Durians for China: A Preliminary View and Dashboard

Recent protocols allow frozen whole durians to be exported to China, home to the fanatics of the King of Fruit. In the past, only frozen durian pulp and purée were imported. Trade regulations are strict. 

With a surge in interest for Malaysia's famed stinky fruit, suppliers of durian in Malaysia are responding to the spike in durian prices with production and processing for export related activities. For example, durian tourism (orchard tours and farm stays, with some all-you-can eat options) has been on the rise; catering to Chinese tourists in Pahang, and particularly in Bentong. Additionally, small-time investors are tempted to purchase land in durian orchards or plantations, with fractional ownership in small plots and even individual trees on offer.

Khor Reports has consolidated data on fruit farms across Malaysia, durian key indicators for Malaysia (supply chain, prices and more), and the durian economy in China. This is available on a dashboard and maps. The sources include information from official data, news reports, trade data, and e-commerce platforms. This presents a holistic view of the status for Malaysian durian farmscape, products and China retail indicators. Data is as of 30 August 2019.

Note: Other details available for ‘Fruit Farms in Malaysia’ include types of other fruits, category types, e.g. Alibaba, MyGAP, and land addresses. We have approximately 3,300 rows and 80 columns of data.

With China offering a pathway for compliant whole fruit, it is predicted that China will import USD 120 million a year from Malaysia. According to official data, premium-grade exports was nearly 75,000 tonnes in 2018, with approximately 23 percent exported to China. This is very small compared to Thailand exports which have long dominated the durian trade to China. But public interest and Chinese consumers are caught UP by the fully tree-ripened durians that Malaysia offers; with the prized Musang King being one of the prime examples. This is in contrast to the typical (blander) durians from Thailand that ripen during transit.

In order to meet the growing demand for durians, existing planted areas are being converted but there is concern that forests may be destroyed. There have been several reports on this: and its negative impacts on the rights of native people and on biodiversity. A news article recently reported the deforestation of 1,213 hectares in Hulu Sempan (Pahang) for durian plantations, putting the likes of Malayan tigers at further risk of extinction. Furthermore, there are reports of Temiar villages in Gua Musang (Kelantan) still tussling for their rights to their ancestral land.

While Malaysian growers are benefitting from the increased trade in the fruit, it is important to acknowledge the trade offs that will affect the Malaysian people and the environment. Deforestation is a thorny issues and so is uncertainty on future pricing of durians. There is a need for a multi-stakeholder review on how we can best ensure sustainability of the durian agri-value chain.

More details are available on a customised basis; including additional data fields. Please contact us to find out more.

Maps and datasets were assisted by Nadirah Sharif and Loh Rachel of Khor Reports.

#Durian #MusangKing #China #Malaysia #ChinaMalaysia

(c) Khor Reports - Segi Enam Advisors Pte Ltd. 2019. All rights reserved.

Coconut Farmers Face Surging Imports in Malaysia

#Malaysia #coconut #imports have seen a notable surge from Dec 2017. Khor Reports’ has taken a preliminary look at some of the data surrounding the story "Millions of local coconuts left unsold," 27 Dec 2018, The Star.

The Department Agriculture reports reports some 80,000 hectares of coconut planted areas mainly in Sabah, Sarawak, Johor, Perak and Selangor, mostly planted by farmers.

A specialist said, "The situation on the ground is bad. Who ever approved the (imports) were doing the local kampong folks a disservice. If you speak to the small farmers on the ground they are annoyed with (the imports). The small players - and with that the voters - will be disadvantaged and they will be confused because they see no action being taken." (Interview, 30 Dec 2018).

Indeed, imports from Indonesia were about 130 million kg in 2016, 180 million kg in 2017, and 187 million kg in 9 months of 2018 (Jan-Sep, the data is not yet available for Oct-Dec 2018) with peak imports of about 25 million kg/month in Mar, Apr, May 2018. 1 kg is about 1 nut.

Jul 2015 - Sep 2018 monthly data. Source: Khor Yu Leng, Khor Reports - Segi Enam Advisors.

In reviewing the monthly trade data prepared by Khor Reports (see line graph above), a coconut expert noted, “This is very revealing and it is the imports that is causing this problem. There is a glut in the markets, and it is still a problem.” (Interview, 9 Jan 2018).

