SD Guthrie Bhd (KL:SDG) has won the silver award at The Edge Malaysia ESG Awards 2024 in the plantation sector, a recognition attributed to its robust ESG strategy rooted in long-term sustainability.

“As a company with more than 200 years of history, we have survived and succeeded in what we do because we have always anticipated and responded to shifting expectations and changing landscapes,” says SD Guthrie group managing director Datuk Mohamad Helmy Othman Basha.

A cornerstone of the firm’s strategy is the mechanisation, automation and digitalisation (MAD) of its plantation operations. While some industry players remain hesitant, the company has made significant investments in these advancements, even at the expense of short-term profits.

“By implementing MAD, we believe the industry’s current land-to-man ratio (LMR) of 8ha to 9ha per worker can be increased to 11ha to 12ha, leading to a 30% reduction in workforce or 30% higher efficiency,” Mohamad Helmy says, adding that he anticipates a reduction in dependency on foreign labour.

Through concerted efforts over the past four years, the firm is approaching an LMR of 13ha per worker. It is also close to achieving a workforce composition of 30% local workers and 70% foreign workers.

Among its recent accomplishments, the firm is particularly proud of having its net-zero targets approved by the Science Based Targets initiative (SBTi), making it the world’s first palm oil company to achieve this milestone. According to Mohamad Helmy, the introduction of SBTi provided an opportunity to reassess the company’s efforts and obtain independent evaluation confirming that its targets are ambitious and aligned with the latest climate science.

However, maintaining ESG performance has not been without its challenges. The firm faces a continuously evolving regulatory landscape, exemplified by the European Union Deforestation Regulation (EUDR), which was due to take effect this December but has now been delayed by a year.

In anticipation of this, the firm has established EUDR-compliant supply chains in Malaysia, Papua New Guinea and the Solomon Islands. It is also piloting projects with EU customers to streamline document sharing and compliance reporting, underscoring the importance of ongoing customer engagement in its strategy.

To further promote ESG adoption in Malaysia, Mohamad Helmy advocates stronger collaboration in modernising the industry by investing in technology that promotes MAD. He also points out that consumers play a critical role in driving demand for sustainable and ethically produced palm oil.

“Greater awareness of social issues such as labour rights and community welfare tied to certified sustainable palm oil will encourage responsible sourcing practices. When consumers prioritise ethically sourced products, it generates pressure across the supply chain, compelling businesses to improve their social impact,” he says.

Mohamad Helmy also calls on investors and global partners to continue supporting companies committed to social responsibility within their ESG frameworks.

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The era of massive government spending on mega projects appears to be over, at least for now, following the tabling of the 2025 budget.

“Now is not the time to implement mega projects,” said prime minister and finance minister Anwar Ibrahim when presenting the 2025 budget in Parliament on Friday.

This signals a fundamental shift in economic strategy to focus on peoples’ well-being while boosting productivity, enhancing national income, and making Malaysia a more attractive destination for high-value investments.

The strategy of focusing on large-scale mega projects as a means of lifting Malaysia among the ranks of developed nations was arguably the brainchild of former prime minister Dr Mahathir Mohamad, the country’s longest-serving leader.

The iconic multi-billion-ringgit projects initiated during his first term as prime minister included the Petronas Twin Towers, Putrajaya, and Kuala Lumpur International Airport.

The trend of mega projects continued under his predecessors, including Najib Razak, whose administration signed off on the Mass Rail Transit (MRT), KL118, TRX, and the East Coast Rail Link (ECRL) projects, which cost tens of billions of ringgit each.

Anwar said national development will now focus on projects of public interest and facilities that support industrial areas according to state priorities.

He cited projects of public interest, including the Integrated Green Industrial Park in Perak – the first high-tech green hub in Southeast Asia – by SD Guthrie and Permodalan Nasional Bhd (PNB).

Other such projects include the high-priority flood mitigation projects involving rivers in Pahang, the Cameron Highlands Bypass, expansion of the North-South Expressway (PLUS) to six lanes in Phase 3, and construction of the Machang water treatment plant in Kelantan.

These are less high-profile than mega projects and they cost considerably less, yet they benefit more people compared with the others. Mega projects invariably exacerbate the country’s huge national debt with limited benefits to the wider population.

Essentially, the government is ditching mega projects in favour of much-needed development projects around the country that have high multiplier effects that can create high-paying jobs and generate economic activities.

