Sime Darby to rely on palm oil cushion

SIME Darby Bhd's 2012 earnings and beyond is not expected to be adversely impacted by the economic uncertainties in the West because of palm oil's position as a main food item.

Sime Darby derives up to 70 per cent of its income from plantations.

Sime Darby chairman Tun Musa Hitam said the economic woes in the United States and Europe were not expected to be much of a problem to the conglomerate as long as crude palm oil prices continued to be firm, supported by demand from developing economies.

"You cannot go wrong when you are producing food. Furthermore, the emerging economies of China and India and the Southeast Asian region will cushion the economic slowdown in the West," Musa said yesterday after handing over a mock cheque for the Tun Abdul Razak chair at Ohio University.

Musa represented Sime Darby as chairman of Yayasan Sime Darby.

He was commenting on a report by research house Nomura, which said Malaysia's economy was expected to slow in the first half of next year before gathering steam in the second half.

He described the economic health of the West as "very sick", but said it was not expected to affect Malaysia due to the emergence of China and the Asian economies, which would soften the impact.

Musa said Malaysia should do what it knew best - doing plantation - to ride out the current difficult time.