Mr Ku, a Pemandu director, said that Malaysia's palm oil industry remains biased towards the upstream and midstream segments, which contributed 74% of the overall industry revenue in 2013. To encourage further downstream investment, Pemandu is providing capex incentive grants, which has led to the private sector investment of RM1.786bn in Malaysia's oleo sector since 2011.
We view this positively as it will help Malaysia stay competitive against the fast rising Indonesian downstream players and boost export revenue. The beneficiaries are players that are expanding downstream like IOI and Sime. Maintain Neutral call and First Resources, AALI, SIMP and Ta Ann as top picks.
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