Protecting the vulnerable
The new direction under the Madani economy framework prioritises uplifting the dignity of the people, improving basic infrastructure, enhancing value of existing services and creating a resilient and inclusive society.

The move to raise the minimum wage to RM1,700 from RM1,500 starting from Feb 1, 2025, will be a boon to those in the lower income group and help alleviate the impact of the cost-of-living crisis.

A key focus of the budget is to continue providing targeted subsidies for essential goods and services, including fuel, electricity, and healthcare, ensuring 85% of the population is protected from price hikes.

By shifting subsidies away from the wealthiest citizens and foreign nationals towards the most vulnerable, the government aims to alleviate financial burdens for lower-income groups.

The government has also allocated RM13 billion for Rahmah cash aid initiatives in 2025, compared with RM10 billion this year. This increase will benefit 60% of the adult population.

A total of 4.1 million households will get RM100 in cash aid a month, compared with 700,000 households this year.

To promote home ownership, the government will provide RM12.8 billion in guarantees for over 57,000 first-time home buyers. Nearly RM900 million has been set aside for People’s Residency Programmes.

The budget also has significant funding for sustainable financing of small and medium enterprises (SMEs), recognising their critical role in the country’s economy.

The Dana Pembangunan Industri NIMP (NIDF) will support SMEs in transitioning to high-value, sustainable production, enabling them to integrate into global supply chains.

Boosting investment in high-value sectors
Another key focus of the 2025 budget is increasing productivity and national income, and making Malaysia a more attractive destination for high-value investments.

Anwar’s government has outlined plans to elevate productivity by prioritising high value sectors such as electrical and electronics (E&E), green industries, and semiconductors.

Under the National Investment Policy (NIMP) and National Energy Transition Roadmap (NETR), these industries will receive tax incentives and other benefits to attract foreign and domestic investment.

A new investment incentive framework will be introduced including expanding export tax incentives for integrated circuit design and offering special tax deductions for private institutions developing courses in artificial intelligence (AI), robotics, and financial technology (fintech).

The budget also promotes automation and advanced manufacturing through tax incentives for companies adopting AI, robotics, and IoT (Internet of Things) technologies.

The Kulim Hi-Tech Park expansion and the development of Batu Kawan Industrial Park 3 are key projects that will facilitate this shift, positioning Malaysia as a leader in Southeast Asia for high-tech manufacturing.

The government is to be commended for seeking to restore fiscal discipline and ensure resources are used efficiently and transparently.

The 2025 budget aims to cut the national deficit from 5% in 2023 to 3.8% by 2025 and bringing it down to 3% by the mid-2020s.

This will be achieved through a phased reduction in borrowing, with new debt expected to fall to RM80 billion by 2025.

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Sabah’s 11,612-hectare (ha) Bukit Piton Forest Reserve is now a sanctuary for orangutans, but it was not always the case.

Formerly known as the Northern Ulu Segama and part of the Ulu Segama-Malua Forest Reserve, Bukit Piton was badly degraded back in the early 2000s, suffering from the impact of forest fires and timber harvesting.

In response to this, the Sabah Forestry Department (SFD) and SD Guthrie Berhad (SD Guthrie) launched an ambitious forest restoration initiative in 2008, targeting 5,400 ha of highly degraded forest where orangutans lived.

The commitment to the restoration of this valuable area was bolstered by a strategic partnership with Yayasan Sime Darby (YSD) in 2010. This is also part of SFD’s work with several other partners to rehabilitate the remaining area.

This initiative was crucial in transforming a landscape into a thriving orangutan habitat in just 15 years, something that might have taken a century to rehabilitate if left on its own, highlighting the impact of collective commitment and strategic investment.

YSD and SD Guthrie’s involvement also enabled the SFD to reclassify the area to a Class I Protection Forest Reserve called the Bukit Piton Forest Reserve, from its original status as Class II Commercial Forest Reserve.

This means the area is now fully protected from potential encroachment or redevelopment activities, meaning the land cannot be converted for other purposes.

Over the years, the successful project has led to the return of orangutans to Bukit Piton Forest Reserve.

This resurgence is evidenced by the increasing number of nests observed, which contributed to an estimated population of 400 orangutans in the area, part of a broader estimate of 3,500 to 4,000 individuals across Sabah.

According to a survey conducted by WWF-Malaysia in 2014, orangutans were found not only in natural canopy-covered areas but also in rehabilitated sites that were once barren and overrun by weeds.

