Steering country’s economic growth


OVER the past 50 years, Malaysia’s plantation and commodities sector has been one of the key drivers of Malaysia’s economic growth.

Comprising palm oil, rubber, timber, cocoa, pepper and tobacco, the sector has become one of the country’s major export earnings source contributing to the country’s economic well-being.

In 2011, the exports of commodity-based products alone were valued at RM141.2bil, an increase of 23.7%.

To shape the movement of the sector to complement the Govern­ment’s aspirations, goals were outlined for the Ministry of Plantation Industries and Commodities under the Government Transformation Pro­­gramme’s (GTP) Ministerial Key Results Area (MKRA).

The MKRA and its attendant Ministerial Key Performance Indicators (MKPIs) identified priorities and set targets for individual Ministers and their Ministries to deliver on in 2011.

For the Plantation Industries and Commodities Ministry, the goal was to fully leverage available opportunities within the sector and nurture programmes that aim to strengthen Malaysia’s competitive advantage against other commodities–producing countries.

The programmes needed to address the following: generating new sources of growth to enable the creation of new job opportunities, facilitate multiplier effects to other sectors of the economy, create new business opportunities and increasing income, especially for smallholders.

To achieve this, Plantation In­­dustries and Commodities Minister Tan Sri Bernard Dompok recognised that the sector needs to keep find ways to be in sync with globalisation.

This means that the industry as a whole needs to embrace innovation in order to nurture sustainability, expansion and growth.

Dompok said: “As we set our targets on becoming a high-income nation, we need to embark on aggressive steps to expand our export markets and improve productivity of the overall sector.

“Under the GTP and the Economic Transformation Programme (ETP), our vision is to push the sector to be rapidly responsive to economic change by diversifying into niche business activities, introducing new techniques, new crops, improving efficiency, engaging new mechanisms and facilitating technology transfer.”

In 2011, Malaysia was the second largest producer of crude palm oil (CPO) globally with a production of 18.9 million tonnes.

This was an increase of 11.18% compared to 17 million tonnes in 2010.

In terms of export earnings, palm oil exports in 2011 was recorded at RM83.4bil, an increase of 34% compared to RM62.2bil in 2010.

Malaysian palm oil is currently exported to more than 150 countries worldwide including China, the European Union, Pakistan, the United States and India.

Exports to these countries were valued at RM37.50bil in 2011 and account for 47% of Malaysia total global exports.

Taking into account the important role assumed by the palm oil industry in the economy, this industry has been selected as one of the National Key Economic Areas (NKEAs) and given new focus under the ETP.

This industry will be one of the core economic drivers to transform the national economy into a high income status by 2020.

The palm oil NKEA focuses on improving the upstream and downstream sectors towards generating higher productivity and new sources of income.

The implementation of the eight Entry Point Projects under the NKEA will further enhance the industry’s contribution to the Gross National Income to RM178bil by 2020.

As it is expected to play a crucial role in contributing to the nation’s economic wealth over the next 10 years, the Minster is working hard to push the sector up the value chain by employing innovative methodologies across the board.

Dompok said: “To date, we have 154 technologies that have been commercialised and made available to oil palm plantations in the form of farm mechanisation, production of oil palm biomass products, animal feed, food formulations and oleo chemical products such as cosmetics and detergent.”

One of the major achievements for the Ministry has been the supply of new fuel, bio-diesel or B5.

The B5 programme, a blend of 5% palm biodiesel and 95% petroleum diesel has been implemented from June last year.

With commercial implementation of B5 in the Central Region, Malaysia became the second country to implement the use of B5, which is higher than the mandatory B2 and B1 blends in neighbouring countries.

Dompok said the roll out of B5 in Kuala Lumpur would involve B5 supply by 247 petrol stations, and about 890 tonnes or 1.03 million litre palm oil biodiesel to be used per month.

“This would contribute to saving close to 12.4 million litres of fossil diesel per year in Kuala Lumpur alone.”

For this sector, the Ministry has achieved its target of constructing six blending facilities which are stationed in the central region.

In 2012, 31 new blending facilities are targeted for completion.

While productivity and profit characterises the transformation of the plantation and commodities sector, the livelihoods of the smallholders is also an important aspect of the Ministry’s programme.

“In our race to achieve a high-income nation status, our efforts must be in line with the concept of inclusiveness and sustainability.

There is a real need to increase productivity and enhance the earning capacity of smallholders in the plantation sector of palm oil.

One of the ways to do this is by accelerating the replanting of oil palm.”

The target area for planting and replanting by smallholders in 2011 was set at 26,500ha.

The Ministry was able to achieve a total of 19,769ha.

For the other commodities sectors namely palm oil, pepper and cocoa, smallholder cooperatives were established for capacity building initiatives to help farmers reach greater markets and acquire new skills.

In the year under review, the Ministry successfully established 11 co-ops for palm oil, two for pepper and two for the cocoa sector respectively.

For 2012, the Ministry aims to set up 7 new co-operatives for the palm oil sector.

Moving forward, the Ministry is targeting smallholders to undertake the replanting of 40,000ha of palm oil and 51,000ha of rubber.

Dompok said: “Malaysia has a rich pool of expertise in various areas of commodities development.

“The goal is to establish Malaysia as a future centre of excellence for the commodities sector and a major producer of high value-added commodity-based products for global markets.”

As the Minister helms the way forward, the increasing scarcity of resources, reliable workforce and challenges such as limited land for plantation has brought on the need for the Ministry to develop a sustainable roadmap to maximise the output for renewable resources.

He added: “In this regard, there is a golden opportunity for Malaysia’s palm oil industry to develop further the technologies of energy production and usage because we are in the enviable position of having access to an abundant source of biomass.

“This is just one of the ways that we can develop and implement a sustainable and viable action plan to ensure long term benefits to the nation as well as resilience within the sector.”

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