Malaysia Day 1: The Oil Palm Boom

Blog Entry #36: Penang, Malaysia: The Oil Palm Boom

Wednesday, October 19, 2011

After a short three-day crossing of the Bay of Bengal from India, and a nighttime passage through the remote Andaman Islands, we reached the northwestern Malaysian island province of Penang.

KOMTAR building dominates the Georgetown skyline in morning light

The capital city and former British colony, Georgetown, emerged eerily through the mist in our early morning arrival, and soon we could see the 65-story KOMTAR tower, built in 1978 and at the time Asia’s tallest building.

Modern high-rises in Georgetown, Penang, Malaysia

My chance to get to experience Penang would have to wait a day, however, as on our first day in Malaysia I was leading and “FDP” (faculty-developed-practicum) on the mainland to look at palm oil production and rice cultivation, two of Malaysia’s main agricultural sectors.

Penang Bridge

Soon our group of 20 was headed across the Penang Bridge to the mainland, and south to Malpom Industries’ palm oil processing plant. 

Mangroves with Industrial Development along Penang Harbor

Global packaging plant

Marco: International Furniture plant

Malaysia was one of the “Asian Tiger” economies of the 1980s and 1990s, as it moved to diversify its largely agricultural economy through manufacturing and industrialization, and the effects are noticeable everywhere: in the 40 km between Penang and Malpom Industries along the modern western Malaysia expressway, we passed corporate firm after firm of companies specializing in everything from textiles to food packaging to electronics to furniture.

Signs of the global economy...

Global Economy continued.  Palm plantation in background

It is my first time visiting one of the “tiger economies” and it is hard not to be impressed with how Malaysia had transformed itself into one of SE Asia’s most affluent societies, largely eliminating poverty.  By 2000 Malaysia also has ranked as the United States’ 10^th largest partner in trade volume.

Malpom Industries Palm Oil Plant

Our time at Malpom Industries was fascinating, as they walked us through the process of extracting palm oil from the African palm fruit bunches.  Malaysia is the largest palm oil exporter in the world and it provides between $30-40 billion dollars of revenue each year.  Over 4.3 million hectares are planted in African palm, and the palm oil is processed at 440 processing plants around the country.

Fruit bunches on African palm tree

Ripe fruit ready for oil extractions

Fruit bunches are harvested 2-3 times a year from the average African palm tree, which produces fruit for up to 25 years.   Palm oil is extracted both from the pulp of the fruit itself, as well as the kernel at the heart of the fruit, which produces a higher quality oil

Processing the palm fruit to extract palm oil

Malpom employs about 120 employees at this plant, with around 70 employed in the processing mill.  Malaysia actually faces a labor shortage for palm oil workers, and so it imports labor from other Asian nations, particularly Nepal, Bangladesh, and Vietnam.  We were told these workers earn about $300/month and work on 3-year contracts.

It was impressive to see how virtually all the different by-products of the milling process are recycled into the process, 

Recycling used palm oil fruit bunches

from the left over fiber being used to fuel the boilers that run the steam turbines, to the pulp recycled into cattle feed and compost.  Still, there is both water effluent and air waste that has to be dealt with.

The rapid expansion of the palm oil industry has generated tremendous debate and controversy over its social and environmental effects.  On one side, much of the palm oil fruit is provided by small landholders who are able to stay on their land with palm production, selling to the processing plants, and thereby participate in the cash economy.  

Air and Water emissions from Malpom plant

But it also has significant environmental problems.  Wikipedia lists at least 4: 

• Significant greenhouse gas emissions.  Deforestation, mainly in tropical areas, accounts for up to one-third of total anthropogenic CO2 emissions.

• Habitat destruction, leading to the demise or critically endangered species (e.g. the Sumatran tiger, the Asian rhinoceros, and the Sumatran Orangutan.)

• Reduced biodiversity, including damage to biodiversity hotspots.

• Destruction of cash crops, such as fruit and rubber trees in Sawawak, Saban and Kalimantan and Borneo, that belong to indigenous peoples (the Dayak), despite their frequent objections.

Driving through the Malaysia countryside it was impressive to see the amount of land planted in African palm.  Indeed it seemed that every bit of land we saw was dedicated to one of four uses: African palm, rice cultivation, housing, or industrial development.

African palm plantations, Penang, Malaysia

Rice fields near the Serba Wangi milling plant

Demonstrating rice milling at Serva Wangi plant

Our afternoon visit to the Serba Wangi rice milling plant was less interesting, as we were not allowed to tour the plant itself (due to trade secrets, apparently), but we did learn about the processing of the rice itself (www.malaysiarice.com/).  It also was fascinating to drive through endless fields of rice being cultivated, where they use irrigation ditches to drain the excess water off the fields, rather than irrigate them! (coming from water-challenged Montana this was hard to imagine).

Malaysian dessert: Ice Kachang!

Our first day in Malaysia ended on a delightful highlight as Pat and I walked into Georgetown to the Restorant Malay and had our first Malaysian meal – spicy and delicious!  Penang is known for its cuisine which blends traditions from the Malay people, India, China and SE Asia (fortunately no British food traditions stuck…), and our meal did not disappoint.  But the real highlight was when we ordered the traditional Malaysia dessert: Ice Kachang.  Imagine a HUGE sundae-looking extravaganza made from shaved ice and topped with everything from green noodles to red kidney beans and yellow corn kernels, then soaked in coconut milk and palm sugar, with a layer of marinated beets on bottom and vanilla ice cream on top.  Somehow it all works! (well , maybe not the marinated beets…).  A wonderful first day.

New Highrise Luxury Condos in northeast Georgetown, Penang, Malaysia