What role do plantation industries and commodities play in Malaysia’s Economic Transformation Programme?
DOMPOK: The plantation industry is a very important industry in Malaysia’s Economic Transformation Programme. In fact, rubber and oil palm are the two crops that have been added to the twelve key economic areas that the government is promoting. We can see from the record over the years that the palm oil industry has a long history of being able to support the country when it was necessary. Going back to the financial turbulence of 1998, for instance, I think the palm oil industry has stood with Malaysia and has helped solve some of the worst effects of the 1998 crisis. Last year, the palm oil industry contributed about 20% of Malaysia’s export earnings, over RM83bn ($26.5bn), an increase of more than 20% from the previous year. I think this and all the other industries will continue to grow. Malaysia is looking at the commodities sector as an area of growth, not just from the upstream, but also from the downstream sector. For example, in the oil palm industry, we are going into the downstream with the pharmaceutical and nutraceutical industries, not just becoming a producer of raw materials. In the case of rubber, it is the same. We are not just concentrating on the upstream, but further going downstream so that there is a lot of value addition to what you are producing. In fact, as far as rubber is concerned, Malaysia is already importing latex from the surrounding countries. Now we are hoping that all of this value-adding will be put to good use.
What are plantation industries and commodities contribution to the GDP and GNI of Malaysia?
DOMPOK: The contribution of the commodities sector to the GDP/GNI of Malaysia has been very progressive. If we look over the period of last year, we have contributed about RM114bn ($36.4bn), and we are hoping that over the period from now to 2020 it will reach to about RM240bn ($76.6bn). The contribution of commodities is about 7% to the GDP of the country.
What is Malaysia’s commodity mix?
DOMPOK: If you look at Malaysia’s commodities sector, roughly the country has an area of about 22m hectars, half of that under the Rio Summit. Malaysia has already said it will be under forest cover, which means that there will be nothing else grown except for trees. The other half is divided into agricultural activities and the land that is required for buildings, stadiums, roads, shopping centers, and all the residential areas. So now you are talking about, roughly, only a quarter of the land available in Malaysia that can be used for agriculture. Out of this, five million hectars has been utilized for the planting of the oil palm, another one million for rubber, perhaps 20,000 for cocoa, and a little less for the other crops like pepper and tobacco. This means that the dominant crop here is the oil palm industry and I think we now produce 90m tonnes of crude palm oil a year.
What are Malaysia’s biggest export markets?
DOMPOK: The biggest export market for the oil palm industry is China. All of our commodities are really looking at the growth that we see coming over the years in China. Today, the oil palm industry exports about 20% of our products to China, followed by India, the United States, the European Union and Pakistan. They are well above one million each. In fact, for the United States, it is more than one million. But overall I think the biggest market is China, and I think we are looking at the growth in China to be very stable over the years, and it is for this reason that we think the long-term prospect of our motives are very good.
Where would you identify FDI opportunities in the plantation industry of Malaysia?
DOMPOK: I think investments can go in the downstream sector. We now have reached a point where there is not much more land available for the planting of crops like oil palm, rubber, and cocoa, and therefore, the first thing for us to do is to increase productivity in the upstream sector. That means that for every hectare of land utilized for the oil palm industry, or rubber, there must be an increase in productivity. Downstream, we are looking at the development of new innovations and technologies that can value-add to the crops. In the case of the oil palm industry, we are going into pharmaceuticals, neutraceuticals, and oleo-chemicals. I think the prospect is good because the world is growing. The world population is getting larger, even for the supply of oil, as in oils and fats, and I think that we have a very important role in seeing that the 9bn population in the year 2015 will get some help from Malaysia in trying to solve how to feed this growing world population.
The contribution of the commodities sector to the GDP/GNI of Malaysia has been very progressive. If we look over the period of last year, we have contributed about RM114bn ($36.4bn), and we are hoping that over the period from now to 2020 it will reach to about RM240bn ($76.6bn). The contribution of commodities is about 7% to the GDP of the country.
As many of Malaysia’s commodities producers are small holders, what is being done to ensure financial speculation does not create imbalances in the market?
DOMPOK: I think we are helping our small holders very much. At the moment, the government is going on a Re-planting, a new planting program in which we are helping the small holders to replant or to plant new areas. Forty percent of the oil palm industry in Malaysia, at least in the upstream level that is planting the oil palm, is in the hands of the small holders. In the rubber sector, most of the holdings are small holders and government is helping the small holders in replanting and trying to identify new technologies so that the downstream sector can take the crops that they produce and be able to give them better returns for their labor.
How does the Ministry generally promote green and environmentally friendly practices?
DOMPOK: I think we subscribe to this world view that what we do must be sustainable. That means that there must be a balance between people, planet, and profit, and I suppose it must be in that order so that no sector will suffer at the expense of another. I think we want to ensure that the products that we produce in this country are sustainable. We are well aware that all these accusations about our products from NGOs, and of course, the NGOs of the world have a different world-view of the environment. Here, we are looking at the hard facts of how do we help our people get out of poverty and how to ensure that they have a living; therefore what we do is sustainable. We are very concerned about the environment because Malaysia’s tourism industry is a very important industry for us. We are hosts to more than 20m people every year, and I think people come to Malaysia partly because they want to see an environment that is conducive to their holidays and we realize that it is very important for us to preserve the environment. Malaysians too want an environment to live and for our children to grow. I think this is not lost on the policy makers, and we are just like anyone else, trying to ensure that there is a balance in all the things that we do.