Fuelling his dreams: A Singaporean's biofuel empire

School and business hiccups haven't stopped SMU student from planting the seed of his biofuel empire
Ho Lian-Yi, The New Paper 12 Apr 09;

WHILE his peers were dreaming of a cushy job in a bank, Mr Lim Hongzhuang was out in a field, shovelling chicken manure on a plot of land.

It was, hoped the 25-year-old Singapore Management University (SMU) finance and sociology undergraduate, the beginning of his biofuel empire.

'I thought that energy prices are always on the uptrend. I asked my friends, and the easiest way to get in is biofuels,' he said.

He was going to plant Jatropha, a tree that produces oil-bearing seeds, on his farm in Kuala Pilah in Negri Sembilan, Malaysia.

Though still in school (he finishes his final year exams in nine days time, this is already Mr Lim's third attempt at business.

He previously started a mobile value-added services company and a web-hosting business. They didn't work out, but that didn't stop him from looking for other opportunities.

Mr Lim had zero agricultural experience, but that didn't deter him. With a friend, he drove up and down Malaysia, scouting the land.

He said he met a Singaporean businessman in July 2007 who promised to work with him and offer his agricultural know-how.

Ups and downs

In December 2007, he found the right piece of land, buying over the former Singaporean owner's company for $80,000. The land was about 90 acres (roughly the size of 30 football fields), dilapidated, full of weeds, with limited infrastructure.

He set up LX Holdings with his friend and the duo started clearing the land for planting, chopping down the banana trees that the former owners planted.

But in Feb 2007, his businessman advisor pulled out, saying Mr Lim and his friend were not 'established enough'.

Shortly after, his friend also left. He had an internship offer in a multi-national financial company, and decided he wanted to try the corporate world.

Now Mr Lim was straddled with a farm but with no agricultural knowledge.

'We were almost at a dead end,' he said. But he wasn't giving up.

No bank would lend him money for his start-up, so he pulled out the money he saved from his previous ventures and turned to his his relatives for loans. They invested RM1,000,000 ($400,000) in all.

But things really got going when they found a farm manager through a web forum, a Malaysian named Tye Tong Fatt, 45, who had a Jatropha nursery that was merged into LX Holdings.

By last October, the farm entered the black. But it wasn't thanks to biofuels. The recession was in full force and fuel prices were crashing.

To pay the bills, he planted vegetables, just like any farmer - a tag Mr Lim wears proudly. The farm now produces about 500kg of vegetables that he sells to markets in Malaysia and Singapore.

He said the farm makes RM2,000 to RM3,000 in revenue a day at a 60 per cent profit margin. That's about $10,000 a month in profit.

Showing off his richly purple eggplants and sumptious ladyfingers, Mr Lim is clearly pleased with his progress. He brings a basket of fresh produce home for his friends and family every week.

However, he has not given up on his biofuel dreams - he is still offering potential clients samples from his farm. One day, he hopes to be able to power their pumps with their own biodiesel.

Driving to the farm is a three-hour trip from Singapore. Mr Lim has made the trip nearly every weekend. He admitted that his grades 'toppled', but he said he gets by doing school projects related to his work.

Still, running his business wasn't easy.

There are middlemen and labour agents to deal with. One squatter even threatened him with a parang when he tried to evict him from his land, he said.

But most pressing is the labour shortage. Mr Lim has nine workers. Mr Tye estimates they would need around 50 to be able to work the whole farm.

Despite all the problems, he is glad he entered the business. In the past, he had hoped to just join a bank and work his way up. But as one of his potential clients told him, what he has learnt, money cannot buy.

Also, because of the recession, he said one in 10 of his peers hasn't got a job.

'So I was thinking of helping them get jobs,' he said.