Financial Times

Lankan growers worry over Wilmar edible oil refinery
By Quintus Perera
Sri Lanka's coconut industry, already buckling under palm oil imports is alarmed over plans by one of Asia's biggest edible oil groups to set up a refinery in Colombo aimed at partly supplying the local market.

Wilmar Trading Pte Ltd, one of Singapore's biggest processor, marketer and distributor of edible oils and oilseeds, is investing US$10 million in an edible oil refinery at an industrial site outside Colombo.

Of the 300 metric tonnes to be refined daily, 200 MT would be exported to India under concessions provided under the Sri Lanka-India Free Trade agreement, 50 MT is to be exported to other South Asian countries and the Middle East and the balance to the local market in the form of bakery fats, shortening, margarine and edible oil in consumer packs, the company said in a statement this week.

The Coconut Growers Association of Sri Lanka (CGASL) has cautioned Plantations Minister, Anura Priyadarshana Yapa against the project saying it would cause a major dent in local coconut oil output since such BOI projects permit duty free imports of raw material. The end product would thus be cheaper than the local edible oil available in the market, growers said. BOI is the Board of Investment, which is responsible for attracting foreign investment.

Khoon Hong Kuok, Wilmar Holdings chairman, was in Colombo last week for meetings with senior ministers and government officials on investment plans. Among those he met were Industry and Tourism Minister Anura Bandaranaike and Agriculture Minister Anura Dissanayake. Khoon, according to his company statement, said he was planning two more investments in Sri Lanka next year.

In a separate appeal to Bandaranaike, the CGASL noted that the government should have a clear policy and responsibility in safeguarding the 700,000 coconut growers and their families.

The CGASL said the BOI has approved 10 vegetable oil refining plants to be established in Sri Lanka, which would have a serious negative impact on the coconut industry in Sri Lanka. "CGASL vehemently objects to all moves to establish these refining and manufacturing projects and release any such products or by products to the local market," the statement said.

Association President J. V. R. Dias said inflows of imported palm oil have already created a negative impact in the coconut oil industry as unscrupulous traders are mixing palm oil with coconut oil and selling it cheaper than coconut oil in the market. He said the authorities have turned a blind eye to these unethical trade practices.

Wilmar and its affiliates have large edible oil interests in Asia. They own five palm oil refineries, four palm kernel crushing plants and three copra crushing facilities in Indonesia and Malaysia. The group also owns oil palm plantations and mills in Indonesia. It also has joint ventures in China and India. The Indian plant is the largest single refinery unit in that country.

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