Malaysia eyes agricultural modernisation to revive the sector

There is a lot to be done for the industry to ensure it will be at par with other sectors and provide job opportunities for the younger generation, says minister


BEFORE the 70s, agriculture cultivation was the backbone of the Malaysian economy as the country is rich with natural resources and unutilised land.

Many Malaysians were working in the agriculture sector to make a living as the country made its maiden step to grow the economy after gaining independence in 1957.

As a result, Malaysia had emerged as one of the world’s top producers of rubber and palm oil, driven by the birth of local commodity conglomerates.

Meanwhile, smallholders were the major players for crops such as rice, fruits and vegetables.

However, the global race of industrialisation saw the rise of the manufacturing industry in the country, causing the agriculture sector to lag behind and put on the backburner.

In comparison, the manufacturing sector generated RM1.27 trillion in 2017 involving 2.2 million individuals in the country, while the agriculture sector made RM96 billion in revenue with the involvement of 835,974 persons.

Salahuddin says the outlook for the agriculture sector for the next decade appears promising despite global challenges

Between April and June 2019, the agricultural sector contributed 4.2% to the total economy as revenue from the palm oil sector moderated and contraction in the fishery segment was recorded.

Prime Minister Tun Dr Mahathir Mohamad had called for a proposition to rebuild the country’s agriculture industry through modernised technologies, comprehensive policies and remunerative strategies.

The task to modernise and push the sector forward fell into the lap of Agriculture and Agro-based Industry (MoA) Minister Datuk Salahuddin Ayub.

Salahuddin, when met with The Malaysian Reserve (TMR) recently, admitted that implementing the government’s strategies to achieve its mission is not easy.

Since he took office last year, Salahuddin has addressed various concerns of a monopolised rice industry, the low self-sufficient level of the country’s ruminant production and the income status of farmers.

Still, to him, there is a lot to be done for the industry to ensure it will be at par with other sectors and provide job opportunities for the younger generation.

In an interview with TMR, the minister spoke at length about his 10-year plan to revive the agriculture industry.

Q: As a country that has been leveraging on the industrial sector, how do you see the agriculture industry growing in Malaysia?

The outlook for the agriculture sector for the next decade appears promising despite global challenges such as climate change, a growing population and scarcity of resources.

The agriculture sector — or more precisely the agro-food sector — continues to be one of the important growth engines for the national economy, contributing 8.2% or RM96 billion to the national GDP.

The country will still depend on other sectors’ contributions such as the services sector and the manufacturing sector.

However, the plan to revive the agriculture sector is underway as the government sees its potential beyond the country’s food security.

The high-value agro-food items such as durian and pineapple are booming and our country, which is acclimatised to grow these fruits, should take advantage of this.

Q: What do you think about the current administration that shows interest in reinstating the agriculture sector?

Since Malaysia was developed from being an agrarian economy to an industrialised country, the agriculture sector has been left behind.

Dron PadiU Putra by Universiti Putra Malaysia. The drone technology is able to capture images of 140ha-950ha of the paddy field in an hour.

However, recent development shows that Dr Mahathir and Tun Daim Zainuddin are expressing greater interest in reinstating the agriculture contribution. Dr Mahathir wants the country to learn and exchange views on agriculture with China, particularly on new technologies.

I will be visiting Hainan, China, which is home to the republic’s Paddy Field National Park, in October this year to learn about paddy cultivation.

The paddy field in Hainan can reach between 10 and 14 tonnes per ha of yield as they are using new technologies that require less water.

We are also going to learn about soil profiling, fertiliser utilisation, implementation of drones for land mapping and the use of artificial intelligence technology.

Delegations from the Muda Agricultural Development Authority and Kemubu Agricultural Development Authority will participate in the visit to implement the technologies in their programmes.

Q: What are your plans on welling agricultural production?

One of the measures for the country to move forward is modernising the agrofood sector via the adoption of technologies based on the Industry 4.0.

Sustainable agriculture growth is in line with one of the country’s sustainable development goals to uplift the income status of target groups such as farmers, livestock breeders, fishermen and agro-based entrepreneurs.

To achieve this vision, the ministry has realigned the current National Agro-Food Policy (NAFP), which will end in 2020, by formulating a document entitled “Direction: Priorities and Strategies for 2019-2020”.

The way forward, which involves the next five years, will be formulated through our strategic paper for the 12th Malaysia Plan. We expect the first draft to be completed by October 2019.

