta Ann continues to fine-tune its production processes to improve productivity by increasing its yield to control cost in the company’s effort to stay competitive.
Wong says 2019 is going to be a challenging year due to market uncertainties and “we shall remain guarded against the global geopolitical scenarios such as the US-China trade war, slowing external demand and rising borrowing costs, which are expected to continue weighing on the global economy as well as in Malaysia.”