About half of the survey segments in the reserve had already exhibited a high abundance of orangutan nests, including sightings in newly planted areas, marking a significant progress in the region’s ecological recovery.

From the outset, SD Guthrie was instrumental in ensuring the effective implementation of rehabilitation efforts. Experts from SD Guthrie’s sustainability and upstream teams were involved with SFD from the very early days, to design the project.

The Project Steering Committee (PSC), comprising representatives from SFD, SD Guthrie, YSD, and other stakeholders, including the Sabah Foundation, Sabah Wildlife Department, and WWF-Malaysia provided strategic oversight, with regular assessments and audits to monitor progress and address operational challenges.

The project involved experienced forest rangers, public workers, and local contractors, many from the Segama community.

They were responsible in planting and maintaining dipterocarp and non-dipterocarp trees that now support not only orangutans but also other endangered species like banteng, clouded leopards, sun bears, and pygmy elephants.

Collaboration was key to the swift success of the exercise. These partnerships facilitated information sharing on tree-planting methods suited for orangutan habitats and addressed the large challenges of manpower resources, unpredictable weather, and wildlife disturbances.

SD Guthrie’s Group Managing Director Datuk Mohamad Helmy Othman Basha noted that the more than a decade long collaboration to restore Bukit Piton underscores SD Guthrie’s commitment to orangutan conservation. “This long-standing collaboration has shown that when organisations work together, meaningful progress in restoring natural habitats and protecting endangered species can be realised,” he said.

“I thank everyone involved, whether behind the scenes or on the frontline, for their unwavering dedication. Your efforts make a real difference, and we remain committed to practices that benefit both the environment and communities around us,” Mohamad Helmy added.

The initiative saw YSD and SD Guthrie contribute a total of RM25 million aside from SD Guthrie’s manpower resources on the ground throughout the project period, directly supporting the restoration of the 5,400 ha of Northern Ulu Segama.

Today, this area has been rehabilitated with 300,000 trees planted with more than 95 species such as indigenous dipterocarps, non-dipterocarps, pioneers and fruit trees – and the orangutans’ habitat restored.

Beyond the positive impact on orangutan populations, the Bukit Piton initiative also benefited 30 community members living along Sungai Segama.

They were provided with employment opportunities stemming from the reforestation efforts, facilitated by SD Guthrie, while community-based programmes helped to increase their awareness of the need to conserve forests.

Building on its success, YSD is advancing the Human-Orangutan Coexistence project to support the peaceful coexistence of wild orangutans in human-altered environments.

In collaboration previously with PONGO Alliance and currently with the South East Asia Rainforest Research Partnership (SEARRP), they will continue to monitor an existing 20,000 ha in Kinabatangan, which is located in the eastern part of Sabah and is part of the SD Guthrie’s Sandakan Division.

They will also expand scientific monitoring to cover an additional 10,000 ha in other parts of Sabah including Sugut and Ulu Segama.

As part of this initiative, 80 ha in Kinabatangan have already been restored, with 4,000 trees from native species planted to create safe habitats and vital linkages for orangutans.

Additionally, the project focuses on capacity building for local researchers by offering scholarships, training, and hands-on experience to ensure long-term, sustainable conservation efforts.

“It is important to ensure humans and wild orangutan populations co-exist for many generations to come,” said YSD CEO Dr Yatela Zainal Abidin.

“It is heartwarming to see orangutan nests in the thriving trees we planted together in Bukit Piton, and our Best Management Practices adopted in plantation estates, fostering harmony with orangutans. We are strengthening our commitment to orangutan conservation by celebrating all that we have achieved, and all that we intend to achieve in the future.

“We are grateful for the support of our donor, SD Guthrie who not only funds our projects but also contributes important resources on the ground. Together with all collaborative partners, we are setting new standards in wildlife protection that we believe will inspire similar success stories across the globe,” she said.

In a related initiative to complement the efforts in creating orangutan sanctuaries, YSD is supporting wildlife protection through a RM3.8 million sponsorship for the Sabah Wildlife Department’s Rapid Response Teams (RRT) from 2022 to 2025, enhancing efforts to combat wildlife poaching and illegal trade in Sabah.

This initiative follows YSD’s previous support for the expansion of the Sabah Forestry Department’s Protect Unit. The RRT comprises specially trained rangers recruited across Sabah to reduce wildlife crimes.

