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SUSAN M. MARTIN MARTIN SUSAN M. The UP Saga Susan M. Martin Histories of the plantations sector in Malaysia have largely focused on the rubber industry and on the rise and fall of big British-owned colonial enter- prises. But since independence, the sector has entered a new phase of spectacular growth founded on the oil palm. This volume offers a radically different history by telling the fascinating story of United Plantations Berhad (UP), a firm of Scandinavian origin that has spanned both eras and evolved along quite different lines from the normal models of British imperial business. The book is also unusual in that the author had full access to well-preserved company records. Tracing the company’s origins before the First World War, The UP Saga describes the crisis years of economic depression, Japanese occupa- T tion and the turmoil of the Emergency, followed by Merdeka and the years he of spectacular growth that have lasted to the present day. ‘[The UP Saga] is expertly researched and is therefore a radically differ- UP ent history of the plantation industry. It offers the reader an authoritative and quite remarkable study … authenticated by the personal experiences The of many recognised experts in this field. … Through her work on The UP S Saga Susan Martin has produced a work of historic importance and great aga interest to all those interested in the development of the global palm oil industry.’ ~ William King, London Metropolitan University UP ‘Potential purchasers should not be fooled by the title into believing that this book is merely yet another company history. It is far more than that. It is undoubtedly the best history that has been written to date of the spec- tacular growth of the Malaysian oil palm industry from its earliest days right Saga up to 2002. … anyone with any interest in palm oil, or the plantation industry cannot afford to be without it. It is also a “must read” for anyone concerned with development studies, the history of Malaysia, or of tropical agricul- ture.’ ~ Datuk Leslie Davidson, Chairman (retired), Unilever Plantations Southdene Sdn. Berhad Susan M. Martin Southdene Martin_pbk-prelims.fm Page i Wednesday, May 19, 2004 4:58 PM The UP Saga Martin_pbk-prelims.fm Page ii Wednesday, May 19, 2004 4:58 PM Martin_pbk-prelims.fm Page iii Wednesday, May 19, 2004 4:58 PM The UP Saga Susan M. Martin & Southdene Sdn. Bhd Martin_pbk-prelims.fm Page iv Wednesday, May 19, 2004 4:58 PM First published in hardback in 2003 by NIAS Press Nordic Institute of Asian Studies Leifsgade 33, DK–2300 Copenhagen S, Denmark tel: (+45) 3532 9501 • fax: (+45) 3532 9549 E-mail: [email protected] • Website: www.niaspress.dk This edition published in 2004 by NIAS Press and Southdene Sdn Bhd P.O. Box 10139, 50704 Kuala Lumpur, Malaysia E-mail: [email protected] © Susan M. Martin 2003 British Library Cataloguing in Publication Data Martin, Susan M. The UP saga. - (NIAS monograph ; 94) 1.United Plantations Berhad - History 2.Plantations - Malaysia - History 3.Palm oil industry - Malaysia - History I.Title II.Nordic Institute of Asian Studies 338.4’766535’09595 ISBN 87-91114-51-9 Perpustakaan Negara Malaysia Cataloguing in Publication Data Martin, Susan M. The UP Saga / Susan M. Martin. - 2nd ed. Includes index bibliography: p.331 ISBN 983-40053-5-0 1.Palm oil industry--Malaysia--History 2.Plantations--Malaysia-- History. I. Title. 338.17385109595 Typesetting by NIAS Press Printed in Singapore by Bestprint Printing Company Martin_pbk-prelims.fm Page v Wednesday, May 19, 2004 4:58 PM Contents Introduction … 1 1. The Entrepreneur: Aage Westenholz … 17 Early Years in Siam Rubber in Perak Early Years at Jendarata The Plantations Unite 2. The Palm Oil Pioneer: Commander W.L. Grut … 45 A New Departure Earlier Palm Oil Pioneers in Malaya and Sumatra Bernam Oil Palms: Formation and Management Early Years at Ulu Bernam Investment, Income and Ideals Survival and Growth in the Palm Oil Industry 3. War, Survival and Revival … 77 Life at Ulu Bernam in 1939 Management in Wartime Invasion and Flight Estate Life under the Japanese The End of the War Reconstruction and Innovation 4. Wealth Creation and Strategic Choice … 113 Success and Strategy New Men in Copenhagen Experimentation and Frustration in Malaya Experiencing the Emergency From Asia to Africa and Latin America Malaysian Commitments Renewed 5. The Tenera Palm … 141 Invention and Innovation Early Experiments with the Tenera Palm Innovation on a Shoestring Growth and Renewal United Plantations Transformed v Martin_pbk-prelims.fm Page vi Wednesday, May 19, 2004 4:58 PM The UP Saga 6. Quality at Low Cost: Axel Lindquist and Børge Bek-Nielsen … 169 Entrepreneurship Renewed Lindquist’s Legacy The Screw Press Bek’s Reputation Grows 7. The Invisible Ingredient: Catering for New Consumers … 199 A Market Transformed Unilever and United Plantations: Contrasting Styles in the Quest for Quality African Approaches New Brands of Palm Oil A Chemical Engineer at United Plantations Gaining a Leading Edge Bek at the Helm 8. Adding Value: Realizing