Imports were equivalent to 15-20% of production in mid-2015 and imports rose to around 55% production-equivalent in Mar-May 2018, around the time of the regime-changing 14th General Election in May 2018. In retrospect, we may ask if coconut problems added to rural angst and the big protest vote among younger voters in rural and semi-urban areas against UMNO-BN.

After the election, it appears that UMNO-BN’s high coconut imports policy was broadly maintained; with imports easing under the new Pakatan Harapan administration, but it remained significantly above trend, Jun-Sep 2018 (see chart below).

The top 4 suppliers of Malaysia imports in Sep 2018 were Indonesia (by far), Philippines, Singapore (surprisingly) and Thailand. Looking at a longer time-frame, coconut imports to Malaysia have risen some 10-fold from mid-2008 to mid-2018, but there was a time period when imports were clamped down, notably mid-2013 to almost mid-2014, the period after the 13th General Election (held in May 2013).

Jul 2008 - Sep 2018 monthly data. Source: Khor Yu Leng, Khor Reports - Segi Enam Advisors.

Looking ahead. The coconut imports data for Oct 2018 and forward will no doubt be closely watched. The question is: What will be Malaysia’s policy on coconut imports be in view of complaints from local coconut traders and farmers ?

Comparative context. The palm oil sector in Malaysia has also seen domestic stockpiles rising to record highs. Reuters reported, “To counter the Indonesian import, (Minister) Kok said the government is "currently encouraging our companies to use domestically produced palm oil to reduce the stockpile…. By reducing imports, we could see a significant reduction in palm oil stocks in Malaysia and this would boost prices." " For both palm oil and coconut, Indonesia holds significant cost advantage.

Indonesia perspective on farmer interests. In the run up to the Indonesia presidential election, Tempo (9 Jan 2019) reports that "candidate pair number 02 had committed not to use identity politics in the 2019 presidential election...The economic programs are the answer to the problems experienced by people at the grassroots level such as farmers, laborers, and housewives. “When we visit the regions, there must be complaints from residents, especially from farmers,” he said... if Prabowo-Sandiaga becomes president and vice president, they will try to reduce the import of commodities that can be produced in Indonesia." Earlier, SCMP reported (19 Dec 2018) that "Indonesia is the world’s second-largest sugar importer and keeping food prices low is critical for voter support ahead of April’s vote. But the country is also home to a vocal contingent of sugar farmers who want to sell for higher prices.... Indonesia is already the world’s second-largest sugar importer behind China though by some accounts, it is actually first. Raising its import quota would feed growing demand from hungry consumers...Data from state logistics agency Bulog indicates the decision to allow more imported sugar has stabilised the price at about US$1 per kg. This, however, has been seized upon by Widodo’s political rivals as evidence his administration will prioritise consumers at the expense of farmers."

#Jokowi #Prabowo #Sandiaga #sugar #palmoil #coconut #PakatanHarapan #UMNO #import #tradepolicy

Notes:

Coconuts policy is lead the Ministry of Agriculture. Palm oil policy is led by the Ministry of Primary Industries.

Product: 0801 Coconuts, Brazil nuts and cashew nuts, fresh or dried, whether or not shelled or peeled. For Malaysia, this category is dominated by coconuts.

Key Indicators for HSR Projects by Khor Yu Leng

I have been reviewing some general stats for a #HighSpeedRail project comparison. RM1-trillion-in-debt (US$250 million) Malaysia is relooking its KL-Singapore HSR project (#MyHSR #SgHSR), and I take a look at the Taipei-Kaohsiung HSR which has intriguing similarities including the price tag.

Commentary in Channel News Asia published on 2 July 2018, available here.

Rapid transit is looking into novel systems. In recent news #ElonMusk's 2013 novel tube-transit #HyperLoop idea is getting a serious look by Chicago (albeit a more basic #Loop non-vacuum or conventional tunnel version)! Notably, no taxpayer money (nor hidden guarantees, presumably). It is private funded. "In exchange for paying to build the new transit system, #BoringCo would keep the revenue from the system’s transit fees and any money generated by advertisements, branding and in-vehicle sales." Chicago set transit time and ticket cost hurdles, and got four bidders.

Back to conventional HSR. In summary, Malaysia cost concerns include:

·       A lower project cost. In consideration of the high debt situation, and to lower fares.

·       A lower fare, to undercut the cost of air travel between Singapore and KL. 

·       A lower fare, for an affordable domestic service for the average Malaysian. 

