Capital expenditure is one of the most crucial managerial decisions whether at the institutional or the organizational levels. Example of an industry that applies qualitative consideration in making a capital expenditure decision is agricultural industry such as TH Plantation Berhad. How the company apply the qualitative consideration in making a decision for capital expenditure are:
1. Environmental Issues
TH Plantation Berhad has Standard Operating Procedure (SOP) in place of land development and plantation operation to protect the environment. The company develop their own approaches such as the employment of green technology and bio-based pest control as well as policies banning open burning and deforestation. Besides that, they also established its own Geographic Information System, e-GIS, which captures, stores, analyses and manages spatial and geographic data, which is invaluable in the decision-making process. The use of technology has helped the company to boost profitability and productivity, and has aided the company in optimizing their operations.
2. Employee morale
TH Plantation Berhad believes that their employees are among their most important assets. As a plantation player, their employees are expected to work with heavy machinery and harvesting tools. Therefore, TH Plantation Berhad has make a great effort to ensure that they are constantly apprised of the dangers in the workplace and has put in place powerful safety and health policies which is Chemical Health Risk Assessment (“CHRA”) under constant review by their qualified Occupational Safety and Health (“OSH”) officers. This CHRA needs to be renewed every five years to ensure that the chemicals used in the plantations and factories do not affect employee health through exposure.
3. Government Regulation.
How TH Plantation Berhad apply qualitative consideration in capital expenditure are by recognizes the importance of having its palm oil certified as sustainable and is presently seeking Malaysian Sustainable Palm Oil (“MSPO”) certification from the Malaysian Palm Oil Certification Council. They consistently emphasize the adoption of Good Agricultural Practices (“GAP”) throughout their operations to further ensure that they maintain a healthy environment at all their estates. TH Plantation Berhad always monitors and manage their use of natural resources and emissions as they believe that is not only in line with GAP but also with our Islamic values and heritage, which calls upon us to be good stewards of the earth.