an Asian Vision … 227 A Break with Tradition? Selling to India: Beyond the Bounds of the Pool A New Vision: Refining for Asia The View from Denmark Refining the Vision Unitata in Action New Players in a Changing Game Success in Asian Markets: Meeting The Challenge of Shifting Sands 9. Building Bridges Between Nations: Two Tan Sris … 255 Nationalization and the New Economic Policy Bek and Basir: a Meeting of Minds The Aarhus Alliance Revitalizing Western Markets: From Soap to Speciality Fats The ‘War of Oils’ The Compassionate Face of Capitalism 10. Growing with the Country … 285 The Plantations Expand Research Begins at Jendarata Hybrid Oil Palms Ideas Exchanged The Challenge of Deep Peat United International Enterprises Cloning the Oil Palm Beyond Cloning? Conclusion … 320 Appendix – Local Processing of Malaysian Palm Oil: The Bek-Nielsen View … 327 Bibliography … 331 Index … 347 vi Martin_pbk-prelims.fm Page vii Wednesday, May 19, 2004 4:58 PM Contents LIST OF ILLUSTRATIONS Aage Westenholz … 19 Jendarata estate manager’s bungalow, 1906 … 30 Commander Lennart Grut … 44 Axel Lindquist the crocodile hunter, 1934 … 47 Jendarata estate’s Hindu temple, 1919 … 76 Jendarata estate hospital, 1928 … 76 Sungei Bernam estate railway and field workers, 1928 … 78 Jendarata estate workers’ bathing place, 1919 … 79 Jendarata estate workers’ housing, 1919 … 80 Jendarata estate assistant’s bungalow, 1928 … 81 Harvesting tall oil palms by ladder, Ulu Bernam, 1963 … 104 Harvesting tall oil palms with pole, Ulu Bernam, 1963 … 105 The Grut brothers, Olof and Rolf … 112 Niels Benzon … 116 The bullock-cart system of field transport, 1965 … 181 The tractor-trailer and gantry system of field transport, 1966 … 182 Palm fruit arriving at the Jendarata mill by rail, 1972 … 183 Palm oil mill at Ulu Bernam, showing the river launch and tanker, 1963 … 184 Tan Sri Børge Bek-Nielsen … 256 Tan Sri Haji Basir bin Ismail … 257 Tan Sri Dr Johari bin Mat … 272 Tan Sri Sir Claude Fenner … 327 LIST OF MAPS 1. Peninsular Malaysia, 2001: location of plantations, United Plantations Berhad and United International Enterprises (M) Berhad … xii 2. Swettenham’s visit to Southern Perak, 1875 … 24 3. United Plantations’ estates, 1917 … 34 4. United Plantations’ and Bernam Oil Palms’ estates, 1940 … 48 5. Bernam Oil Palms, Ulu Bernam Estate, 1955 … 179 6. United Plantations’ estates, 2001 … 298 vii Martin_pbk-prelims.fm Page viii Wednesday, May 19, 2004 4:58 PM The UP Saga LIST OF TABLES 1. Planted area and output of palm oil, Bernam Oil Palms, United Plantations and Malaya, 1917–40 … 69 2. Area planted with oil palms at Ulu Bernam and Jendarata Estates, 1945–65 … 156 3. Planted area of oil palms and output of palm oil, Bernam Oil Palms, United Plantations and Malaya, 1945–65 … 160 4. Planted area of oil palms and output of palm oil, United Plantations and Malaysia, 1966–80 … 161 5. Export destinations of Malaysian processed palm oil, 1982–2000 … 247 6. Regional shares in Malaysia’s export trade in processed palm oil, 1982–2000 … 248 7. Export volume and export value of Malaysian oil palm products, 1999–2001 … 274 8. Oil palm planted area, United Plantations, United International Enterprises and Malaysia, 1981–2001 … 284 9. Oil palm mature area and crude palm oil output, United Plantations, United International Enterprises and Malaysia, 1981–2001 … 308 viii Martin_pbk-prelims.fm Page ix Wednesday, May 19, 2004 4:58 PM Preface his book tells an amazing story, the saga of United Plantations (UP), a European firm founded in early colonial Malaya, which dared to do things differently. As a Scandinavian enterprise with a strong culture T of co-operation and good corporate citizenship, this firm was able to thrive even better after independence than it had done under colonialism, and made a distinctive contribution to the development process. In recent years the UP success story has also been the story of Malaysia’s success in export-led industrialization, a rare and spectacular case of industrial growth based on tropical agricultural foundations. Within the context of both imperial economic history and development studies, this is such a remarkable story that no researcher could have been ex- pected to go out looking for it. Nor could it have been found and understood by one person without a great deal of help. Indeed, so many people have helped in the writing of this book that it is impossible to list them all in one short preface. Most of them appear in the list of interviews and correspondents in the Biblio- graphy, and several more may be found as authors discussed in the Introduction. Special thanks must be given to the School of Oriental and African Studies (SOAS), University of London, and to the Nuffield Foundation, which funded the initial fieldwork in Malaysia and Denmark, and to Tan Sri Dato’ Seri Børge Bek-Nielsen, who offered hospitality and full access to company archives both in Malaysia and Denmark, and who has supported the project consistently without ever seeking to determine my analysis or change the text.
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