Two Malaysian firms plan agarwood venture in Laos
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Two Malaysian companies plan to invest US$18 million (RM79 million) for the inoculation of agarwood in Laos that is expected to generate US$200 million in three years.
Agriculture transaction company Aseagate (M) Sdn Bhd, forestry management company Richwood Capital Sdn Bhd (RWC), together with non-governmental organisation Global Outstanding Chinese 100 Organisation of Singapore (GOC100) yesterday inked a memorandum of understanding (MoU) for the project.
GOC100 inked an MoU with Aseagate that gave the latter sole rights to plantation management for over 2,000ha of land in Bolikhamsai province, Laos, while Aseagate inked an MoU with RWC to spell out their roles in the management, inoculation and supply of agarwood in the Indochinese state.
The formalisation of the two MoU will be implemented in March.
RWC CEO Kendrick Ho Qing Tyat said the parties are in the process of raising funds for the project and plan to get institutional investors from China.
“Given the platform that we have, with GOC100 backing and the Lao government’s support, there’s no reason why people won’t believe and invest with us. This is a good opportunity for them to earn money as well. This market may be new to them but it’s not new in this world,” he told a press conference after signing the MoU yesterday.
““Given the platform that we have, with GOC100 backing and the Lao government’s support, there’s no reason why people won’t believe and invest with us.”
Agarwood is a dark resinous heartwood and is the most expensive wood in the world. Agarwood is pricier than gold with a retail price of between US$5,600 and US$10,000 per kilogramme. A litre of agarwood oil can be sold at US$10,000 to US$14,000. It is valued in many cultures for its distinctive fragrance, and thus is used for incense and perfume. One of the main reasons for the relative rarity and high cost of agarwood is the depletion of the wild resource.
GOC100 was awarded the exclusive concession by the Lao central government’s Ministry of Agriculture and Forestry to manage the country’s agarwood plantation. GOC100 had in August 2015 signed an exclusive agreement with the Lao Ministry of Agriculture and Forestry for concession to these trees that are planted within the Lao military base and guarded by military.
The Aseagate-RWC partnership will see the inoculation of agarwood trees aged from 15-22 years to produce resin on behalf of the government of Laos.
GOC100 Singapore secretary-general Peter Lee said the Lao venture is significant to tap into the growing demand for agarwood, especially in the Middle East and China markets.
He said the agarwood project is a safe investment, as it is more resilient to economic fluctuations as compared to stocks and bonds, with insurance purchased for its proven inoculation technique and against natural calamities.
The parties are confident of the venture as the management and technical team has accumulated over seven years of experience in forestry management and agriculture technology, having provided solutions to plantation owners in Malaysia.
Ho said it utilises technology from Singapore to artificially induce trees to produce resin.
Questions & Answers
Q.What is the total investment planned for this agarwood venture?
What is the total investment planned for this agarwood venture?
Two Malaysian companies, Aseagate (M) Sdn Bhd and Richwood Capital Sdn Bhd (RWC), plan to invest US$18 million (RM79 million) in the project. This investment is for the inoculation of agarwood in Laos.
Q.Which organisations are involved in this agarwood project?
Which organisations are involved in this agarwood project?
The project involves Aseagate (M) Sdn Bhd, Richwood Capital Sdn Bhd (RWC), and Global Outstanding Chinese 100 Organisation of Singapore (GOC100). GOC100 secured the exclusive concession from the Lao Ministry of Agriculture and Forestry.
Q.What is the expected revenue generation from this venture?
What is the expected revenue generation from this venture?
The project is expected to generate US$200 million within three years. This revenue will come from the inoculation of agarwood trees to produce valuable resin.
Q.What makes agarwood a high-value product?
What makes agarwood a high-value product?
Agarwood is the most expensive wood in the world, priced higher than gold, and is valued for its distinctive fragrance. A kilogramme can retail for US$5,600 to US$10,000, and a litre of oil can sell for US$10,000 to US$14,000.
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