|Type||Public limited company|
property development & investment
|Area served||South-East Asia|
|Key people||Tan Lee Shin Cheng (Chairman)|
IOI Corporation Berhad (MYX: 1961) commonly referred to as IOI, was incorporated on 31 October 1969 as Industrial Oxygen Incorporated Sdn Bhd. IOI is one of Malaysia's biggest conglomerates that started off from industrial gas manufacturing. It ventured into property development in 1982, followed by oil palm plantations in 1985. As at June 2009, IOI Group employs more than 30,000 personnel of more than 23 different nationalities in 15 countries.
IOI is listed on the main board of the KLSE (now known as Bursa Malaysia). Subsidiaries IOI Properties Berhad and IOI Oleochemical Industries Berhad (Industrial Products) were separately de-listed from the exchange and duly privatised under IOI Corporation Berhad in April 2009 and March 2006, respectively.
IOI also owns 2 resort hotels namely Marriott Putrajaya Hotel and Palm Garden Hotel in Putrajaya. In 2005, IOI Properties was ranked second in The Edge's Malaysia Top 10 Property Developers Award.
The group is currently headed by Tan Lee Shin Cheng, the executive chairman. Lee has two sons and four daughters, all were trained as lawyers. Lee and his family's control of IOI Corporation is held via Progressive Holdings Sdn Bhd. Although all of Lee's children work for the company, sons Dato' Lee Yeow Chor and Lee Yeow Seng are given more prominence as seen in their representation in IOI Corporation Berhad board of directors.
Core Business Activities
Plantation is IOI's biggest income generator. As at June 2009, about 65 per cent of the conglomerate profits comes from its oil palm plantations. The group operates 152,000 hectares of oil palm plantations in Malaysia and 83,000 hectares in Indonesia. It has 12 palm oil mills with total milling capacity of 4.1 million tonnes per year at its 80 estates throughout Malaysia.
With oil yield of some 6 tonnes per hectare per year at its matured estates, IOI is the most efficient plantation company in the world. Malaysia's oil palm average yield for the last 20 years is stagnant at 4 tonnes per hectare per year.
Nestlé has at least temporarily stop buying palm oil from IOI in 2012. The United Nations Environment Programme says palm oil production is the main cause of deforestation, which is occurring at a rate of about 2% per year. Indonesia is also the world's third largest carbon emitter, largely as a result of deforestation and the burning of peatlands.
IOI's property businesses can be categorised into real estate development and property investment holding branching out to leisure and hospitality. The property segment contributes around 18 per cent of the group's earnings.
- Manufacturing of oleochemicals and speciality fats
IOI is the largest vegetable oil based oleochemical manufacturer in Asia – held under wholly owned entities IOI Oleochemical Industries Bhd and Pan Century Oleochemical Sdn Bhd with a combined capacity in excess of 750,000 tonnes per annum.
These plants produce fatty acids & esters, glycerine, soap noodles, fatty alcohols, and metallic strearates – that have various industrial applications in the production of food, pharmaceutical, cosmetics, personal care, home care, industrial detergent/ surfactants and lubricant products. Products derived from oleochemicals are more readily biodegradable and hence do not pose a threat to the environment. This is because oleochemicals are derived from renewable resources, as compared to petrochemicals which are obtained from exchaustible or non-renewable petroleum.
IOI's speciality fats businesses are operated under Loders Croklaan, with manufacturing facilities in the Netherlands, North America, and in Malaysia (with combined production capacity of more than a million tonnes per year). Loders Croklaan's customer base include global food giants like Unilever, Nestle, Cadbury and Kraft. IOI's sales offices are spread out in 8 countries serving customers in 65 countries.
Specialty fats provide special function and/or unique solution in food applications and branches out to nutrition / health supplement applications. These fats are use in pastries, confectionery, snack foods and ready-to-eat meals.
IOI is a co-founder of the Roundtable on Sustainable Palm Oil (RSPO) and has played an active role in shaping the scheme. The company has several of its estates in Malaysia certified as complying with the RSPO standard. According to the Friends of the Earth in March 2010 IOI Corporation failed to live up to its green claims of policy. For example:
- Plantation development took place in forestlands without approval of the Ministry of Forestry in conflict with the Indonesian legislation
- Plantation development took place without approved Environmental Impact Assessments
- Fraudulent statements were made
- Encroachment has taken place in forests and peat lands
- There is significant increase in fire hot spots
- Corporate claim not to use peat land but to circumvent the issue it does not consider coastal or shallow peat as peatland.
- Corporate claim not to use 'burning policy'. According to the Fire Information for Management System (FIRMS) there were a significant increase in the number of hot spots after land clearing activity start in 2009.
- IOI's current land development activities may trigger significant land conflicts.
- IOI Corp to buy out property arm. New Straits Times, 5 Feb 2009
- IOI gets SC nod to take unit private. New Straits Times, 25 Oct 2005
- IOI chairman's passion for his oil palms. New Straits Times, 31 Oct 2009
- IOI Corp Bhd annual report 2008
- Raising oil palm yields. New Straits Times, 25 Jan 2008
- Forbes 2012 #4 Lee Shin Cheng
- Nestlé stars in smear campaign over Indonesian palm oilGreenpeace links food manufacturer with mass deforestation December 2009
- IOI to buy Aditya Birla's Pan Century for RM423 million. New Straits Times, 8 Dec 2006
- IOI to buy Unilever's oils and fats division. New Straits Times, 31 Aug 2002
- Forbes 2012 No. 4 Lee Shin Cheng
- Too Green to be True, IOI Corporation in Ketapang District, West Kalimantan Milieudefensie and Friends of the Earth Europe, March 2010