There will no doubt be a wider discussion on the #socioeconomic implications of HSR and lower-cost medium-speed rail options now mooted (at 1/3 the cost of KL-Singapore HSR) . The #Mahathir administration is mandated to improve the livelihoods of the average Malaysian and look into issues of jobs, incomes, affordability of homes, and the cost of living. Sources reckon that part of the KL-Singapore HSR justification is property development and a ramp up in property prices. If this is so, it may not sit well with ongoing concerns about affordability.

Please contact us for detailed data and analysis; and for redistribution.

(c) 2018 Khor Reports - Segi Enam Advisors. All rights reserved.

Malaysia Post-GE14: Preliminary News Dashboard

Khor Reports has consolidated information on Malaysia's post General Election news in the format of a dashboard and map. The sources are public media sources and specialist economic reports. This data summary is preliminary and covers over 100 news items up to end day 31 May 2018. We will update the dashboard periodically. 

More details are available on a customised basis; including data fields on 'Policy, news, action / reaction', 'Linkages & associations', 'News link / Source' and more. Please contact us to find out more.

On Page 1, you can toggle the map view by Category. Click on a particular Category or Business sector or item to gain a more detailed view. The data is all interlinked on the dashboard and the map will adjust accordingly. Page 2 presents key items By Value. Data as at 31 May 2018. Please 'mouse over' to get more details.

Notable items for 31 May after our close (dashboard updated 1 Jun):

a) Consumer Association calls for review of projects under the Penang transport masterplan, reportedly to cost up to RM46 billion.

b) Global Times of China concerned about rights of China enterprises in the HSR and ECRL projects.

c) Khazanah Nasional announces resignations of Najib Razak, Johari Abdul Ghani, and Irwan Siregar.

#Malaysia #PRU14 #GE14 #Mahathir #PakatanHarapan #PoliticalEconomy #MegaProjects #China #ChinaMalaysia #BeltandRoad #OBOR

(c) Khor Reports - Segi Enam Advisors Pte Ltd. 2018. All rights reserved.

Malaysia: The Political-Economy of Land Development (or the Politics of Floods) by KHOR Yu Leng

What are simmering issues for post-GE14?

(Read our summary of high-key issues for GE14 here.)

Bread-and-butter economic issues are regarded as front of mind for the average voter. We covered some of this in our Johor case study, examining the cost of living and housing affordability; with a comparison of a Johor Bahru (urban) household versus a Bukit Tinggi (rural, Felda) household. You should also look at Bank Negara’s concerns and call for a living wage.

So what else might urban-centric voters (and activists) feel some concern about? We look at the simmering issues of governance relating to land development and water in select hot button states, with a special focus on the Peninsular and case studies of Kedah and Kelantan.

First, we look at an an indicator of land activity for 2013-2016 across three states - Johor, Kedah and Kelantan. The greatest land activity (as a ratio of total district area) was in Pendang, Gua Musang and across several districts of Johor. This indicator covers both development and redevelopment economic activities. Heightened land (re)development-clearance should bode well for future incomes, but may cause some short to medium-term discomfort. Urbanites may face delays due to construction and be worried about rising congestion, rural folk may have regular incomes disrupted if there is major oil palm replanting (it takes a few years to mature) and Orang Asli may face local water supply problems and other impacts including minor landslides affecting road access. 

After several years of El Nino-driven dry seasons (when the Peninsular was affected by drifting haze form peat smog and forest fires from Sumatra), it seems that the climatic turn to a regular-wetter situation brings on more flood risk. When this encounters major land development-clearance activities, we run into the Politics of Floods.

Land activity by district 2013-2016, as a proportion of land area - for three states

Development and water

In contrast to high politics, these issues are in the realm of low politics, and are localised or sub-regional issues. There are cases of resistance to rising urban density, water supply outages and extreme events like major flood crises. Malaysia NGOs typically blame deforestation (land clearing) for unusual flooding, as do various experts. In Thailand’s mega floods, the situation was similar, with the problem blamed on development, bad planning and officials, despite expert ambivalence on causality. What is common in various countries post-flood is a crackdown on logging and deforestation.

In the wake of the 2017 massive floods in Penang and Kedah, the Institution of Engineers Malaysia calls for a new comprehensive planning: "the master plan should include the flood mitigation and prevention action plans, for current and future developments, land use changes as well as climatic change factor."

