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Oil Palm: The Imported Wonder

By Mark Wong, Oral History Specialist

The oil palm has come a long way from its humble beginnings as an ornamental plant to being an inexpensive source of nutrition, and increasingly of biofuel, for millions of people around the world.

Although Southeast Asia is today responsible for the cultivation, processing and export of most of the world’s oil palm products, the oil palm was originally imported to the region from West Africa, some 12,500 km away. Favourable climate and soil conditions, together with active governmental support have helped Southeast Asia, in particular Malaysia and Indonesia, to emerge as the world’s largest producers and exporters of palm oil.

Singapore’s historical role as a leading entrepot and commercial hub has also been a major factor in making Southeast Asia a centre for the international circulation of oil palm products.


The Oil Palm and its Versatile Products

The oil palm produces three main products: palm oil, palm kernel oil and palm kernel cake and meal. Palm oil comes from the pericarp of the fruit, while palm kernel oil is extracted from the seed. Both are classified as edible-industrial oils.1 Interestingly, though originating from the same fruit, the palm oil and palm kernal oils “are very different in their constitution and properties, although some of their end uses are similar”.2 Palm oil is used in the manufacture of soap and candles, and in some butter-substitutes.3 Furthermore, as the 1920 prospectus of the plantation company, Malayan Oil Palms Limited explains,4 palm oil was literally involved in lubricating the wheels of early Malayan industry:

"Large quantities [of palm oil] are used in the tin-industry to prevent oxidation of the plates, as they come from the rollers, and await dipping into the molten tin. Enormous quantities are used by railroad companies for lubricating the axle boxes of railway carriages."5

Palm kernel oil differs from palm oil in being a “hard” oil, more similar in quality to coconut oil.6 It is used in making soap, candles, synthetic detergents, butter substitutes and even chocolate, substituting for the costlier cocoa-butter.7 After the extraction of oil from the kernel, the residual cake still contains 6% oil and is used as a cattle feed and an agricultural fertiliser. If the kernel was extracted by chemical solvents, the residual meal contains only 2% oil and is valued as a superior feed for milch cows.8

Both palm oil and palm kernel oil, as vegetable oils, can also be used as biofuels to power internal combustion engines. The idea of biofuel was introduced as early as 1900 when Rudolf Diesel developed his diesel engine which ran on peanut oil. However, with cost the deciding factor, biofuels were not considered a viable alternative to petroleum at the time, as seen in this extract from a manual on oil palms published in 1934 by the Department of Agriculture of the Straits Settlements and Federated Malay States:

"Palm oil has been used as a fuel for internal combustion engines with satisfactory results, although its use in this connexion is likely to remain restricted to those countries in which palm oil can be produced more cheaply than imported mineral oil."9

It is only in the latter part of the 20th century, with rising concerns over the environmental impact of human industrial activities and the need to reduce dependence on non-renewable fossil fuels that the idea of using biofuels has seen renewed interest. More recently though, biofuels have faced criticism for diverting food sources towards fuel production and contributing to rising food prices, while the increase of oil palm plantations has been blamed for the depletion of primary rainforests.


Singapore and the Oil Palm

Singapore’s association with the oil palm was established early on. While there were never large-scale oil palm plantations on the island, the first oil palms grown in Malaya were those grown in Singapore’s Botanic Gardens in 1875. Seeds of the African oil palm (Elaeis guineensis) were sent to Singapore via the Royal Botanic Gardens in Kew.10 With its large and welcoming fan-shaped branches, delicate pinnate fronds and striking red fruit, the oil palm was initially cultivated as an ornamental plant, even though its economic potential was not unknown. It was only later, as consumption and demand for vegetable oils and fats increased, that the commercial planting of oil palm was taken up. The first commercial oil palm plantation in Malaya opened in 1917 on Tennamaram Estate at Kuala Selangor.11

Source: Singapore Press Holdings
The oil palms found in the Singapore Botanic Gardens are a reminder of the beginnings of one of the most successful Malayan exports ever, palm oil. This photo was taken in 1963.

