Govt announces RM500mil soft loan fund, incentives for oil palm smallholders

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was up 0.7% at 2,007 ringgit ($482.34) per tonne on Tuesday evening, charting its first gain in three days. It had risen as much as 1.3% to an intraday high of 2,019 ringgit

PUTRAJAYA (Bernama): The government announced on Saturday (April 27) a RM500mil soft loan fund with low interest rates of just 2% yearly for private smallholders to replant oil palm.

Finance Minister Lim Guan Engsaid the soft loan fund is expected to help ease the financial burden of smallholders in carrying out the replanting of crop.

"In addition, a soft loan fund of RM50mil has also been provided at a 2% interest rate per annum to finance palm oil input and materials with the use of registered seeds, as well as the latest breeds of quality," he said.

Lim explained that smallholders were being given the assistance because of the government was concerned over the situation faced by entrepreneurs due to low commodity prices. 

"The provision of soft loans, especially to smallholders for replanting crop, is in line with the commitment of the Pakatan Harapan government in ensuring the welfare of oil palm entrepreneurs.

"At the same time, it is also to strengthen Malaysia's position as the world's leading sustainable palm oil producer," he said.

Lim also announced a RM100mil grant for entrepreneurs who obtain the Malaysian Sustainable Palm Oil Certification (MSPO).

"Under this policy, the government will bear 100% of the MSPO certification costs from the existing 70% for entrepreneurs who have medium-sized smallholdings (40ha to 1,000ha).

"The government will also increase aid for auditing costs from 30% to 50%. This incentive will be paid after the entrepreneur gets the certification,” he said.

Lim added that the Finance Ministry welcomed Malaysia's palm oil certification internationally, including the signing of a memorandum of understanding between Malaysia and China on Thursday (April 25) involving the purchase of an additional 1.9 million tonnes of Malaysian palm oil with an estimated value of RM4.56bil over a period of five years (2019-2023).

He said, the improvements in helping out entrepreneurs, especially private smallholders, was aimed at ensuring that Malaysian palm oil growth was not only enjoyed by big companies. – Bernama