FGV Annual Report 2020

80 FGV HOLDINGS BERHAD Annual Integrated Report 2020 Our Operating Landscape OPERATING ENVIRONMENT • Higher demand due to concern on Global Food Security • Volatility of CPO Price • Shortage of migrant workers • RSPO certification • Human Rights • USA - China trade tension • EU trade restrictions and Malaysian measures • Malaysia – USA trade STRATEGIC IMPLICATIONS • This trend is an important consideration for FGV, which has share of the domestic food market, to increase its market share by producing market-driven food products. • In 2020, Malaysia’s Ministry of Finance proposed counter measures that included: a) Biodiesel programmes to increase the utilisation of CPO b) High impact downstream projects to develop oleochemicals and biochemical industries c) Awareness campaigns to promote the socio-economic benefits of palm oil d) Diversifying into new markets to promote the long-term adoption of palm oil • Suspension of RSPO certification. • Non-compliance of regulations and policies resulting in the inability to sell certified products to existing/potential buyers. • The weakening of the US dollar will make Malaysian exports more costly. • Affecting the company’s supply chain and product sales, and have repercussions on other trading partners such as Japan, South Korea, Taiwan and Singapore. ACTION PLAN • The Group is being restructured, with Consumer Food Products as a strategic revenue stream. • With this new direction, we also envisage playing our part to reduce Malaysia’s hefty food import bill. • Establishment and maintenance of good relationships with local and foreign authorities. • RSPO action plan to be developed, implemented and monitored in line with standard requirements. Details of actions taken can be found in Section 4 of this report. • FGV remains alert to these developments and the impact on trade, technology and supply chain restrictions. M a c r o e c o n o m i c E n v i r o n m e n t S u s t a i n a b i l i t y / A n t i P a l m L o b b y i s t P o l i t i c a l I n s t a b i l i t y / C o n f l i c t s