Singapore’s port played a key role in facilitating the distribution of Malayan-produced oil palm which was growing rapidly in volume. In 1921, there were only 6,015 acres of oil palm plantations in Malaya.12 This grew to 56,960 acres in 1931 and later to 72,143 acres in 1938.13 Moreover from 1925, Singapore’s immediate neighbour Johore consistently accounted for approximately half of the acreage of oil palm in Malaya as a result of active encouragement by the Johore Government.14 Oil palm companies such as Oil Palm Plantations Limited15 and Malayan Oil Palms Limited16 were registered in Singapore while acquiring land in peninsula Malaya for their plantations. Malayan Palm Oils Ltd, for example, was registered on 13 July 1920 with its Office at 18 Battery Road, Singapore. In the company’s prospectus dated 14 July 1920, it was stated that:

"The Company has been formed for the purposes mentioned in the Memorandum and Articles of Association and primarily to acquire for the planting of the West African Oil Palm 6,250 acres of Jungle situated between Layang Layang and Rengam, Johore.17

The prospectus further elaborated that the plantation would be accessible by road, rail as well as the Johore River, where “direct water transport to Singapore 69 miles distance is available for Tongkangs.”18

Singapore Harbour Board’s Bulk Storage Facilities

A key development in Singapore’s role as a centre for the re-export of palm oil lay in the Singapore Harbour Board’s decision to build onsite palm oil bulking facilities. The precedent for such facilities in Southeast Asia was set by the port of Belawan, North Sumatra in the 1920s. From 1930-1932, lengthy negotiations were conducted with companies interested in leasing proposed palm oil bulk storage facilities from the Singapore Harbour Board, which would include three 500-tonne oil tanks, a boiler, pumps and pipes. This installation would enable the direct storage of large quantities of palm oil at the port, facilitating the quick reception and despatch of oil. The Singapore Harbour Board had to find a tenant that could guarantee an adequate length of tenure and tonnage of oil in order to justify the large amount of infrastructural costs that such an installation would incur. The breakdown in negotiations between the Singapore Harbour Board and Plantations Hallet Limited illustrates the relative inexperience and uncertainty on the part of both sides in embarking on such a venture. In a letter dated 12 January 1931, the Manager of Plantations Hallet Limited condemned the Board’s requested annual rent of 25 cents per square foot:

"From what you write I can only surmise one of two things. Either your Board are totally ignorant of the difficulties under which an oil palm estate has to operate in order to show a profit (what one calculates in cents for rubber one has to deal with in fractions of a cent in palm oil) or else your Board have no desire whatsoever to see palm oil bulking plants, established in Singapore [….] In view of the fact that a land station is not an absolute necessity for the successful handling of palm oil in bulk – I consider the terms which you have stated in your letter under review, unless modified very considerably, closes the door on the possibility of Singapore ever becoming a palm oil collecting port for ocean going vessels."19

Negotiations with Guthrie & Company fared better. Although their initial projected oil tonnage was deemed too low to be economical, Guthrie & Company eventually formed the Malayan Palm Oil Bulking Company Limited20 with several other oil palm planting companies to share the new bulking storage facilities at the Singapore Harbour Board. This development played out in the Singapore Harbour Board’s minutes of meeting dated 8 September 1931:

"According to the tonnages given to the Chairman by Mr. Mann and Mr. Robertson at their interview with him on 6th January, 1931, it would appear that Messrs. Guthrie’s output of palm oil for 1931 will be 750 – 1,000 tons which it was expected would increase by 1,000 tons per annum for the next 10 years. This would not justify the expenditure by the Board of erecting and leasing tanks and pumping plant and the Board suggest the Chairman should interview Mr. Robertson and ask him if his firm is in a position to give any guarantee as to the tonnages they expect to ship through the installation."21

And a month later on 7 October 1931:

"Messrs Guthrie & Company would appear to have interested other companies to join them in the shipping of palm oil as indicated in the memorandum enclosed with their letters of 22nd September and 6th October, 1931, which gives a total of 7,000 tons of oil to be shipped in 1932 with a maximum output of 24,000 tons."22

The bulking storage facilities were thus built at an estimated cost of $93,345 and leased out to Guthrie & Company for fifteen years, at an annual rental of $10,200, with an option for renewal at the end of the lease. 23 Guthrie & Company then sub-leased the premises to the Malayan Palm Oil Bulking Company, whose investors included Guthrie & Company themselves as well as the planting companies Bernam Oil Palms Limited, United Plantations Limited, Tennamaram Palm Oil Company Limited and several others.24 In the Malayan Palm Oil Bulking Company’s Annual Report submitted at the First Annual General Meeting held on 17 February 1934, it was reported:

"The Company commenced receiving oil at the Installation on 15th December, 1932, and the first shipment outward, amounting to 630 tons, was effected by the S.S. ‘Titan’ on 31st March, 1933. During the year 7,974 tons of oil have been received at, and 6,905 tons have been shipped from, the Installation. For a new venture, the Installation has functioned with a high degree of efficiency."25


