Jul 15, 2022

Saturday, 16 Jul 2022 For decades, Indonesia has been the mecca for many Malaysian plantation companies as a reliable source for migrant estate workers.However, this is no longer the case, especially when Indonesia took over the status of the world’s largest producer of palm oil from Malaysia with many Indonesians opted to stay home and work in the oil palm estates there. Planters’ bane IT was a rude awakening for local planters this week, when Indonesia again displayed its inconsistent policy by freezing the recruitment of its workers for Malaysia. Hopes were dashed for the arrival of the first batch of 32,000 Indonesian workforce meant for the sector here. For decades, Indonesia has been the mecca for many Malaysian plantation companies as a reliable source for migrant estate workers. However, this is no longer the case, especially when Indonesia took over the status of the world’s largest producer of palm oil from Malaysia with many Indonesians opted to stay home and work in the oil palm estates there. Ironically, some of the big oil palm plantations in the republic are also owned by several high-profile Malaysian planters. With the Covid-19 pandemic, the shortage situation in the local plantation scene has escalated further to 120,000 workers currently from about 60,000 workers during the pre-pandemic period. Of the 2.06 million legally-registered foreign workers in Malaysia, the labour-intensive plantation sector hired about 268,203 or about 15.9%, alongside with other sectors such as construction, manufacturing, agricultural and domestic maids. With Indonesia’s latest temporary freeze on its workers for Malaysia, the best bet would be for local planters to seek elsewhere, perhaps from India and Pakistan as suggested by the Plantation Industries and Commodities Minister Datuk Zuraida Kamaruddin. Another alternative is to bump up on the mechanisation and automation in the oil palm estates – an idea which often looks good on paper but still has yet to take off on a successful route. Another suggestion is for the government to provide a higher matching grant from the current RM30mil for investment in the mechanisation and automation in the estate operations. This perhaps could further encourage planters to take on the automation programme on a more serious note. Apparently, the freeze of Indonesian workers to Malaysia also coincides with the upcoming palm oil peak production months. The Malaysian Estate Owners Association reveals that any potential delay in harvesting the fresh fruit bunches may result in its members suffering 5% to 10% losses in earnings due to the current severe labour crunch. Healthcare ventures SUCCESSFUL healthcare providers tend to get ascribed with high valuations. Listed medical groups in Malaysia are a good example. are good examples of having price-earning ratios of more than 30 times. Newcomer Cengild Medical Bhd managed to secure an earnings multiple of 27 times when it was floated earlier this year. The reasons why these companies enjoy a high earnings multiple is because of the high entry barrier to the business. Medical equipment costs a lot and there are other high operational costs too. It also requires a fair bit of expertise and medical personnel who are able to win the trust of the customers. This is why healthcare ventures take a while before they start showing profits let alone sustainable profit margins. During the Covid-19 pandemic, a number of listed companies sought to venture into the healthcare business by announcing businesses related to vaccine distribution or even production. None of the companies have managed to eke out solid profits from those ventures. More stable plans have come from companies such as LYC Healthcare Bhd, which first ventured into healthcare back in 2018 by focusing on a niche. It opened its first mother and child centre that year. The company has made other inroads into the healthcare space, which could prove to be profitable in the future. But for now, it is still remains loss making, indicating the long gestation period for these businesses plus the impact that the pandemic has likely had on it. This week, another loss-making company, Omesti Bhd , said it has formed a joint venture to set up and operate diagnostic and screening centres. Omesti has said that it plans to increase its investment in the healthcare services segment. Payback, though, may not be that fast or lucrative. Article type: free