KUALA LUMPUR: FGV Holdings Bhd (FGV) and PLS Plantation Bhd (PLS) are exploring a joint venture (JV) for the development of cash crop plantations, primarily durian, following the signing of a heads of agreement (HoA).
FGV Group CEO Haris Fadzilah Hassan said the collaboration was part of FGV’s strategy to make productive use of unplanted areas that are unsuitable for oil palm, and to explore additional revenue streams by increasing the percentage of cash crops.
He said FGV’s logistics and support businesses sector would also benefit from the partnership as it offers a reliable logistical network through strategic collaborations.
“With this HoA, FGV hopes to explore the opportunity for both parties to form a JV, in line with the proposed National Durian Plantation Programme initiated by PLS,” he said in a statement today.
The HoA was signed at the recent Belt and Road Forum in Beijing, China.
In August last year, the agriculture and agro-based industry ministry signed an export protocol with China’s General Administration of Customs for fresh and frozen durian.
“There is a huge potential market for the Malaysian durian industry, with China currently being the world’s largest consumer of the fruit,” Haris said.
PLS, through its subsidiary, Dulai Fruits, has successfully penetrated the markets of 10 countries, of which China is the largest.
Dulai Fruits has 30 years of experience in the planting and export of durian.
Haris said FGV would also be able to leverage PLS’ market intelligence and networks to further strengthen its products and brand positioning in China. He said the group had identified approximately 1,398 hectares of land with the potential for large-scale commercial planting of durian.
According to United Nations trade data, durian exports to China have been increasing at an annual average of 35%, and was worth US$1.1 billion in 2017 – a significant jump from US$243 million a decade ago.
Although Thailand dominates the market, Putrajaya has targeted a 50% increase in exports by 2030, as the local industry reshapes itself for the global marketplace.
“The durian is the most profit-making cash crop from the value per hectare perspective and FGV aims to capitalise on China’s demand for the king of fruits.
“We believe that this venture will contribute positively to FGV’s financial performance, which will, in turn, improve shareholders’ value,” Haris said.