The sector’s outdated practices have contributed to declining productivity and wages
by HIDAYATH HISHAM
MALAYSIA’S agricultural sector is facing significant challenges due to a widening modernisation gap.
Economy Minister Rafizi Ramli said the sector’s outdated practices have contributed to declining productivity and wages, further exacerbating the rural-urban divide.
He expressed concern over the state of agriculture in Malaysia, pointing out that the industry’s productivity had diminished over recent years.
“The value added per hour worked in agriculture has declined from RM25.2 in 2015 to RM24.8 in 2023,” he said at the launch of the 30th edition of the Malaysia Economic Monitor (MEM) on Oct 14.
Rafizi mentioned that while employment in the agriculture sector continues to grow, with a 4.2% increase, the sector’s rural concentration has led to lower wages, deepening social divisions.
“You are condemning people to lower wages, worsening the rural-urban divide, and exacerbating the sense of being left behind,” he said.
Rafizi also addressed Malaysia’s growing dependence on food imports, a trend he described as a security threat.
In 2022, Malaysia’s food trade deficit reached RM31 billion, with the country importing 1.7 times the value of food it exports.
As the population grows, this reliance on imported food will put further pressure on the country’s economy and food security.
To address these issues, Rafizi outlined the need for a new economic approach to agriculture, focusing on modernising the sector through the integration of digital technologies.
He advocated for a stage approach to technological adoption, explaining that expecting rural farmers to rapidly embrace large-scale digitalisation was unrealistic.
Instead, he proposed a minimum viable product (MVP) approach, where small-scale pilot projects are tested, refined, and scaled up.
Rafizi pointed to the government’s INTAN initiative as a potential model for modernisation.
The programme, which revitalises federal land using modern agricultural technologies, has seen participating farmers earn up to RM5,600 a month — double the average farmer’s salary.
“By showing the real benefits of embracing technology, rural farmers can command a higher salary and standard of living,” he said.
As Malaysia looks to the future, Rafizi pointed out the importance of agriculture as a core driver of the economy, urging the nation to take swift action to modernise the sector.
“Modernising the sector will minimise the trends of import dependence and reduced contribution. It will make sure those growth figures spillover, not just into manufacturing and services, but agriculture too.”
Following his keynote, Rafizi also responded to questions from the media regarding the delay in the government’s RON95 subsidy reforms, which have yet to be implemented this year.
When asked whether the reforms were still on the agenda and how Malaysia plans to meet its fiscal deficit target of 4.3% of GDP, Rafizi advised patience, hinting that key policy announcements would follow the upcoming budget.
“I think we should wait for the budget and the subsequent months after that because certain things have changed. For example, with higher economic growth, we have slightly more room to navigate to meet our fiscal glide target,” he explained.
Rafizi also made clear that a strengthening Ringgit has helped reduce pressure on subsidy bills, easing some of the fiscal strain.
He mentioned the complexity of balancing multiple economic factors.
“What is most important to the government is to balance everything because whatever we decide, all these parameters are interconnected — the fiscal target, inflation, growth, and especially the pressure on the cost of living,” he said.
Rafizi reiterated that the government has a range of policy options and that sequencing will play a critical role in achieving fiscal sustainability.
“My view is that as long as this government has more options to navigate, we will be able to balance these competing priorities better while at the same time moving closer to the fiscal consolidation target,” he said.