Use of Palm Oil during the Japanese Occupation

Palm oil from Malaya was successfully re-exported via Singapore in the years leading up to the Second World War and businesses in the industry reaped financial rewards. However, during the Japanese Occupation, many plantations in Malaya were left untended and trading was disrupted. Nonetheless, palm oil imposed an invigorating presence on Singapore—but in a nutritional rather than financial way. Palm oil’s characteristic red colour is the result of its high amounts of beta-carotene, a fact that authorities already knew about before the War. As this extract from the Annual Report of the Straits Settlements 1938 shows, attempts were made to take advantage of this nutritive property:

"Amongst the 46 lines of introductions from West Africa, ten palms have been selected with very high colour of oil. Selfing and inter-crossing of these palms has been carried out. The possibilities in connexion with small scale production of oil with very high carotene content for dietetic purposes are being explored."26

While most people would not have known about its precise nutritional content, many did know that there were health benefits to palm oil. In fact, a case can be made for palm oil’s vitalising role in sustaining many during the difficult Japanese Occupation. Through the illustrations by William Haxworth, a prisoner of war who secretly made hundreds of sketches and watercolour paintings while imprisoned at Changi Prison and Sime Road Internment Camp,27 we learn that the Japanese fed internees palm oil to keep them healthy. One illustration by Haxworth comes with the captions: “Changi Ration:- one teaspoonful per diem” and “Red palm oil made us feel younger”.

Source: W R M Haxworth
This sketch by Prisoner-of-War William Haxworth depicts the consumption of palm oil by internees during the Japanese Occupation

The late Brother Vincent, a Missionary School educator and Justice of the Peace, also went through the Occupation as a prisoner of war. Once a week, on the black market, he would sell away the rice-bun he received from the Japanese so that he could buy palm oil to supplement his health, despite its bad taste:

"With the money he gave me, that was $25, I was able to buy a sweet bottle in which you had some palm oil. And the doctor said that one spoonful of that palm oil had more nutrition, and more calories and more value in food than whatever the Japanese gave us for the whole day. And therefore, I used to take that. It was a horrible taste not because palm oil taste bad, but because it came in containers that used to contain kerosene. And they had not washed the kerosene or removed -- they couldn’t remove the kerosene, and of course in the black-market business you couldn’t argue. So they came with the tin and filled that with palm oil [….] The containers! And you would taste that and your heart would kind of go up. This was the only way you could get the palm oil. So I was able throughout my stay in Sime Road [Camp] to have my three spoonfuls of palm oil a day. That was really what saved me."28

Outside of the prisons and internment camps, palm oil was also given out regularly in schools to keep children healthy. In his interview with the Oral History Centre, Victor Tan recalled the weekly fortification ritual he experienced in school during the days of Syonanto:

"Very often we get palm-olive oil to take as cod liver oil, once a week or so.  The school people [forced us to take it]. It’s horrible smell […] We all lined up in a row and [our teacher] said, ‘Open your mouth.’ I remember that very well. It’s palm-oil. Later when I grew big I found out it was palm oil, it is horrible smell. What you do, you just lined up. That’s why I said, the Japanese no doubt they are a bit bad, but they take quite good care of [the children….] We were quite healthy, you know. Nobody suffer any sickness, very strange. At that time the common cases were beriberi, because we take a lot of tapioca and all that, a lot of common cases of beriberi, I remember. I think this oil helps, surprisingly"29


Many people hated palm oil for its bad taste. In addition, Ng Lee Kar also recalled that people did not like to consume palm oil because of its strange red colour.30 However, for many, there was not much of a choice because food supplies were low. Heng Chiang Ki recalled that because rice was expensive, tapioca became a staple for the poor during the Occupation, used to make all sorts of food like bread and cakes, while palm oil was used for cooking. This particular set of circumstances even churned out an intriguing dish: red char kway teow made from tapioca!

"Oh yes, the oil that we used for cooking was palm oil, the red palm oil. And even when you take ‘char kuay teow’, they had to use palm oil to fry the ‘char kway teow’ […] It’s red in colour. Looks more like tomato ketchup. So the mee was also made of tapioca. So when you fry the mee with the palm oil, you can just imagine what the taste is like!"31

Food shortages also affected those in the Indian community. Niranjan Singh recalled that owing to a lack of ghee, which was widely used in Indian cooking, palm or coconut oil was used as a substitute, altering the diet of the Indian community.32

Palm Oil Today – From Food to Fuel?