Additionally, YSD is collaborating with the Tropical Rainforest Conservation and Research Centre (TRCRC) to germinate over 35,000 seedlings of endangered tree species for forest restoration, and with Universiti Malaysia Sabah to restore 102 ha of forest and improve wildlife habitats in Sandakan Bay.

YSD has supported 19 projects since 2010 through funding amounting to RM96 million in Sabah.

This is part of a larger RM210 million directed towards environmental conservation across Malaysia. These initiatives span forest rehabilitation, species conservation, environmental education, anti-poaching efforts, the development of State Action Plans for the Proboscis Monkey, Banteng, and Clouded Leopard, with another plan underway for the Hornbill.

YSD’s commitment to environmental conservation in Sabah showcases a holistic approach to preserving biodiversity while fostering sustainable community development.

By integrating efforts in forest rehabilitation, wildlife protection, and environmental education, they not only safeguard endangered species but also sets a benchmark for long-term environmental management across Malaysia.

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Pursuing a career in the male-dominated  palm oil plantation industry is no easy feat for women, but Siti Zuwairiah proved that a woman can not only thrive as a planter but also excel.

“When I lead my team, I don’t consider gender—what matters is commitment to the work and personal growth. That’s what being a planter is about, and I’m proud to be one,” said Siti Zuwairiah Abdullah, a Malaysian planter.

Siti now manages a 1,800-hectare palm oil plantation at Sime Darby Berhad (Estate Ladang Tampin Tinggi). Her career journey began in 2005 when she sought higher education. Initially, Siti had no plans to become a planter; she dreamed of becoming a lawyer, like many aspiring professionals in Malaysia who aim to be teachers, doctors, or lawyers. Unfortunately, she did not meet the academic requirements, and her dreams of becoming a lawyer were dashed. “I was devastated,” she recalled.

However, life took an unexpected turn. Siti eventually studied agriculture at the University of Putra Malaysia (UPM), where she received a scholarship from Guthrie, Malaysia’s largest palm oil company, now known as Sime Darby Plantation.

“After having consideration, I chose agriculture in the University of Putra Malaysia (UPM),” she said.

Of 17 students that got scholarship program, there were only four females. Siti Zuwairiah that got Golden Hope Academy award, was one of them. When having the program, she got theories and practices in palm oil plantations of the company in person.

Her father did not agree with what Siti chose to work in plantation sector. Her father himself worked as harvester in Felda – a palm oil plantation company. Her mother was fertilizer applicator in the same company.

“My father worried because working in plantation sectors was dominated by men,” she said. Her mother also suggested Siti to get better jobs than hers.

Her 2005 – job experiences started by having the first planter recruit by Golden Hope Berhad. In 2007, Golden Hope Berhad, Kumpulan Guthrie Berhad, and Sime Darby Berhad were joint. Since 2008, Siti has started her career as female planters. In 2019 she was officially inaugurated as the first plantation manager by Sime Darby Plantation Berhad.

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Palm oil has been heavily criticised due to the unsustainable practices used in its cultivation. But this is beginning to change, says Jannie Myburgh, senior manager of trading oils procurement at SD Guthrie International SA. He spoke to Marinda Louw Coetzee.

What does SD Guthrie International SA do?
It is part of a global company called SD Guthrie International, which is involved in the upstream (plantation) and downstream (bulk processing, refining and processing) production of palm oil.

We have branches in Malaysia, Indonesia and Europe, and supply sustainable palm oil to South African industries and retailers.

Our facility in Boksburg, Gauteng, focuses on the production of industrial ingredients, pastry fats, industrial margarines and specialised oils, and has been supplying palm oil certified by the Roundtable on Sustainable Palm Oil (RSPO) since 2012.

As a vertically integrated sustainable palm oil company, we take a multifaceted approach

to promoting sustainable palm oil. We areactively involved in developing sustainability standards and practices and have been at the forefront of the adoption of RSPO certification in all of our upstream plantations and mills.

We also use our downstream refining assets to make sustainable palm oil available in all the markets we serve, including Africa.

Where does South Africa import most of its palm oil from?
Most of South Africa’s palm oil is imported from Indonesia, the largest producer of palm oil. We also import from Malaysia, the second-largest palm oil producer in the world.

What is PalmTrace?
The PalmTrace app is the RSPO’s traceability system for certified oil palm products. It is used to register sales and processing and can serve as a marketplace to trade sustainably produced palm oil.

