IOI Corp charts broader growth path beyond palm oil

KUALA LUMPUR: IOI Corp Bhd is broadening its business beyond palm oil as part of its next five-year plan, with new ventures in renewable products and value-added agriculture such as palm biomass, coconuts and organic palm oil.

Group managing director and chief executive officer Datuk Lee Yeow Chor said the plan aims to diversify income streams, improve yields and reduce reliance on labour.

"Among the newer areas we are working very hard on are renewables. The one we have already embarked upon is palm biomass processing by converting palm trunks into wood blocks," Lee said after the company's 56th annual general meeting here today.

He said IOI's palm wood plant has been operating since early last year, while a joint venture to turn empty fruit bunches into pulp is also progressing.

"This project has significant potential to scale further as global demand for pulp is huge especially in China, where our joint venture partner is based. We are producing non-wood pulp, which is very attractive to the market," he said.

The group is also venturing into coconuts, driven by stronger global demand and higher prices.

Lee said Coconut prices have climbed to around RM8,800 per tonne, about twice the RM4,400 per tonne price of palm oil.

IOI plans to plant up to 5,000 hectares (ha) of coconuts within two years and will build a mill to produce coconut water.

"Construction of the coconut processing plant will begin in the first quarter of next year and is expected to take 18 months to complete, bringing it to the end of 2027," Lee said.

On organic palm oil, IOI has planted 1,200ha and began selling certified organic palm oil last year at a premium. Encouraged by demand, the group plans to double its organic palm oil area to about 2,500 hectares.

Lee said organic certification requires a three-year process to prove sustainable practices.

"It's not so much about capital expenditure but about innovation, changing the way we cultivate. Organic means avoiding all forms of chemical fertilisers and pesticides," he said.

He added that IOI is ready to meet the European Union Deforestation Regulation (EUDR) and has already supplied compliant palm oil before the rule was deferred.

"Because we can already comply with the EUDR requirements and obtain a premium for it, we will be able to turn this adjustment into a business opportunity."