The palm oil industry was revived with the end of the Second World War and has become once again a major commodity in this part of the world. Malaya quickly reclaimed her place as the leading global palm oil producer, and palm oil was identified as one of the key industries of post-independence Malaysia. According to an Economic Development Board (of Singapore) report from 1969:

"[Malaysia’s] oil palm industry was given a great booster with the adoptation of The First Malaysian Plan 1966 – 1970 whereby the [Malaysian] Government had conceived that oil palm can be more profitable than rubber since it will yield higher net returns and offer an excellent opportunity to diversify the Malaysian agriculture."33

The rise of Southeast Asia as the leading production centre of palm oil in the late 1960s was also the outcome of disruptions in oil production in Nigeria due to its Civil War. Global dependence on oil palm supplies shifted from Africa to Southeast Asia, in particular Malaysia and Indonesia, the world’s top two oil palm growers. Singapore, replaying its traditional role as entrepot, benefited from this, as evidenced in the same Economic Development Board report:

"The significance of this commodity in the entrepot trade is evidenced by the fact that re-exports constituted 99% of imported volume and are mainly consigned to U.K., European Economic Community, Kenya, Israel, and Iraq. Others include Formosa, Japan, Philippines, Pakistan, and South Africa. These countries have been increasingly seeking the commodity from this region since the termination of supplies from Nigeria. About 8,669 tons are retained primarily to supply the edible/vegetable oil manufacturing industries in Singapore."34

It was further noted that Singapore was looking to increase its stakes in the global palm oil trade by investing in refining and winterisation plants. This would allow it to diversify its role into manufacturing as well:

"3 new projects on winterisation and fractionation of crude palm oil for edible purpose or use in the manufacture of margarine, soap, shortening and vanaspati, are being implemented by Ben Hwa New Industries Ltd., Inter-continental Oil Industries Pte. Ltd. and Lam Soon Vegetable Oil Pte. Ltd. Their total production capacity per annum is anticipated at 32,000–33,000 tons of refined palm oil from 40,000 tons of crude palm oil. It can therefore be envisaged of the feasibility of substituting the re-export component of refined palm oil with exports of domestically produced/processed palm oil thus resulting in higher net foreign exchange earnings."35

This same attitude of constantly seeking out new avenues to ensure Singapore’s continued economic relevance can be seen in more recent moves by Singapore to position itself as a major bioenergy hub. In a speech in September 2007, the Minister of State for Trade and Industry, Mr S Iswaran, made clear Singapore’s aspirations in the energy market:

"We will endeavour to integrate biofuels into our oil industry. In the last 3 years, the Economic Development board of Singapore has made considerable headway in the biofuels sector by jump-starting biodiesel manufacturing on Jurong Island."36

Biofuels are not without controversy as soaring food prices have been blamed in part on the diversion of vegetable oils such as palm oil into the production of biofuel. The expanding palm oil industry has also been blamed for rainforest destruction. On its part, Singapore is simultaneously looking at how it can involve itself in the production of second generation (2G) biofuels, which will use agricultural and forestry waste (non-food) products in its feedstock rather than edible vegetable oils like palm oil. As Mr Iswaran explained:

"When we started, we attracted investments in first generation biodiesel plants on Jurong Island. Companies like Peter Cremer kick-started the biofuel industry by leveraging on the availability of palm oil produced in Southeast Asia [….] In Singapore, we are committed to invest in biofuel research to develop and commercialise second generation biofuel solutions […] developing alternative biofuel feedstock such as jatropha and sweet sorghum. All these efforts will be important in addressing the sustainability of biofuel and its integration into Singapore’s chemical industry."37

In 2011, Finland’s Neste Oil opened the world’s largest (2G) biofuel plant in Tuas, located at the western end of Singapore. The plant uses a variety of renewable feedstocks to produce its diesel, including palm oil and side stream products of palm oil production from Indonesia and Malaysia, as well as waste animal fat from Australia and New Zealand.38

Whether as fuel or food, the uses of the products of the oil palm are certainly diverse. The once humble ornamental palm and now fiercely contested commodity continues to be extremely relevant to Singapore and the region.

 

1 “Economic Reports - A Note on the Market Position of Coconut, Animal/Vegetable Oil Industry in Singapore,” Economic Development Board, File no. B 4/74, Microfilm no: EDB 760

2 “Economic Reports - A Note on the Market Position of Coconut, Animal/Vegetable Oil Industry in Singapore,” Economic Development Board, File no. B 4/74, Microfilm no: EDB 760

3 “Malayan Oil Palms Limited,” Registry of Companies, File no. 31/1920, Microfilm no: ROC 181

4 “Malayan Oil Palms Limited,” Registry of Companies, File no. 31/1920, Microfilm no: ROC 181

5 “Malayan Oil Palms Limited,” Registry of Companies, File no. 31/1920, Microfilm no: ROC 181

6 “Economic Reports - A Note on the Market Position of Coconut, Animal/Vegetable Oil Industry in Singapore,” Economic Development Board, File no. B 4/74, Microfilm no: EDB 760