Selected issues:

• In the Klang Valley, Selangor has been beset by water supply issues for over a decade. In some areas, residents worry about the conversion of parks to property projects, including in Taman Rimba Kiara and Taman Desa,  congestion problems during peak hours, and over-development.

• Social activists points to a Penang (development) Dilemma; and concern about environment-development issues, notably about (real estate) hillslope developments and disgruntled residents. During rainy periods, small landslide risk is of concern. (However, there does not seem to be major risk concern as there is better engineering implementation on Malaysian hillsides.) Amidst local finger-pointing, Penang leaders argue that a freak storm and flood was politicised a few months ago.

• Pahang issues include polluting aluminium mining that faced a ban (with exceptions), and an (anti-corruption) seize-and-release case. Earlier, a rare earth processing plant by Lynas of Australia caused concern and is likely to be an ongoing issue given the traumatic history of Mitsubishi's rare earth processing in Perak (with USD100 million voluntarily spent on its clean-up). Logging risks will first immediately affect the water source for villagers, and nature spots like Tasik Chini have been spoilt by various activities.

• In Kedah, concerns have arisen on logging and sand mining, and seem to persist. There is concern about its effect on the water supply to the three northern states of Peninsular Malaysia, with some finger pointing between the authorities of Penang and Kedah.

• Kelantan’s Orang Asli living near Gua Musang were affected by logging and durian plantation development, also giving rise to some blockades. The flood of 2014 was record setting (bankers tell of the first floor of bank branches entirely engulfed and planters talk of 15-20 meter tall oil palm trees submerged) and triggered by exceptional rain, but experts point to the problem of deforestation.

• In Sabah, there is a electoral promise of better wildlife protection.

Fiscal federalism

Stronger state finances are often linked to increased land development (which state administrations fully control). It is regularly noted that Malaysian states rely on revenues from land related activities. Malaysia’s centralised federalism is criticised for a fiscal federalism that needs a fairer and more balanced distribution of revenue collection. At the Federal level, there is notable rising funding to the Prime Minister’s Office, with a large discretionary (development) spending portion and centralised control over even more. Budget experts note that this is often mirrored at the state level, with Chief Ministers having control over large discretionary budgets too, with little to distinguish BN and non-BN run states.

A lawmaker points out that only 2.4% of federal revenue goes back to states. Nevertheless, after the massive flood of 2014, Kelantan has been criticised for over-reliance on funding via concessions and logging. Activists ask its government to find other sources of revenue. Within the bounded context of state finances, it is clear that there is still an expectation that states have better governance and non-land revenues.

Perspectives on development

Land development includes extensification of economic activity with logging and timber plantations depending on the type of forest zones; intensification with forest conversion to agriculture, and agricultural land conversion to non-agriculture; and hyper intensification with upward revised plot ratios for high-density urban landscapes. It also covers large infrastructure projects (E.g. East Coast Rail Link, Pan Borneo Highway) and land reclamations (quite in vogue for large development projects in Penang, Melaka and Johor).

We spoke to 20 expert observers of land development issues (including three civil servants, whose views are featured in Appendix 1) with a semi-structured questionnaire. The key findings are shown in Table 1.a, and displays across-the-board concern about land governance, with a slightly positive view on economic outcomes, and strongly negative views on environmental and socio-economic impacts. Table 1.b presents observers views on policy reforms needed and indicates their economic sector and work geography.

Table 1.a: Views on land development projects - timing, governance, impact

Table 1.b: Views on land development projects - policy reforms needed

Land development in Kedah and Kelantan - exploring big data and state budgets

In a preliminary review of land development by extensification, we set geospatial information (satellite imagery on zones of land clearance or tree cover loss for all types of economic development) against public information from state budgets (looking at non-recurring land-related revenue, that is most closely associated with such land development). Figure 1 shows that Kedah gets 50-60% of its revenue from land-related segments and Kelantan’s reliance has dipped to about 30%.

Figure 1: Kedah and Kelantan % state revenue from land, forestry, mineral and water

Note: Based on official audit reports that features top revenue sources, but do not provide the full breakdown of items. These figures will be slightly lower than the full count, as there will be some revenue amounts that are not shown in the “top” sources list.

Data on tree cover loss should give a fair gauge of land development, but only after we deflate it for the probable ratio of replanting of plantations in Malaysia (using recent national averages); to avoid inflating perceptions on deforestation. In this way, we derive a proxy for greenfield development (land clearance), from two data-sets available on the popular Global Forest Watch platform. Data on land clearance is not provided by states in a timely and comprehensive way. This approach offers an insight to economic analysis opportunities from including novel “big data” sources.

