One of the fastest growing investment opportunities in the Asia Pacific region is investment in commercial plantation and farming industries.
One of the success stories in the industry is Asia Plantation Capital (APC), which owns, manages and operates a range of commercial plantation and farming businesses across the Asia-Pacific region as well as globally.
Smart and sustainable
According to Mr. Barry Rawlinson, chief executive officer of Asia Plantation Capital investment in the commercial plantation business is attracting considerable interest due to three primary factors:
Increasing worldwide demand for wood will result in further price increases. Because of long growth cycles, the supply of tropical hardwood cannot be expanded rapidly. In the last decade the price of tropical hardwood has increased more than 50% and future increases are expected.
2. Risk distribution
Historically, wood prices do not follow general developments on stock markets. Therefore, investing in wood can contribute markedly to portfolio diversification.
3. Inflation resistant
An investment in forestry is immune to inflation because periods of inflation are generally coupled with a strong increase in the price of wood.
“Forestry investments, agricultural investments and plantation investments have changed over the last decade to become part of both large and small investors’ portfolios. We’ve seen opinions on this type of investment change from being considered an alternative investment to more mainstream, and now investments in forestry are an essential component of many institutional and pension growth funds,” says Mr. Rawlinson.
The Asia Plantation Capital Group acts as plantation and agricultural investment managers and advisors to several private equity funds that focus on the forestry, farming and renewable energy investment sectors. Plantation and biological assets currently owned and or under managed on behalf of private clients exceed USD $400 million and are expected to rise to over USD $1 billion over the next decade.
In, September 2014 , Asia Plantation Capital announced a significant rise in turnover for the 2013 financial year, posting a new revenue peak of USD $53.5 million. The company also passed the USD $6 million milestone in repayments to stakeholders on the company’s agroforestry plantation projects last year. This figure is projected to continue rising as more plantation species reach maturity.
Diversity in diversification
The continued harvesting and production of oud (agarwood oil) and associated oud products from the company’s managed agarwood plantations is also expected to yield a profit, and APC is developing opportunities for agarwood crops in Malaysia. With the value of oud oil, the oil that comes from the specially treated wood of the tree, 1.5 times higher than the value of gold, the sustainable agarwood industry is well established in Asia and APC is actively looking to bring their advanced plantation systems to Malaysia.
“Gaharu is not new to the region and we see many opportunities for its growth in Malaysia. As a leading company in plantation management, we ensure that our agarwood is harvested ethically and sustainably,” said Steve Watts, chief executive officer of Asia Plantation Capital Berhard, speaking at the recent Johor Biotech Conference. “Not only that, we are one of the very few plantation companies that has its products certified by CITES, the Convention on International Trade in Endangered Species of Wild Fauna and Flora, to legally trade in agarwood,” continued Watts.
Agarwood—more commonly known as gaharu in Malaysia and Indonesia—comes from the aquilaria tree, a species native to Southeast Asian countries like Malaysia, Thailand, Cambodia, Vietnam and Indonesia. What makes it so highly sought after is the rarity of the fragrant resin contained within, as it is only produced when the tree is affected by or, as is the case of trees managed by APC, treated with a certain fungus.
Oud oil and oud wood chips have been an integral part of Middle Eastern cultures for centuries, where it is not only used in fragrances but wood chips are also burned as incense in homes. In China, agarwood sculptures are common pieces in homes, and wearing bracelets made of agarwood beads is quickly becoming a trend, with recent record auction prices being achieved in China for agarwood pieces. Globally, oud is now a major component in the fragrance and cosmetics industry, used by virtually all of the world’s leading luxury fragrance brands. APC’s partner fragrance company, Fragrance Du Bois, recently had one of its perfumes shortlisted as a top 10 finalist in the Art + Olfaction awards, a fragrance award in Los Angeles, beating out competitors from around the world.
The health benefits of agarwood have long been known and used in Traditional Chinese Medicine (TCM), for instance, to treat the digestive system, relieve spasms and pain, as well as treat tightness in the chest, abdominal pain, vomiting, diarrhea, skin infections and asthma, and recent research has shown that agarwood may have even more medicinal benefits. Agarwood oil has been found to have sedative effects, while a component of agarwood shows promise for use in the development of an anti-cancer drug. Antioxidant properties have also been found in the extract of agarwood leaves.
All species of the aquilaria tree are classified as endangered species under CITES due to extensive and illegal logging and harvesting for oud oil, but APC’s oud oil and woodchip products are certified legal under the CITES agreement, which ensures ethical and legal standards are upheld in the planting, growing and harvesting of agarwood and oud oil.
Moving forward, Asia Plantation Capital has plans to explore further opportunities by acquiring plantations or partnering plantation owners to develop agarwood in Malaysia. Over the last 10 years APC has developed advanced proprietary inoculation systems which have been implemented in Thailand, Cambodia and India to proven results and a new patented system which, over a longer time frame, can stimulate resin production throughout the entire tree.
Investors may also be interested in the growing market for bamboo across Asia and the world. Asia Plantation Capital’s bamboo plantations have been in operation since early 2013, producing consistent yields of edible shoots and future diversification into bamboo-based biomass and flooring is planned.
Asia Plantation Capital continues to aggressively invest in its plantations, implementing the latest processing and production systems technologies. The company leverages leading engineering specialists and researchers in Thailand to advise on improvements across all sectors of the company’s plantation operations; continuing its policy of working with various Universities on key research projects related to its activities.
“Asia Plantation Capital continues to deliver outstanding results for our clients and partners. Despite many challenging factors within the sector, we have consistently continued to grow and strengthen our position in the market. Our philosophy of constantly investing in our plantations projects through the introduction of the latest proven techniques and technology, together with strong operational management, has reaped substantial rewards over the years,” said Mr. Rawlinson. “As we find new opportunities and markets, we will ensure that what we plant is sustainable, produces end products that are of high value and contributes to the community.”
In addition to achieving profits for investors, working closely with and supporting the local communities in which it operates is a core principle of APC, and it provides social and cultural support, as well as investment, to help these communities move away from deforestation and illegal logging—previously seen as a main source of income in some regions of Asia. The company actively promotes the use of certified wood as the best way of preventing deforestation, protecting biodiversity and combatting poverty in the tropical rainforest regions. For the yachting sector, which strives for excellence and which is already involved in environmental efforts, this is also a way of ensuring that no wood from illegal logging is used. Asia Plantation Capital currently has projects at various stages in Thailand, Malaysia, China, Laos, India, Cambodia, Sri Lanka, Mozambique, Gambia, North America and Europe.
For further information, please contact:
Group Marketing Director
Asia Plantation Capital
Tel: +65 6222 3386
Chief Executive Officer
Asia Plantation Capital Berhard
Tel: +607 207 0276