Commodities industry – a year in review

  • Opinion
  • Wednesday, 20 Dec 2017

Fruitful venture: Mah (second from left) looking at a fresh palm fruit bunch during his visit to a booth at the International Palm Oil Congress and Exhibition 2017 at KLCC. Also present are Malaysian Palm Oil Board chairman Datuk Seri Ahmad Hamzah (right) and Malaysian Palm Oil Board director general Datuk Ahmad Kushairi Din (left). — Bernama

When I was appointed Minister of Plantation Industries and Commodities on June 28, 2016, many said it was a homecoming for Gerakan.

This ministry has always been regarded as a “Gerakan portfolio” as the party held the ministerial post for 26 years: Datuk Paul Leong held it for eight years between 1978 and 1986, and the late Tun Dr Lim Keng Yaik for 18 years between 1986 and 2004.

I was born and bred in Teluk Intan and I am intimately acquainted with the palm oil industry, as it remains the key driver of the local economy.

I sometimes share an anecdote of how the town will be bustling with activity when the price of crude palm oil is high and somewhat quiet when the price of CPO is at a lower level.

This is testimony to the unbreakable bond between commodities and Malaysian everyday life. Commodities sustain millions of Malaysians, especially those living in rural areas, and it is my abiding conviction to do right by this industry and all those who depend on it.

The combined planted commodities area comprising palm oil, rubber, cocoa, pepper, kenaf and sago is 6,910,773 hectares, accounting for 63% of agriculture land and about 21% of Malaysia’s land mass.

In export terms, these crops contributed RM122bil or almost 11% of the country’s GDP in 2016. Smallholders work on almost 40% of plantation land with the rest being held by estates and large plantations.

Oil palm alone accounts for almost 650,000 as smallholders; if we add rubber, cocoa and pepper, then the number breaches one million.

The commodities sector is not only a key engine of growth for the Malaysian economy but it serves a key social objective: to reduce the economic gap between urban and rural areas.

The Malaysian growth story will only be a success if the fruits of economic growth is extended to all Malaysians, especially those living out of the urban conurbations. Hence, I take the trust that the Prime Minister has placed in me very seriously.

Highlights and lowlights

As I reflect on my 17th month tenure in this ministry, it has been a fulfilling yet challenging journey. I believe it is important for Malaysians to be aware of the challenges we face in government so they better appreciate our efforts to tackle these challenges. I believe there is a need for a better “connect” between the government and the citizenry.

One of the highlights for me was presiding over the 100th year celebrations of commercial oil palm planting.

Our forefathers could not have possibly imagined that the first commercial plantation in Tennamaram Estate, Selangor in 1917 would grow to cover 5.74 million hectares, contributing RM67.6bil in exports in 2016.

Ironically, while it was a Frenchman, Henri Fauconnier, who planted the seeds that transformed into our economic behemoth, it is his fellow countrymen and other members of the European Union (EU) Parliament who are trying to cripple the livelihood of our smallholders and other Malaysian dependents.

In a sequence of acts that is akin to crop apartheid, the EU Parliament has taken steps to raise trade barriers, leading to ultimate breach of the EU’s World Trade Organisation (WTO) commitments and effectively jeopardising the Malaysia-EU Free Trade Agreement negotiations.

It started with its resolution in the EU Parliament on the new renewable energy directive (RED) that sought to introduce a single certification scheme for palm oil entering the EU market and phase out the use of palm oil based biodiesel by 2021 on April 4, 2017, followed by endorsements by the Parliament’s Environmental Committee (ENVI) on Oct 23, 2017 and Industry, Research & Energy Committee (ITRE) on Nov 28, 2017.

However, I have staunchly asserted that I will do whatever is necessary to curtail these unprovoked and unfounded attacks on palm oil.

We will continue to engage our critics and if there is a need to take protective and retaliatory action, we will do so without hesitation.