We reckon the above estimates on proxy data results in a conservative (perhaps underestimated) view for Kelantan given that is still a frontier of development (notably in the west and south-west). It should be relatively fair for Kedah which is a long developed state where forest-to-land conversions occurred decades ago (but there is recent activity around the water catchment areas in the north-east). However, with more resourcing a more detailed data study can distinguish true green-field development outside of long-in use areas, and these results should be updated accordingly.

Figure 2 illustrates adjusted data from Global Forest Watch on annual land clearance across a span of 10 years (grouped for apparent up-and-down cycles) for Kedah and Kelantan. The latter may recently have land clearance (ex-plantations) of over 12,000 hectares per year; which appears significantly higher than similar activity in Kedah (dark green versus blue columns).

Figure 2 and Figure 3 show the zones of land clearance-development activities (black-green) for each state that have occurred outside areas that were already in-use by 2000. (This data differs from the Global Forest Watch data referred to above that are used in Figure 4).

Figure 2: Map, Kedah - zones of land clearance

Figure 3: Map, Kelantan - zones of land clearance

The results of matching estimates of land clearance (from Global Forest Watch data sets) against state revenue, the indicative Ringgit per hectare suggests that Kedah reports significantly higher income per unit of land cleared (outside of plantation zones) is shown in Figure 4.

This preliminary review focuses on readily available and timely public information, which are the state revenues. It does not include income that government-linked corporations (GLCs), including Menteri Besar Incorporated (MBI) units, Yaysans (foundations) and others may earn off state land development activity. Further research should cover these data sources. For now, we may note that Kedah reports more in state revenue per hectare of land (development) clearance than does Kelantan (dark blue line versus the light green line in Figure 4). However, it is possible that Kelantan just books more of its land activity earnings elsewhere (in the aforementioned state-linked and other associated entities), but this needs to be clarified by an aggregate disclosure of such information.

Figure 4: Kedah and Kelantan - exploring public data on land (clearance) development and revenues

For the sake of improved transparency and governance (an issue strongly felt by the experts interviewed for this paper), it would be important that state administrations evolve to disclose comprehensive and timely information about land (development) clearance and what the state earns from (each hectare of) such activity.

Major findings:

• Malaysia’s fiscal federalism centralises funding control in the center. At the Federal level, there is notable rising centralised control; and a similar pattern is seen at the state level, with Chief Ministers having control over large discretionary budgets too.

• There are some obvious risk-gaps between the land development pace set by state administrations and “downstream” planning changes controlled at the Federal level. This results in blame-games between states and the Federal Drainage and Irrigation Department (E.g., Penang blames underspending) and causes states afflicted by record floods to appeal for Federal emergency relief (E.g., aid for the massive 2017 Penang flood). Kelantan faced massive floods in 2014, and experts point to the state’s search for revenue (from logging) and call for a stop to unsustainable land clearance, and better Federal-state cooperation.

• We spoke to over 60 close observers of land development issues (including 20 experts and three civil servants). There was across-the-board concern about land governance, slightly positive views on economic outcomes, strongly negative views on environmental and socio-economic impacts. All observers were vocal about policy reforms needed, no matter which political coalition runs the state. There is a broad call for greater transparency and public consultation.

• States can do better to report in a comprehensive way their earnings from land development. This is currently spread across State Budget and other entities such as state-level state-owned enterprises or GLCs (including Menteri Besar Incorporated) and state and other associated Yayasans (foundations).

Khor Yu leng is an independent geo-data economist at Khor Reports - Segi Enam Advisors.

This preliminary report builds on the research findings from the author’s interviews with 60 sources in late 2017 to early 2018, including those with state and budget specialists. Assisted by Jeamme Chia for geospatial data analysis and Sharon Tan for expert opinions on development issues.

#Malaysia #PRU14 #GE14 #PoliticalEconomy #Development #Flood #Governance #Deforestation #GlobalForestWatch #KhorReports #Data #DataScience

(c) 2018, Khor Yu Leng. All rights reserved.

Appendix 1: Viewpoints from three civil servants on governance in land development

Three civil servants in Peninsular Malaysia were among a group of expert observers on land development issues interviewed in late January to early February 2018. Among the often heated narratives of businessmen, NGOs and politicians, this segment often lacks a voice; and so we present their views here verbatim.