Growing Agarwood in Malaysia: Business & Challenges of a Malaysian Chinese Father & Son

Aerial view of the Gaharu Tea Valley at Gopeng; the plantation's manufacturing factory is surrounded by more than 200,000 Agarwood trees.
(Photo : Business Times / James Ong)
Aerial view of the Gaharu Tea Valley at Gopeng; the plantation's manufacturing factory is surrounded by more than 200,000 Agarwood trees.

The rapid development of information technology means that instant communication can happen in a matter of seconds. Information can be transferred from one place to another instantly. Such a convenience comes at a cost--people are getting more impatient by the day. At the same time, the ease and proliferation of materials and spiritual consumption threaten to obstruct mankind from keeping their focus on priorities. The same goes to the commercial sphere, where businessmen are inclined to see immediate return of investment. However, a Malaysian Chinese father-and-son pair act in a diametrically opposite way when they grow Agarwood-an endeavor foreign to them, far removed from their professional trainings. Growing Agarwood requires more than 18 years to see a return and that looks quite extraordinary.

The story began in the year 1992. An old man from Japan sought cooperation with Malaysia to plant 200 seedlings of Agarwood, but he was rejected time and again. "It took 15 years for the 200 mother trees to grow before replanting seeds were produced; then it took another 3 years for the newly-planted trees to grow before they could be used to produce medicine and tea. There is no revenue during these 18 long years," Nicklaus Ho, CEO of Gaharu Tea Valley at Gopeng, said. Despite all odds, Nicklaus' father, David Ho, a second-hand heavy machinery dealer, accepted the deal.

Nicklaus Ho, 39, is a descendant of the Hakka clan. His great grandfather came to Malaysia from Mei County, Guangdong Province, China. "My father bought 300 acres of land in the year 1991. Initially, he was planning to grow oil palms or rubber trees since it would only take a few years to harvest," Nicklaus recalled. However, the meeting with the Japanese old man reminded David Ho of a story told by his elementary school history teacher from China, in which an ancient emperor seeking elixir for longevity haphazardly discovered the medicinal value of Agarwood. The story inspired David Ho to plant Agarwood in the pursuit of producing valuable medicine from the herb. "The original intention of my father was to share the health benefits of Agarwood to the mass. However, the surrounding people could not understand nor agree with his decision at that time," said Nicklaus. "Although there were many difficulties along the way, my father persisted and kept his promise without giving up halfway."

Gaharu Tea Valley, Gopeng's CEO Nicklaus Ho introduced the history of the plantation at the showroom.
(Photo : Business Times / James Ong)
Gaharu Tea Valley, Gopeng's CEO Nicklaus Ho introduced the history of the plantation at the showroom.

The very first difficulty David Ho faced was the fact that he didn't know how to plant Agarwood at all. In this era where organic plantation is commercialized, the common practice is to isolate the plantation site from the surrounding environment so that the quality of the product could be maintained. But from the very beginning, the Japanese old man told David Ho to "just do it by the way the forest grows itself." "Therefore, we copied the natural ecosystem, started off by putting a large number of earthworms, raising birds and bees in the plantation, growing fish in the pond, and dredging underground springs. (Even though there are lots of eco-friendly pesticide products in the market,) we still chose to do the weeding with lawn mowers," Nicklaus said. At that time, organic farming concept was yet to be known in South East Asia nor was it widespread in Western countries.

The fish pond, a part of the plantation's natural ecosystem.
(Photo : Business Times / James Ong)
The fish pond, a part of the plantation's natural ecosystem.

The most difficult moment faced by Ho's family during these 25 years of operation was the year 1997 when Malaysia suffered from the Asian financial crisis. They were unable to repay the land loan. After a negotiation with the bank, the plantation was sealed for 10 years. At that time, David Ho's second-hand heavy machinery trading business was also being deeply affected by the economic downturn. In such trying circumstance, the Ho's family regarded the planting of Agarwood as the mission of God towards their family and they continued to nurture the growth of the mother trees in the period while the plantation was closed. "By 2007, more than 70 Agarwood mother trees survived, and that number has grown to more than 200,000 trees today, "Nicklaus said. "The same faith held by all our family members played a very crucial role; also, thanks to the continuous support and investment from the other individuals, we were able to sustain the business," he said.

The second-generation Agarwood of Gaharu Tea Valley, Gopeng, which are about 10 years old now.
(Photo : Business Times / James Ong)
The second-generation Agarwood of Gaharu Tea Valley, Gopeng, which are about 10 years old now.

Agarwood is one of the most expensive trees in the world owing to the special value of its resin. At the same time, every part of the Agarwood tree in the plantation (a special 12 in 1 hybrid Aquilaria spp, named as Hoga, which aptly coined as Holistic Gaharu, meaning "its benefits can be extracted from every part of the tree") has medicinal value, from the leaves to the roots. "We used the leaves and various parts of the Agarwood to make tea; scientific experiment has proven the benefits of the Agarwood extract," Nicklaus said.

