Corporate World

Yet another closely guarded secret of palm oil industry is the way investors calculate to see if an investment is worth investing. Afterall, palm oil land can set you back anything from a few thousands to hundreds of thousands per acre.

When a person asked me if it is worth investing their spare cash in the palm oil industry, I always ask them the question if they are willing to look after their plantation on a full time basis if needed. If the answer is negative, I would tend to advise them against an investment.

Contrary to popular believes, palm oil is a hands on industry. If you do not understand the process it is best to steer clear as the industry is filled with people who are out to “make a quick buck”. Pilferage is the biggest costs of the industry. I will not go into details on managing the available resources as that itself is a specialty.

Now to investment in land. There is a sarcity of land at the moment given the land rush experienced recently due to increase speculative activity. It is very rare to find palm oil land below the RM10,000 mark per acre.

If you hear people telling you about land in Sarawak for palm oil, you might as well as forget about it even if it is cheap. There are many issues regarding the Native Customary Rights (NCR) and its short lease. Plus there is no ready palm oil infrastructure there. Sabah may be a better alternative but yet the price is no longer cheap especially on the eastern side of the state. The western side do not produce as well as the east side. Pahang has pretty challenging terrains and its soil is not as fertile as most other states. Perak, Selangor and Johor are pretty good for cultivation but the price of land will set you back quite a bit.

The other question which one has to ask is how big is your appetite. It really depends on your budget and how much you want in return. Palm oil pays pretty good return if you manage your costs well. For those who wants a second opinion on their investment, drop me a line in the comment, and I will calculate and give you the pros and cons of your investments.