We are also looking at transforming the agriculture sector in the next decade with the formulation of the NAFP 2.0 (2021-2030), which is expected to be the catalysts for the country’s modernised agriculture outlook in the next decade.

Q: MoA plans to introduce a tax incentive for agricultural farming companies in the downstream production. Has the ministry finalised the tax structure?

The current incentive under the new food production project of the Income Tax Act 1967 offers tax exemptions and deductions for companies who invest and carry out upstream production.

However, many of the emerging agropreneurs have been carrying out both upstream and downstream activities to provide a sustainable production for raw and value-added agricultural products.

Besides the incentives by the ministry, the Malaysian Investment Development Authority (Mida) also provides incentives focusing on the manufacturing sector.

However, the current incentives under Mida and MoA cover only specific sectors instead of the supply chain, which creates an unsupportive business environment for agropreneurs.

In order to shoulder the needs of the industry, MoA is seeking to expand the current scope of the incentives to cover both the upstream and downstream subsectors. This will be discussed further with the Ministry of Finance, the Ministry of International Trade and Industry and Mida.

Q: The government is fine-tuning the NAFP 2.0. How will MoA formulate a comprehensive agriculture policy to sustain the country’s food production and security for Malaysians?

According to the midterm review that we have done, the current agro-food policy is set to achieve its target despite the shortfalls in agro-related industries.

The high-value agro-food items such as durian are booming and our country should take advantage of this

The study also suggests that some minor adjustments have to be made to the current policy with regard to national development.

As the current policy will expire next year, the ministry is drafting the new policy with consideration on the development of global and domestic industrial landscape by comparing policies and strategies.

We will also consider the evolution of industry players and stakeholders in the value chain, as well as their strengths and weaknesses in the role to support the government. Currently, we are in the preliminary stage in updating the NAFP 2.0.

Q: Thirty percent of youth in the country are currently involved in the agriculture sector, particularly in the farming and fertigation subsector.

What are your plans to increase this proportion? The young agropreneur unit, a division under the ministry that encourages youth to participate in the agriculture activities, has been one of our prime focuses.

Developing young agropreneurs will be achieved through two initiatives, which are the establishment of the National Young Agropreneur Council and the Young Agropreneur programme. The two initiatives are designed to facilitate and encourage the involvement of young agropreneurs along the value chain of the industry.

Q: The middlemen and proxies in the fisheries value chain have made it difficult to reduce the market price. What are your plans to eliminate this layer of business to allow direct trade between the fishermen and consumers?

For the ministry, we will increase the number of fisherman markets and promote the Federal Agricultural Marketing Authority’s (FAMA) “My Best Buy” programme to increase the sales of catches.

Through “My Best Buy”, the fishermen could negotiate their catches directly and get better prices as we eliminate the chains of middlemen.

We have four ministries which are currently discussing this, which are the Ministry of Home Affairs, Ministry of Domestic Trade and Consumer Affairs, Ministry of Housing and Local Government and MoA, since the plan involves the development of wholesale and wet markets.

Through FAMA’s ‘My Best Buy’, the fishermen could negotiate their catches directly and get better prices
as wthe MoA eliminates the chains of middlemen

We have done a pilot project in Paya Jaras, Selangor, where the bulk of the purchases were done directly at the fish-landing sites. The model had successfully reduced the prices at a reasonable rate.

However, it may not work for bigger cities just yet.

To entirely eliminate the middlemen’s role, it requires a mid- to long-term plan. The idea of e-commerce has been floating around in the ministry as FAMA is currently developing an online platform for the fisheries market, imitating platforms such as Lazada.

Q: WWF-Malaysia has reported that there were 263 fish-bombing activities in Semporna, Sabah, alone in June-September 2018. What are your plans to combat illegal, unreported and unregulated fishing?

We have launched the “Operasi Tenaga” where we would blow up a hole at the bottom of the cheaply made pump boats used for illegal fishing activities, to let them sink.

As of early August, we have captured 72 illegal vessels which had been carrying out the activities for almost three months. Currently, we have resolved four cases involving illegal fishing.

The enforcement of this operation would have to heavily involve the Malaysian Maritime Enforcement Agency (MMEA), Royal Malaysian Navy (RMN), the Ministry of Home Affairs and Ministry of Foreign Affairs.

In the operation, MMEA and RMN’s assets are useful and convenient as a deterrent to reduce the illegal activities.