LAST_UPDATEFri, 22 Jun 2018 9am

2018 Budget Will Spur Commodity Exports And GDP Contribution

Pic: NSTPic: NST

KUALA LUMPUR: Malaysia raked in RM93.40 billion from plantation commodity exports in the first eight months of this year, thanks to a slight improvement in palm oil and rubber pricing.

“This is 21 per cent better than the corresponding period last year, which amounted to RM77.50 billion,” said Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong in a statement today.

Malaysia’s plantation-based commodities comprise palm oil, rubber, timber, cocoa, tobacco and pepper. Apart from manufacturing and tourism, plantation commodities are also a major contributor to the economy.

Mah said the plantation industry played a positive role in the country’s economy, especially since imports from the industry were significantly lower compared to the electronics and electrical sectors.

Last year, plantation commodity exports, totaling RM121.99 billion, contributed 15.5 per cent of Malaysia’s total exports, which were valued at RM785.93 billion.

This led to the plantation commodity sector contributing 7.4 per cent to Malaysia's gross domestic product (GDP) of RM1.11 trillion.

Yesterday, Prime Minister Najib Razak in the tabling of the 2018 Budget said the government is committed to transform the commodities sector to be more knowledge intensive and feature more value-added activities.

The budget allocated RM460 million for the welfare of rubber smallholders through the Monsoon Season Aid, which will benefit more than 500,000 smallholders. This allocation will also aid rubber replanting and the improvement of infrastructure in latex production.

There is also a RM140 million allocation for oil palm replanting, new plantings and promotion of palm oil exports.

As for furniture makers, Mah said banks are to accord RM100 million in loans, with 70 per cent government surety to encourage further automation and incorporation of the Industry 4.0 way of doing business.

Medical gloves, catheters and condom manufacturers are also set to benefit from the government's RM245 million grant under the Malaysian Investment Development Authority’s (MIDA) Domestic Investment Strategic Fund to upgrade and incorporate smart manufacturing under the Industry 4.0 initiatives.

“The budget seeks to reinvigorate the commodity sector being the largest contributor of net exports in 2018, spearheading economic progress above and beyond the TN50 agenda,” Mah said.

The plantation industry harbours considerable political influence and significance. More than half of the country’s 222 constituencies are populated by small farmers cultivating oil palms, rubber, acacia, cocoa trees, pepper vines and kenaf on their land.

It is expected that state owners and smallholders’ political and economic interests and contribution to Malaysia’s economy will continue to be upheld as their produce continue to be value-added via manufacturing, trading and branding activities.