Greater push for biodiesel in Indonesia, Malaysia

Posted on : 02-05-2017 | By : sabah today | In : International Business

JAKARTA, Indonesia: The rapid depletion of fossil fuel heightens the need for governments  to start implementing measures to reduce its dependency on natural oil and gas.

Alternative sources of energy is needed to aid this shift from traditional fossil fuel, but not many are ready to make that full leap into green or renewable technology.

Hence comes the biodiesel – a blend of vegetable oil with traditional fuel that is more environmentally friendly.

In South East Asia, Indonesia is moving ahead of the rest of the pack to implement B20 – an oil mix which contains 20 per cent of biodiesel derived from palm oil – in its market since 2016.

With a population of about 250 million people, the Indonesiam government has put forth in its policy which gives subsidy to end-users of the B20.

According to Indonesia’s director of Bio Energy of the Ministry of Energy and Mineral Resources Sudjoko Harsono Adi, since its implementation of B20 last year, Indonesia has been able to save up to US$1 billion from the import of diesel.

“As a net oil import country, we really have no choice but to implement B20. And by implementing B20, we are also allowing our palm oil farmers to earn better income from their crop,” Sudjoko told Malaysian delegates at his office in Jakarta recently.

The three-day Jakarta trip organised by the Malaysna Palm Oil Board (MPOB), was organised to get a first-hand experience on how Indonesia has been able to introduce the B20 with minimal glitches.

During the trip, the Malaysian delegates were briefed on the implementation of B20 in Indonesia by top officials from the Ministry of Energy and Mineral Resources; a meeting with Industry Development Compartment of the Association of Indonesia Automotive Industries (GAIKINDO) officials and a site visit to Pertamina B20 terminal at Tanjung Priok, Jakarta.

This comes as no surprise as currently, Indonesia is the leading producer of palm oil in the world with over four million oil palm farmers directly benefiting from the government’s initiative.

Surprisingly, the Indonesian public has given their full support to their government to implement the B20.

“We are 100 per cent behind this government initiatives and so far, there is no side effect on our trucks running on B20 except that some companies have installed additional water filter to their trucks.

“Warranties (for B20) are given to all our trucks,” said chairman of the Indonesian Trucking Association Drs Gemilang Tarigan.

He added that currently, there are some six million trucks plying Indonesia roads which are using B20.

Prior to its implementation, the Indonesian government has done a comprehensive studies on B20 on its commercial vehicles for three years.

“Based on its finding, which was based on few models after 40,000km on the roads, there was no side effect on the vehicles tested,” said Abdul Rachim, the secretary of GAIKINDO during their meeting.

Positive results

What was crucial was that the studies showed only positive results that is good for the Indonesian Government, for the environment as well as the oil palm farmers.

“Our studies is also verified by the Japanese automotive experts and we are very happy to show then result of our finding based statistics with all of you,” he reiterated.

These results propelled the Indonesian government to hasten plans to implement B25 by 2020 and perhaps even B30 by 2025.

“We are not duly worried about the truck makers because they must build their vehicles to suit our needs and not vice versa,” Abdul Rachim reiterated.

And with the implementation of the B20, the Indonesian oil company Pertamina has been distributing the B20 product to almost 90 per cent of the Indonesia market.

Then remaining 10 per cent are for special cases such as for the military and those who are living in faraway islands throughout Indonesia.

“And of course, neat diesel is also still available at selected stations for premium private vehicles which are still bonded by warranties,” quipped Abdul Rachim.

Malaysia’s efforts

From the Malaysian perspective, Malaysian Palm Oil Board (MPOB), as a leading Government agency to implement biodiesel in the country, has introduced B7 on the Malaysian market since 2015.

According to MPOB principal research officer Dr Harrison Lau Lik Nang, the government plans to introduce B15 by 2020.

“The Indonesian experience showed that B10 should be acceptable in our Malaysian market as diesel quality and engine types in both countries are the same.

“We are not rushing into B15 yet as we want to implement it in stages, so that all stakeholders will be duly aware of what is going on.

“This is because the more biodiesel we use, and the cleaner will our environment be.

“Surely, we do not want to be left behind by the Indonesians in terms of environment and greater reliance on biodiesel which, in turn will also benefit our oil palm farmers,” said Lau.

However, both the Malaysian Truckers’ Federation (MTF), formerly known as Pan-Malaysia Lorry Owners’ Association and Association of Malaysian Hauliers (AMH) cautioned that the implementation of B15 should not be rushed as the stakeholders would bear the brunt if the B15 has negative impact on modern trucks which are now used in the country.

“We have invested millions in our trucks, surely we want to make sure that there will be nothing wrong with them in the long run,” said MTF president Anthony Tan Boon Siong.

Tan’s view was fully supported by AMH president Nazari Akhbar, who said that container trucks are as expensive, and thus, would emphasize on the need to observe the warranty which these trucks are bonded to.

“Unless the government can give us the guarantee that our trucks will not be dully affected by B10 or B15 in the long run, we will continue to voice our concerns to safeguard the logistic industry in Malaysia.

“We hope that MPOB could organise a roundtable discussion between us and vehicle dealers in Malaysia to resolve issues on engine warranties,” said Nazari.

And what also worry the truckers is the fact that the Malaysian Government has still not come up with a blue print for the implementation of biodiesel beyond 2020.

