Chavez in Malaysia: palm oil, biofuels, geopolitics and ideology

Even though OPEC-member Venezuela is an oil rich country, it is seeking investments from Malaysia's palm oil sector as part of efforts to diversify its economy and to prevent it from becoming too dependent on fossil fuel. Venezuelan President Hugo Chavez is on a four-day visit to the country to boost economic ties. Top of the agenda was his visit to the state-owned Golden Hope plantations where he expressed great interest in palm oil's competitiveness as a renewable energy crop, and where he closed a bilateral biofuel cooperation deal. During his visit he also controversially urged Malaysia to 'bypass the West'. And reciprocally, Malaysia announced it is backing Venezuela's bid for a seat on the UN Security Council. Clearly, biofuels, geopolitics and ideology are forming a fascinating cocktail.

Chavez's first stop was at Golden Jomalina Food Industries Sdn Bhd, Golden Hope's biodesel plant in Teluk Panglima Garang. While heading to the Golden Hope Academy in Pulau Carey later, Chavez and his delegation had the chance to view the palm plantations. Chavez asked many questions about costs, yields, social sustainability, technology and biodiesel. Venezuela, one of the world's largest oil producers, shares the Equator line with Malaysia, making its land also suitable for growing oil palm.

Briefing the president, Golden Hope's group chief executive Datuk Sabri Ahmad revealed some interesting facts about what such a tech and knowledge transfer would entail:

• High yielding clones: Golden Hope could bring in its in-house developed ultra-high yielding GH 500 series planting material to Venezuela. The planting material is capable of yielding 40 tonnes fresh fruit bunch per tonne with a 25 percent extraction rate, which comes down to a yield of around 10 tons of oil per hectare. It is sold at RM1.35 per seed locally and RM1.80 for overseas markets. About 30 percent of Golden Hope's total plantation had been planted with the GH 500 series.
• Smallholder involvement: a presence in Venezuela would consist of establishing "nucleas estates" where the promotion of palm oil would be done via smallholders. "Land is sensitive issue anywhere in the world. We should work with the government how to promote palm oil through their own smallholders," he added.
• Good management: Sabri told Chavez during a briefing that good management is crucial, and illustrated this by saying that Malaysia will double its palm oil production either by 2010 or 2015. This could be achieved via good planting materials, harvest culture and biotechnology applications which Malaysia was currently pursuing, he said. Sabri also told the president that six million tonnes of the total production would be set aside for biodiesel production and the remainder for food-related purposes.
• The cost to run a 10,000-hectare palm oil plantation, yielding 400,000 tons of fruit bunches and 100,000 tons of oil, would require an investment of about US$40 million for three years.
• Since Golden Hope's plantations are state-owned, the biofuels knowledge and tech transfers all happen within a formal bilateral framework
  

This alliance is quite interesting because of Chavez's (controversial) policies at home. As is well known, the left-leaning president has been implementing a grand series of socio-economic policies aimed at bringing social justice to the poor through fighting poverty, solving land issues for the rural population, bringing education and health-care to the poor, redistributing wealth, and managing Venezuela's oil wealth in such a way that it benefits all citizens.

It will be interesting to see how Venezuela's nascent biofuels industry and the alliance with Malaysia will fit into these policies. As we have said elsewhere, oil palm can be a GDP-booster and bring wealth and jobs to the rural poor, provided the right policies are put in place. We feel that if there is one country where these major benefits of palm cultivation can be achieved, it is Venezuela.

While at it, Hugo Chavez urged Malaysia to bypass Western powers as it expands its global business links, and presented Caracas as an ideal destination to develop its palm oil and petroleum technology. Some interesting quotes:

• "The solution for our countries is not the North. The solution is between us ... We have to have our own model, not the model the countries of the North want to impose upon us,'' said Chavez, while using a laser pointer on a world map to indicate where the United States and Europe was.
• The left-leaning Chavez, a frequent critic of U.S. President George W. Bush, then implored Malaysian companies to invest in Venezuela as they were "brothers.''
• "Palm oil is very important to us. If Malaysia doesn't have the land to plant anymore, Venezuela has it,'' Chavez added.
• He also dangled a Venezuelan oil carrot before the gathering of about 150 businessmen and government officials. "Don't worry Malaysia. As a brother, we can help you explore and find oil. If you don't have oil (anymore) ... it will be provided for by Venezuela,'' he added. Venezuela, he said, had even larger proven reserves than Saudi Arabia - the reason America was out to oust him.
• "Malaysia is a country that shares many of Venezuela's positions. I think a new world geopolitical dynamic heading toward post-imperialism is in march. Imperialism must end, and it will end''.
• "My friend Fidel Castro says ... Washington is looking for you,'' added Chavez, without elaborating.

We will definitely keep tracking this development as it is another step forward towards creating an intensive form of South-South cooperation in the bioenergy sector. Meanwhile, green energy has become the battlefield of mild ideological struggles, that much is clear.

More information:

• A good overview of Chavez's social policies and his 'Bolivarian Revolution', seen from the context of the recent World Social Forum that took place in Caracas, Venezuela in January 2006, can be found in the article: Wsf Caracas : Shroud for Venezuela's social movements.
  More in-depth info can be found on the Wikipedia page about the "Bolivarian Missions" concerning education, health, housing, food security, rural economics and land reform.
• The Star: Venezuela's president urges Malaysia to bypass West - August 29, 2006
• The Star: Chavez: Malaysia backs Venezuela's UN bid - August 29, 2006.
• Bernama (Malaysian National News Agency): Golden Hope To Assist Venezuela In Palm Oil Activities - August 29, 2006
• Business Times Malaysia: Venezuela seeks palm oil cooperation with Malaysia - August 29, 2006
• Business Times Malaysia: GHope to triple oil palm landbank in Kalimantan - Aug 25, 2006
• Official homepage of the Malaysian Palm Oil Association

[Entry ends here]
biodiesel :: biomass :: biofuels :: energy :: sustainability :: palm oil :: Malaysia ::Venezuela :: Chavez ::