Kulim (M) Bhd is allocating RM240mil this year to boost its plantation and oleochemical operations in Malaysia, Papua New Guinea (PNG) and Solomon Islands.

Chairman Tan Sri Muhammad Ali Hashim said about 65% of the allocation would be utilised by the company’s plantation division.

He said it would be used mainly to replant 1,720ha of oil palm in Malaysia and expand its PNG Kumbango oil mill capacity, from the current 40 tonnes hourly to 60 tonnes.

“A portion of the funds will be used to boost our oleochemical operations in Johor,” Ali said after Kulim’s AGM yesterday.

These include construction of a third hydrogenation plant with a capacity of 300 tonnes per day, costing RM11mil, and a 54,000-tonne yearly palm wax plant for RM6.5mil.

Ali said the move was to capitalise on the growing global demand for stearic-based products and palm wax, a cheaper substitute for parafix wax compared with petroleum.

He said Kulim would build a plant-breeding laboratory at Kapiura, PNG, this year to meet rising demand for laboratory tests for plant breeding and seed production.

He said although the company was no longer involved in oil palm plantation in Indonesia, it did not mean that Kulim would not be there again.

“We are always open to options and Kulim might be in Indonesia in other business activities in the future,” he added.

Managing director Ahamad Mohamad said the group’s palm oil production was expected to be enhanced by the higher crop towards year-end and increasing maturity of young fields.

“The future growth of the plantation division will be largely driven by our overseas businesses,” he said.

Ahamad said Kulim’s PNG operation was anticipated to be well rewarded from the strong price trends of crude palm oil and the Solomons would contribute positively, being its first full year in operation.

He added that the divestment of its Indonesian plantations, which was announced last week, would not dampen the company’s operations for the year.

Ahamad said the move was necessary as the Indonesian operations were becoming more challenging to manage and returns on investment had not been encouraging.

He said Kulim would expand its oil palm acreage in PNG and Solomon Islands, currently at 44,714ha and 6,594ha respectively, by a total of another 15,000ha.

The company had identified several areas for the expansion programme, Ahamad said, adding that the investment was not part of the RM240mil allocation.

For the financial year ended Dec 31, 2006, Kulim recorded pre-tax profit of RM221.56mil on revenue of RM1.84bil from RM124.17mil and RM1.33bil respectively before.