Thus, they hoped that the government will come up with a clear blueprint that will benefit all stakeholders in the long run which will not only benefit the current generation but for the future generation as well.


RISDA (Rubber Industries Smallholders Development Authority) target to exports entrepreneurs’food products to China

Posted on : 02-05-2017 | By : sabah today | In : National Business

SHAH ALAM: The Rubber Industry Smallholders Development Authority (Risda) targets to market food products such as biscuits and chocolates by its smallholders or entrepreneurs to the supermarket chain in China by July this year.

Chairman Datuk Zahidi Zainul Abidin said this was one of the initiatives by the agency to assist in opening up market opportunities for the smallholders and entrepreneurs to increase their income and not depend only on income from rubber which is subject to price uncertainty.

He said he would be leading a delegation comprising members of the Malaysian Chinese Muslim Chamber of Commerce to Xining, China, soon to meet Chinese Internet tycoon, Jack Ma, to have further discussions on this matter.

“We are made to understand that the sale of halal food products online in China is among the two biggest pioneered by the Ma family.
“In addition, the Ma family owns 20 hypermarkets in China which could be explored by Risda’’s entrepreneurs to market their halal products,” he told a press conference after launching the Selangor-level Risda Entrepreneurs Carnival in Shah Alam on Tuesday.

He said priority would be given to market food products by Risda’s entrepreneurs with Produk Ummah logo, besides products with the halal logo from the Department of Islamic Development Malaysia.

The Produk Ummah logo was developed by Risda with the cooperation of the Ministry of Domestic Trade, Cooperatives and Consumerism, he said.

He also said besides products manufactured by Risda’s entrepreneurs, food products by entrepreneurs under the Ministry of Rural and Regional Development would also be marketed to China.

“At the meeting, Risda will also discuss the Islamic tourism programme in an effort to make Malaysia as an Islamic tourism hub for Chinese tourists who want to make Malaysia as a transit to Jeddah (Saudi Arabia),” he said.


IMF: Malaysian economy performs well despite challenging global environment

Posted on : 02-05-2017 | By : sabah today | In : National Business

KUALA LUMPUR: The Malaysian economy has performed well over the past few years and remained resilient despite the challenging global economic environment, said the International Monetary Fund (IMF) in its annual consultation report on Malaysia, which concluded on March 15.

Despite the global commodity price impact and financial market volatility, it said the country’s economy remained resilient, owing to a diversified production and export base, strong balance sheet position, flexible exchange rate, responsive macroeconomic policies and deep financial markets.

“While real gross domestic product (GDP) growth slowed down, Malaysia is still among the fastest growing economies among its peers.

“The challenging global macroeconomic and financial environment puts premium on continued diligence and requires careful calibration of policies, going forward,” it said.

It added that federal debt and contingent liabilities were relatively high, limiting policy space to respond to shocks.

The IMF also said that risks to the outlook were tilted to the downside, originating from both external and domestic sources.

External risks include structurally weak growth in advanced and emerging market economies and retreat from cross-border integration.

Although the Malaysian economy has adjusted well to lower global oil prices, the IMF said sustained low commodity prices would add to the challenge of achieving medium-term fiscal targets, adding that heightened global financial stress and associated capital flows could affect the economy.

Meanwhile, it said domestic risks were primarily related to the public sector and household debt, along with pockets of vulnerabilities in the corporate sector, adding that although the household debt-to-GDP ratio was likely to decline, household debt remained high, with debt servicing capacity growing only moderately.

The IMF said Malaysia’s real GDP growth rate was expected to increase moderately to 4.5% year-on-year (y-o-y) in 2017 from 4.2% in 2016, with domestic demand, led by private consumption, continued to be the main driver of growth.

“While Malaysia’s economic growth is expected to continue in 2017, weaker-than-expected growth in key advanced and emerging economies, or a global retreat from cross-border integration, could weigh on the domestic economy,” said the IMF.

As such, the IMF urged vigilance and continued efforts to strengthen policy buffers and boost long-term economic growth.

The IMF also projected that consumer price inflation would rise and average 2.7 per cent y-o-y in 2017 on the back of higher global oil prices and the rationalisation of subsidies on cooking oil.
It said the current account surplus would be largely unchanged, as impacts from an improved global outlook and higher commodity prices would be offset by the strength of imports on the back of a resilient domestic demand.

The IMF agreed that the authorities’ medium-term fiscal policy was well anchored on achieving a near-balanced federal budget by 2020.

It said the planned consolidation would help to alleviate risks from elevated government debt levels and contingent liabilities, and build fiscal space for future expansionary policy, as needed.

The fund’s board concluded that Malaysia’s current monetary policy stance was appropriate, and going forward, Bank Negara Malaysia should continue to carefully calibrate its monetary policy to support growth, while being mindful of financial conditions, as global financial market conditions could affect monetary policy.

It said that the banking sector was sound, overall, and that financial sector risks appeared contained, but cautioned that potential pockets of vulnerabilities should be monitored.

The IMF also stated that it welcomed the authorities’ commitment to keeping the exchange rate as the key shock absorber, and recommended that reserves be accumulated, as opportunities arose and deployed in the event of disorderly market conditions.

It also supports Malaysia’s efforts in increasing female labour force participation, improving the quality of education, lowering skills mismatch, boosting productivity growth, encouraging research and innovation, and upholding high standards of governance.