7 “Malayan Oil Palms Limited,” Registry of Companies, File no. 31/1920, Microfilm no: ROC 181; “Economic Reports - A Note on the Market Position of Coconut, Animal/Vegetable Oil Industry in Singapore,” Economic Development Board, File no. B 4/74, Microfilm no: EDB 760

8 “Malayan Oil Palms Limited,” Registry of Companies, File no. 31/1920, Microfilm no: ROC 181

9 B Bunting C D V Georgi and J  N Milsum, The Oil Palm in Malaya (Kuala Lumpur: Department of Agriculture, Straits Settlements and Federated Malay States, 1934), p. 239

10 B Bunting C D V Georgi and J  N Milsum, The Oil Palm in Malaya (Kuala Lumpur: Department of Agriculture, Straits Settlements and Federated Malay States, 1934), p. 1

11 B Bunting C D V Georgi and J  N Milsum, The Oil Palm in Malaya (Kuala Lumpur: Department of Agriculture, Straits Settlements and Federated Malay States, 1934), p. 2

12 B Bunting C D V Georgi and J  N Milsum, The Oil Palm in Malaya (Kuala Lumpur: Department of Agriculture, Straits Settlements and Federated Malay States, 1934), p. 4

13 Annual Report of the Straits Settlements 1930 and Annual Report of the Straits Settlements 1938

14 “Malayan Oil Palms Limited,” Registry of Companies, File no. 31/1920, Microfilm no: ROC 181

15 “Oil Palm Plantations Limited,” Registry of Companies, File no. 24/1928, Microfilm no: ROC 238

16 “Malayan Oil Palms Limited,” Registry of Companies, File no. 31/1920, Microfilm no: ROC 181

17 “Malayan Oil Palms Limited,” Registry of Companies, File no. 31/1920, Microfilm no: ROC 181

18 “Malayan Oil Palms Limited,” Registry of Companies, File no. 31/1920, Microfilm no: ROC 181

19 Singapore Harbour Board Minutes, 4 Feb 1931,  pp. 16-17

20 “Malayan Palm Oil Bulking Company,” Registry of Companies, File no. 37/1932, Microfilm no: ROC 260

21 Singapore Harbour Board Minutes, 8 Sep 1931,  pp. 11-13

22 Singapore Harbour Board Minutes, 7 Oct 1931,  p. 11

23 Singapore Harbour Board Minutes, 6 Apr 1932, pp. 4-8

24 “Malayan Palm Oil Bulking Company,” Registry of Companies, File no. 37/1932, Microfilm no. ROC 260

25 “Malayan Palm Oil Bulking Company,” Registry of Companies, File no. 37/1932, Microfilm no. ROC 260

26 Annual Reports of the Straits Settlements 1938, p. 919

27 The Haxworth Collection of paintings and sketches was donated by Mrs Haxworth to NAS in 1986. They are featured in an exhibition on the war and its legacies at the Former Ford Factory.

28 Brother Vincent, Oral History Interview in English, Acc. no. 468, Reel 15

29 Victor Tan Teck Chye, Oral History Interview in English, Acc. no. 483, Reel 2
   [clip 1] [clip 2]

30 Ng Lee Kar, Oral History Interview in Hokien, Acc. no. 317, Reel 8

31 Heng Chiang Ki, Oral History Interview in English, Acc. no. 152, Reel 6

32 Niranjan Singh, Oral History Interview in English, Acc. no. 440, Reel 61

33 Economic Development Board, “Economic Reports – A Note on the Market Position of Coconut, Animal/Vegetable Oil Industry in Singapore”, File No. B 4/74, Microfilm No. EDB 760

34 Economic Development Board, “Economic Reports – A Note on the Market Position of Coconut, Animal/Vegetable Oil Industry in Singapore”, File No. B 4/74, Microfilm No. EDB 760

35 Economic Development Board, “Economic Reports – A Note on the Market Position of Coconut, Animal/Vegetable Oil Industry in Singapore”, File No. B 4/74, Microfilm No. EDB 760

36 S Iswaran, Speech at the 23rd Asia-Pacific Petroleum Conference, 11 Sep 2007, Document No. 2007091101

37 S Iswaran, Speech at the 5th Annual Asia Biofuels Conference, 12 Dec 2007, Document No. 20071212994

38 Neste Oil Corporation Press Release, “Neste Oil celebrates the grand opening of its ISCC-certified renewable diesel plant in Singapore”, Neste Oil, 8 March 2011, http://www.nesteoil.com/default.asp?path=1;41;540;1259;1260;16746;17030 (accessed 11 May 2012).