KUALA LUMPUR: Sime Darby Bhd’s unit, Sime Darby Plantation Sdn Bhd, has acquired the entire stake in Nature Ambience Sdn Bhd from Common Enhance Sdn Bhd for RM16.82 million in a move that will allow it to develop oil palm plantations in Sarawak on native customary rights (NCR) land.

In a statement yesterday, Sime Darby said: “The acquisition will enable the Sime Darby group to develop oil palm plantations in Sarawak under the state government’s new concept of development for NCR land, in conjunction with Sarawak’s Land Custody and Development Authority (Pelita) and the natives holding native customary rights in the land.

“It is the intention of the group to adopt a differentiated approach to cultivate the NCR land, which is to be developed pursuant to the NCR joint-venture agreement, in compliance with the relevant guidelines issued by the Roundtable on Sustainable Palm Oil.”

It added Nature Ambience, which was incorporated in December 2008 and would be principally involved in oil palm cultivation and palm oil production, had on Oct 2, 2009, been granted approval from Sarawak’s ministry of land development to invest in or develop 26,211ha of NCR land in Kapit and Julau in accordance with the state government’s new concept of development on NCR Land.

Sime Darby said in the approval letter, the state’s ministry of land development had asked Pelita to issue a formal offer letter to Nature Ambience incorporating the basic terms and conditions to be entered into between relevant parties, the NCR joint-venture (JV) agreement, subsequent to the confirmation of interest by Nature Ambience.

It said the JV was expected to be between Nature Ambience, as a JV vehicle, Sime Plantation and Pelita’s subsidiary, Pelita Holdings Sdn Bhd, acting for itself and as trustee for the natives holding the rights in the NCR land.

Under the NCR land development scheme, the equity structure of the JV held by the investor, landowners and trustee would be 60:30:10, it added.

Meanwhile, Sime Darby said the scheme was an effort by the Sarawak state government to bring together the landowners with their land and the private sector with its capital and expertise to develop the land for commercial farming on a joint-venture basis, for the benefit of both parties.

“The objective of the NCR land projects is to turn idle NCR land into productive commercial assets and enhance equitable economic wealth distribution in the state,” it said.

It said the development of the land involved the merger of contiguous plots of NCR land into one parcel of land, with the agreement of the landowners. A leasehold title would then be issued to the land in favour of a JV for a period of 60 years or two planting cycles.

As consideration for the use of the land, the NCR landowners would be allocated a 30% equity in the JV company, with Pelita acting as trustee, in addition to its own 10% equity interest in the JV, it said

This article appeared in The Edge Financial Daily, December 8, 2009.