The scientific research partnership formed with University of Science, Malaysia and the University of Nottingham, it has been shown that the Hoga Agarwood extract of Gaharu Tea Valley, Gopeng has anti-diabetic effect and it brings better result in regulating blood glucose compared to metformin (the first-line medication for the treatment of Type 2 diabetes). The International Diabetes Federation (IDF) statistics showed that, in the year 2017, the total cases of diabetes among Malaysian adults recorded a 3.4926 million cases and the prevalence of diabetes among adults reached 16.9%. "There are lots of other benefits that the Hoga extract could bring and we will continue to work with research institutes for further validation."

It is known to all that the most valuable part of Agarwood, in terms of economics, attributes to its black resin. "In nature, when an Agarwood tree is struck by lightning, bitten by insects, suffered from cuts or winding damages, the tree will secrete resin that will gradually turn brown-black in colour. The longer the resin has been secreted, the darker it will get,"he said. "We use electric drill to make holes into the bark every six inches apart to organically bring about resin production. There will be hundreds of small holes in one tree and it takes one year to grow 1mm of resin," said Nicklaus.

The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) classified Agarwood as an Appendix II endangered species. Every Agarwood planted need to be registered, but products such as Agarwood chips and powders can be exported. "The Middle Eastern population generally uses Agarwood as incense and as essential oils and perfume, but few of them are aware of its edibility and medicinal value. The Chinese usually buy Agarwood back home and find craftsman to carve, after which the value of the wood will increase at least tenfold because each wood is unique and has high collector value," Nicklaus explained. Currently, the medicinal health value of Agarwood is yet to be known to the mass, posing a great challenge for the development of the market, but that means that there is great potential on the other hand.

The showroom exhibits various kind of Agarwood. The darker it is, the higher the value is. High quality Agarwood sink in water and this is the source of its Chinese name
(Photo : Business Times / James Ong)
The showroom exhibits various kind of Agarwood. The darker it is, the higher the value is. High quality Agarwood sink in water and this is the source of its Chinese name "ChenXiang", "Chen" meaning sinks.

The precious value of Agarwood is also accompanied by its industrial difficulties and challenges. "As it takes a long time for an Agarwood to produce resin, how do you think other plantations wait for 30 - 40 years to reap the harvest? They will use dangerous formulas and methods without scientific demonstration to stimulate resin formation; large scale illegal tree logging often happens. All these bring harm to the human body and the environment, resulting in damage to the entire market. As a result, we have to put up with a lot of misunderstandings and pressures. Every day is like a battle in this industry," said Nicklaus.

Facing the challenges above, aside from planting Agarwood, Gaharu Tea Valley, Gopeng not only uses Agarwood as primary material to manufacture food/medicine products, but it also frames the plantation into a tourist attraction. With such an industrial convergence, the Ho's family hoped that the plantation could become an information platform in promoting Agarwood, establishing a brand for its food and medicinal products, and even playing a role in protection against burglars. According to Nicklaus, in order to maintain normal operation of the different businesses here, there are 120 employees working in the plantation, of which 80 are in residence, which in fact ties with the local population's interests with the plantation, thus reducing the risk of the Agarwood being stolen. "Every worker here is a part of our family," he said.

Compared to his father who dropped out from school at the age of 13, Nicklaus achieved a better education level. He obtained a bachelor's degree in electrical engineering from the University of Nottingham, England, in the year 2000. But this does not translate into being easier to run the plantation than his father did. Between the businesses of planting, manufacturing, and tourism, the challenge in manufacturing is greatest for Nicklaus. Currently, the plantation has launched a "Hoga" series of products such as "Hoga Tea", "Hoga Instant Tea", "Hoga Bao Ren Powder", and "Hoga Gaharu oil", all of which are products of Nicklaus perspiration.

Hoga tea is made not only by the tree leaves, but also by various parts from the tree, Nicklaus Ho explained.
(Photo : Business Times / James Ong)
Hoga tea is made not only by the tree leaves, but also by various parts from the tree, Nicklaus Ho explained.

Commenting on the future direction and plan of the plantation, Nicklaus said, "at this stage, we need to ensure that we are reaching the goal of 3G (Good Source Practice, Good Agricultural Practice & Good Manufacturing Practice). In the future, our focus is on bringing up talents in related fields and developing the business into an educational platform combining agriculture and natural medicine. We also expect to establish a small hospital to share the benefits of Agarwood with the community."

"The lifespan of an Agarwood tree is up to 300 years. To achieve a sustainable development of the plantation, talent cultivation is critical." However, up to this point, Nicklaus expressed some concern, "Like my children, young people nowadays no longer have patience in doing such things."

(Original article is in Chinese.)

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