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M.R. Subramani

Chennai , Oct. 5

MALAYSIA palm oil companies are looking at India to invest in plantations and oleo chemical industry.

"As land availability is limited in Malaysia, our Government has asked the companies to look overseas for investments. We already have invested in oil palm plantations in Indonesia. We are also looking at India," said Mr M.R. Chandran, former Executive Director of Malaysian Palm Oil Board.

For the Malaysian companies to consider investing in India, the existing Plantation Act should be amended, according to Mr Chandran. "It would be economical to invest in Indian plantations under the current Act. Oil palm tree is a water guzzler and therefore, given the Indian climatic conditions, irrigation is an important consideration. Our companies can't be buying and going in for oil palm plantation on small pieces of land. Our companies require large estates," he said.

Oil palm plantation should be done in a minimum 5,000 hectares. "It is a business-to-business idea that has been floated by us. We have asked the Solvent Extractors Association of India to urge the Indian Government to relax the rules," Mr Chandran, who was in Mumbai recently for a global edible oil conference, told Business Line.

"Only if there is proper irrigation, we can get good yield. We are looking at an average yield of four tonnes of oil a hectare," he said.

While Kerala is seen as an ideal State by Malaysian companies for oil palm plantation, Andhra Pradesh and North Tamil Nadu were the other places seen as having good potential. These places are seen as ones with good potential because oil palm are planted between 10 degrees North and 10 degrees South of the equator.

"Oil palm needs a minimum 200 days of rain. In places like Kalimanthan in Indonesia, we get rainfall for 250 days. The average rainfall required is around 1,600 mm. In Papua New Guinea, oil palm plantations get nearly 3,000 mm rainfall, which helps improve the yield," he said.

While investing in India, Malaysian companies will transfer high yield seeds from Malaysia besides helping in plantation management. Ideally, these companies would prefer to get a minimum lease of 60 years with option for another 30 years. "But even a lease of 30 years with option to extend it by another 30 years would be good," he said.

The investment could be part of joint venture between companies in both the nations, Mr Chandran said, adding that Malaysian firms were set to invest in oil palm plantations in Brazil, Venezuela, Colombia, Costa Rica and Mexico.

Malaysian companies were also looking to invest in down stream industries in India, particularly in speciality fats and oleo chemicals sector.

"We perceive a major growth in the oleo chemicals and speciality fats sector, especially for personal care, pharmaceuticals and neutraceuticals. Our companies are looking for even joint venture or cross venture options," he said.

This means, companies in India can buy stake in palm oil plantations in Malaysia, while form a join venture with its Malaysian partner at home to set up an oleo chemical company.

Mr Chandran during his visit had held exploratory talks on behalf of a Malaysian firm. However, he refused to divulge details of the company he represented and the Indian firms with who he held talks.

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