How easy is it to be part of the RSPO supply chain and use the PalmTrace app?
The RSPO body acts as an independent auditing and facilitation platform. Its requirements are strict to ensure holistic supply chain sustainability.

Although the app’s registering and trading system requires various audits to assure compliance with RSPO standards, it’s pretty user-friendly. It requires focus to ensure all systems and facilities are kept to these standards. This is to assure traceability.

How much of the palm oil that SD Guthrie International SA handles comes from sustainable sources?
More than 50% of our palm oil is certified sustainable.

Why are you using certified sustainable palm oil (CSPO), and how long have you been a member of RSPO?
CSPO is used in a wide range of foods, ranging from peanut butter and chocolates to cereals and fast food. SD Guthrie International SA, through SD Guthrie International, was a founding member of the RSPO in 2004 to ensure the sustainability of the palm oil supply chain.

Is the use of CSPO a consumer- or retailer-driven choice?
For CSPO to become more mainstream, it must become a shared choice by all players throughout the supply chain. This entails demand from consumers and supply-driven programmes to show that there is an alternative to conventional palm oil.

What does palm oil cost?
CSPO carries a general cost of around US$70/t (about R1 300/t), which incentivises producers and mills to invest in the required systems to ensure compliance with sustainability practices.

Because of the implementation of sustainable practices, the quality of the oil has slightly improved.

What factors are limiting the widespread use of CSPO?
The main challenge is the development of the demand side. The drivers of the uptake of sustainable palm oil would mainly be with the retailers to educate the consumers on the importance of sustainability.

We have been actively engaging with market actors to promote the use of sustainable palm oil. We have also made value-based investments to develop supply chains to bring sustainable palm oil to South Africa and to demonstrate that this is an option for the region.

How do you envision the transformation of the palm oil industry in the future?
We are fully aligned with the RSPO’s vision to make sustainable palm oil the norm and hope to see a dramatic uptake in this industry. We believe that strong demand will increase the number of plantations that adopt RSPO standards. Visit simedarbyoils.co.za.

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SD Guthrie Berhad (SDG MK) has reported a slight earnings beat for the second quarter of 2024, with core earnings rising to RM415 million, a substantial increase of over 50% year-on-year. This boost is attributed to higher operating profits in its Malaysian upstream segment, buoyed by improved Fresh Fruit Bunches (FFB) yields and elevated average Crude Palm Oil (CPO) prices. However, challenges persist in Indonesia and Papua New Guinea due to adverse weather conditions affecting crop yields. Despite this, the downstream segment has shown a robust recovery, with profits climbing to RM111 million, marking a significant year-on-year increase.

Analysts are optimistic about SD Guthrie’s prospects. MIDF Stock Broking House has maintained a NEUTRAL rating with a revised target price of RM4.80, up from RM4.18 previously. They highlight the recovery in the upstream segment and promising downstream prospects, despite ongoing production issues in Indonesia. They note that earnings forecasts for FY24-25 have been adjusted upwards by 5.4% and 10.9% respectively.

Kenanga Stock Broking House, while revising their target price to RM4.20 from RM4.00, maintains a MARKET PERFORM rating. They have upgraded earnings estimates for FY24-25 by 11% and 4% respectively, citing strong 2QFY24 results that exceeded their expectations. Their analysis points to continued positive performance in the upstream sector, which is expected to offset any potential softness in downstream margins.

In the upstream sector, SD Guthrie’s production and profitability have surged. The company’s upstream segment saw a dramatic rise in both revenue and profit, driven largely by a rebound in Malaysian FFB production and higher average CPO prices. However, production in Indonesia has suffered due to ongoing dry weather, leading to a 22.3% year-on-year decline. Despite the challenges, the average CPO and Palm Kernel (PK) prices have improved to RM4,029 per metric tonne and RM2,166 per metric tonne respectively, though the all-in cost of production remains elevated at nearly RM3,000 per metric tonne.

The company’s downstream division has shown strong performance, benefiting from increased sales volume and improved margins, particularly in Europe. This segment’s profitability has doubled year-on-year, thanks to a recovery in demand for Palm Oil Products (PPO).

In a recent strategic move, SD Guthrie has signed a memorandum of understanding with TH Properties to develop a HALMAS-certified managed industrial park at its Bukit Pelandok estate in Negeri Sembilan. This project aligns with the company’s strategy to monetise its non-core assets and expand its industrial park portfolio.

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