Plantations industry badly in need of stability


Photo: Reuters

THE plantations industry has always been an important economic asset for the country with rubber and oil palm being the dominant crops. Though rubber has lost some of its earlier shine, it still offers the potential to remain a vibrant source of economic wealth. Oil palm, now more than 105 years old, is still riding high.

However, the oil palm sector has been under a lot of pressure from competition from other oils in the global edible oils business – it has to compete with 17 other oils.

The product is also attacked left and right by environmentalists despite the crop’s positive carbon emission data nowadays. The industry continues to engage and educate critics on the matter.

The Russia-Ukraine war has provided a breather in this aspect. As a result of the weakened supply of sunflower oil – Ukraine was the world’s biggest supplier – there is less criticism of palm oil. Com-panies that once shied away from using palm oil are now scrambling for supply. This has helped push global palm oil prices northwards, far exceeding the usual prices.

As industry players and associations have been pointing out, it is a pity that this good fortune comes at a time when production, at least in Malaysia, is severely reduced because of the ongoing labour shortage. It is estimated that billions of ringgit have been lost in unharvested fruits.

The pandemic has been largely responsible for the labour issue. But industry watchers also point to other factors that add to the problem. One such factor are the constant changes in leadership at the institutions in charge of the plantations sector. Since the last general election, the government has changed three times at least. And the plantations minister has changed three times as well, creating instability in the sector.

What is of greater concern is that every time a new minister is put in charge, there are changes to the people leading key plantation institutions under the ministry. This is bad for governance. It upsets the stable functioning of the institutions. It creates uncertainties in policy- and decision-making.

In the early days, the CEOs were all selected from professionals who had spent years working in the plantation sector. And chairmen were appointed from among experienced captains of industry. They understood the issues and were able to use their experience to steer policy direction for the institutions and, therefore, the sector. The industry has urged the government to rethink the strategy of filling leadership positions.

This unfortunate situation is happening when both palm oil and rubber are in need of new directions. Palm oil production is reaching a limit with no more land to expand beyond the current six million hectares. One way to grow value is through downstream expansion and for this, the sector desperately needs guidance from people with industry knowledge and experience.

Rubber is in even more dire straits. Except for the fortunes made in rubber gloves, the rest of the industry is not in the best of shapes. Rubber smallholders face the most grim future of all. They need a good strategy. But even a good strategy will not work if governance keeps changing. Stability in governance is what the plantations industry needs.

It is time we get the right professionals to lead plantation industry institutions. Good knowledge of industry issues and trends is of utmost importance. Otherwise, the future of the plantations industry will continue to be uncertain, which is unhealthy for investments in the sector.

PROF DATUK DR AHMAD IBRAHIM

Tan Sri Omar Abdul Rahman Centre for STI (Science, Technology and Innovation) Policy Studies,

UCSI University

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