AS you read this, I am now the caretaker Minister of Plantation Industry and Commodities after the 13th Parliament was dissolved on April 6.
Despite a relatively short stint which started on June 28, 2016, I believe the sector has performed remarkably well and I have to thank my ministerial team and all the officers of the agencies under my watch.
In 2017, the total trade of commodity products reached RM179.8bil, up 16.3% from 2016 and amounting to about 10% of Malaysia’s total trade in goods.
From an export perspective, the corresponding figure is RM140.3bil, up 14.4% from 2016 and contributing about 15% of national export.
Hence, the trade balance of commodity products is positive to the tune of RM100.8bil, an increase from RM90.6bil in 2016. This compares more favourably than the trade surpluses for electrical and electronics, as well as petroleum and gas products at RM90.1bil and RM35.9bil respectively.
Clearly, due to primarily domestic resource origination as well as strong prices of commodities in 2017, commodity products command superior value-add compared to the two sectors that require higher intermediate import for value-addition. This is the unique value of Malaysian commodities that we can proud of.
The year 2017 saw the centennial celebration of commercial oil palm planting in Malaysia. The main event was officiated by our Prime Minister Datuk Seri Najib Tun Razak and took place at the historical site of Tennamaram Estate in Bestari Jaya, where Frenchman Henri Fauconnier started the incredible journey of the Malaysian palm oil industry.
As we celebrated the milestone, we also started taking concrete steps to secure the future of the palm oil industry. One such step is to make Malaysian Sustainable Palm Oil (MSPO) certification mandatory nationwide by Dec 31, 2019.
To facilitate the process, the Government has allocated RM130mil to bear 100%, 30% to 70% and 30% of the certification costs for independent smallholders, plantations and estates, as well as millers and refiners respectively.
In the same vein, we also do not compromise on quality and safety of our palm oil. A further RM50mil has been allocated to MPOB to carry out research and trials with industry players to mitigate and address the issue of 3-MCPD. The exercise is expected to be completed by the end of this year.
Even as we take these proactive and responsible measures, the anti-palm oil war remains unabated. The European Parliament passed a resolution on Jan 17 this year to ban palm biodiesel from 2021 under the Renewable Energy Directive II (RED II), but other edible oils such as sunflower, corn, soya and rapeseed remain as part of the fuel mix until 2030.
Not only is it highly discriminatory – akin to crop apartheid – but it is also a poison pill that can kill the livelihood of our 650,000 small farmers.
We immediately set up a Palm Oil War Room to monitor and take appropriate action. I personally led a technical mission to the European Union on Feb 9 to 16, where we had the opportunity to address all EU energy ministers regarding the misinformation on palm oil.
It is heartening to note that major EU member states such as France, Sweden, the Netherlands, United Kingdom and Spain, among others, do not support the resolution.
On this matter, we also pursued a stronger alliance with Indonesia under the auspices of the Council of Palm Oil Producing Countries (CPOPC) to increase pressure on the EU.
On the timber front, the Dutch government accorded full recognition of the Malaysian Timber Certification Scheme (MTCS) under the Sustainable Timber Procurement Policy in January 2017, placing MTCS on par with other international certification schemes such as the Programme for Endorsement of Forest Certification (PEFC) and Forest Stewardship Council (FSC).
Soon after, MTCS-certified timber was also endorsed by the Tokyo Olympic and Paralympic Games Organising Committee as sustainable timber that could be used in the construction of the Olympic Stadium being built for the 2020 Olympic Games.
These developments proved the integrity of MTCS and were a great boost for Malaysian timber.
Enhancing commodity upstream productivity starts with new planting and replanting. This is where independent smallholders require the most assistance.
Under the Palm Oil and Rubber National Key Economic Area, we successfully implemented the schemes across 341,924ha of land nationwide between 2011 and 2017. That is 4.5 times the size of Singapore.
The total budget for the initiatives is RM4.035bil across the 10th and 11th Malaysia Plans.
Last year, the Prime Minister also announced a special replanting grant for Felda to be administered by MPOB to cover an area of 24,280.31ha, with an allocation of RM166.6mil between 2017 and 2020.
In addition to oil palm and rubber grants, many smallholders in Sarawak and Sabah also received new planting assistance for pepper and cocoa, while other smallholders in Kelantan, Terengganu and Kelantan benefited greatly from kenaf farming grants.
Productivity initiatives also extend to downstream activities. To support investment in automation among rubber glove manufacturers to improve efficiency and reduce labour dependence, a three-year Reinvestment Allowance was introduced in 2016.
Meanwhile, the Accelerated Capital Allowance of 200% was extended for the period of 2018 to 2020.
The furniture industry has also been given due attention. Our Prime Minister announced Muar as the Furniture City of Malaysia and launched the Muar Furniture Park, both aimed at positioning Muar as a hub for the manufacture and the research and development of high-value, high-quality furniture.
These initiatives are further augmented by the SuperBumi programme to train bumiputra furniture entrepreneurs who will eventually become vendors in the industry.
There is still a lot of room for our commodity industry to diversify in terms of markets and higher value products.
MPOB reopened its office in Teheran, Iran, last year to tap the vast potential of the country, as well as other Middle East markets.
Meanwhile, its new office in Mumbai, India, allows MPOB and MPOC to collaborate with technical and commercial partners to better serve the large Indian market.
We must continue to tap into emerging markets, even as we strive to maintain our share in traditional markets.
We are also continuing to extend the palm oil downstream value chain, aided by the Palm Oil NKEA, into the oleo derivatives and palm-based food and health products by large companies, as well as small and medium enterprises.
Since 2011, RM2.7bil in private investment commitment has been secured.
In the rubber sector, seismic bearing and rubberised road development are among our priority areas. The former reduces the impact of earthquakes on the structures of affected bridges and buildings, especially in tremor-prone regions.
Most recently, 2,234 natural rubber seismic bearings were installed on the second Penang bridge.
Meanwhile, the Malaysian Rubber Board collaborated with the Works Department to complete 5km of rubberised roads in Teluk Intan, Kota Tinggi, Bentong and Segamat. It is hoped that the initiative will lead to more durable and safe roads while creating stronger demand for domestic rubber.
Much more to be done
Having only served one year, nine months and 10 days in a sector that is one of the critical pillars of the economy of the nation and people, I know that much more remains to be done.
However, I am proud of what has been achieved in this short stint. Much more needs to be done to take this most crucial industry to the next level.
It has been my honour to serve you, farmers and enterprises alike, and I hope to return to serve you again.
Datuk Seri Mah Siew Keong is the caretaker 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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