I have also engaged my colleagues in Indonesia and via the Council of Palm Oil Producing Countries (CPOPC); we will ensure that our response to this concerted anti-palm oil campaign is structured and systematic.

kkk: Drone photo of Tennamaram palm oil estate. To be use in future or archive.
Green goldmine: Drone photo of Tennamaram Palm Oil Estate.

Sustainability, Productivity, Diversity

In my mind, we are on the cusp of being a developed nation and there is a pressing need to modernise this industry and push ourselves up the value chain to ensure we achieve more with less. We have to embrace innovation and mechanisation in the form of Industry 4.0, as the future will not wait for us.

Further, there are three priorities to focus on to protect and grow commodities in a competitive manner –sustainability, productivity and diversity. Let me explain:

While deforestation and loss of wildlife has been used as the rallying cry by EU-based environmental NGOs to attack the palm oil industry, we must continue to show tangible efforts to improve sustainability and conservation. We can and we will do better because it is in our best interests to protect our own environment. The commitment by relevant federal and state agencies to ensure the Central Forest Spine and Heart of Borneo are implemented comprehensively also burnishes our conservation credentials.

Mandatory implementation of the Malaysian Sustainable Palm Oil (MSPO) Certification Scheme by December 2019, coupled with full public funding for smallholders’ certification and audit cost rebates for larger planters, millers, refiners and crushers, clearly show we mean business.

The ministry also provides grants for companies to further their efforts in the development of the downstream and further-downstream sectors of the palm oil industry. I have also challenged palm oil companies to multiply their efforts in oleo-chemicals and oleo-pharmaceuticals sectors because palm oil has naturally healing properties that has yet to be fully tapped and initial results of these efforts have been promising.

Sustainability applies to timber as well. We fought hard to convince the Tokyo Olympic Organising Committee that the Malaysian Timber Certification Scheme (MTCS) is sustainable and fortunately, Malaysian timber will be used in the construction of the Olympic Stadium in Tokyo. MTCS is already fully accepted by the UK, Germany, France Denmark, Belgium, Finland, Switzerland and Japan, and this recognition must be aggressively expanded.

One good example of local innovation is the development of rubberised roads. We are completing 28km of trial roads in various parts of the country, including 3km in Teluk Intan, by the end of 2017 and this will help to establish standards for full commercialisation by mid-2018. Initial findings have shown that rubberised roads are more durable, offer better ride quality, reduce road noise and save cost over the long term. Also, Malaysia’s Hartalega Holdings Bhd has developed the world’s first non-leaching antimicrobial nitrile examination rubber glove, which it aims to launch early next year. This is an example of local innovation.

Strong conviction

According to Food Aid Foundation, 795 million people suffer from chronic malnutrition globally. Food and Agricultural Organisation (FAO) of United Nations says global food production must increase by 70% within the next 33 years to ensure adequate food supplies by 2050.

Palm oil, with 19 million hectares of cultivated area representing merely 0.4% of world agricultural land, supplies one-third of oils and fats and 55% of its exports.

Not only are we helping to feed and nourish the world with the least land use, we are also creating jobs, incomes and moving them up the economic ladder. We bring progressive change to the world and are unabashed about our efforts.

Similarly, our other commodities bring positive change to people, be it in nutrition, safety, healthcare or lifestyle enrichment, sustainably.

As I count down to one year, six months and three days as your Minister of Plantation Industries and Commodities come Dec 31, my vision is clear and my resolve is unabated. I step into 2018 with the complete conviction to serve our valuable industries and people, especially our smallholders. I am encouraged by the fact that our best days, as a country, have yet to be lived and the best days of the commodities industry have yet to come.

Till we meet again in 2018, have a blessed New Year.

Datuk Seri Mah Siew Keong is Minister of Plantation Industries and Commodities. ‘Commodities Today and Beyond’ is his op-ed to share his views, hope and vision for commodities with everyday Malaysians.

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