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Palm Oil And Rubber
Last Updated : 17/3/2017 11:26 AM

Where we are today
Malaysia's palm oil industry is the fourth largest contributor to the national economy and currently accounts for RM53 billion in GNI. The industry spans the value chain from upstream plantations to downstream processing. The development is mainly private sector driven and remains heavily skewed towards upstream activities. However, with limited land available to expand plantations, Malaysia will need to enhance upstream productivity and capture the full potential of existing downstream opportunities to sustain growth in this sector.

Vision for the future
Palm oil will remain a major contributor to the Malaysian economy over the next 10 years building on a core set of advantages including rising relative-demand globally versus substitutes, continued high oil-yield per hectare over substitutes, distinctive edge in yield and quality over competitor nations such as Indonesia and a conducive regulatory environment. These would be supplemented by superior productivity through mechanisation and a stronger presence in the lucrative downstream segment.

Targets and aspirations
The Palm Oil NKEA is targetted to raise total GNI contribution by RM125 billion to reach RM178 billion by 2020. In achieving this, an additional 41,000 jobs will be created, of which 40 percent will be high-skilled jobs earning average monthly incomes of RM6,000.

The NKEA plans to implement eight core EPPs that span the palm oil value chain.

  1. Upstream productivity and sustainability
    These EPPs will focus on improving upstream productivity and transforming Malaysia's oil palm plantations by accelerating the replanting of aging oil palms, mechanising plantations using equipment such as CantasTM, stringently enforcing best practices to enhance fresh fruit-bunch yield, implementing strict quality control parameters to enhance oil extraction rate and developing biogas facilities at palm mills to capture the methane gas released during the milling process.

  2. Downstream expansion and sustainability
    These EPPs will target capturing the lucrative downstream segment where Malaysia has little presence today by focusing on developing finished segments that generate high value, including oleo-derivatives and selected food and health-based segments, as well as commercialising second-generation bio fuels from the resulting bio mass that is generated in the industry. 

Enabling growth
Achieving our aspirations will require cumulative funding of RM124 billion over the next 10 years with 98 percent of the funding coming from the private sector. The total public funding for capital expenditure is expected to be RM2.9 billion with an additional RM2.7 billion in the form of tax incentives, soft loans and cash incentives to promote private-sector development in the downstream sector. 

There are also three key sector-wide enablers that must be set up including increasing the number of university courses and graduates in chemical engineering, bioengineering and related courses to meet the demand for the nearly 80,000 skilled personnel; extending the Brain Gain Malaysia programme to Malaysian diaspora who are food scientists and fast-moving-consumer-goods marketing specialists in leading global food and non-food downstream companies; and industry companies and Government agencies such as Malaysian Palm Oil Board playing a key role in collecting information such as business intelligence and product intelligence to ensure we stay ahead of the industry.

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