Agriculture
Nurturing a culture of added-value products

Malaysia boasts a strong primary industries sector and is a world leader in palm oil production, rubber, and timber. Industry experts, under the guidance of the Ministry of Agriculture and the Ministry of Plantation Industries and Commodities, have been investing heavily in research and development to add value to primary products coming out of the country and to contribute to the sustainability of the nation’s primary resources.

Palm oil, rubber, and timber are the leading products of Malaysia’s blooming agricultural sector. The focus is now on developing the industry’s manufacturing capacity and employing branding to boost exports

Consequently, Malaysia is now among the world’s top ten wooden furniture exporters. Prime Minister Badawi has given renewed emphasis to the agricultural and primary products sectors, underlining the sectors’ importance in the country’s economy. Currently agriculture accounts for 8.4% of GDP, second only to manufacturing in overall GDP contribution, and also accounts for 6% of the country’s export earnings, while employing nearly 15% of the workforce. The Ministry of Plantation Industries and Commodities oversees cultivated commodities, as well as the timber and timber-related products sectors. Peter Chin Fah Kui, Minister of Plantation Industries and Commodities, comments, “The success of this Ministry depends on downstream activities, and on being able to convert our commodities into products. So we are very actively encouraging our private sector to go downstream as much as possible. This also means going into branding at a later stage.”

PETER CHIN FAH KUI Minister of Plantation Industries and Commodities

ABDUL HAMED BIN HJ SEPAWI Executive Chairman of Ta Ann Holdings

Although Malaysia’s palm oil industry has flourished throughout the last three years, Mr. Peter Chin says there is a strong emphasis on continuing to develop its capacity for manufacturing refined products and to strive to meet all international health standards. He comments, “We want all of our commodities to be of the highest international standards in health, quality, and product presentation. Consequently we are spending more than $25 million per year in R&D for palm oil.”

The industry is also expanding its manufacturing capacity. The larger palm oil producers have already begun to employ branding and to export ‘Made in Malaysia’ oleo-chemicals, and food, cosmetic, and pharmaceutical products, and this is a trend that Mr. Peter Chin wants to see continue. He states, “We aim to increase the value-added of our palm oil. We have the technology and the capability of going downstream and producing refined products, oleo-chemicals and pharmaceuticals, which are very much in demand on the world market.”

Malaysia also produces almost 20% of the world’s natural rubber. Peninsular Malaysia is among the world’s most important rubber growing areas, and rubber is also grown in Sabah and Sarawak. Together the regions comprise 1.7 million hectares of rubber cultivation. The majority of the country’s producers are involved in the manufacture of rubber gloves. A third important industry for the country is timber, which is mainly located in Sabah and Sarawak, home to the largest tropical forest in the world. Major timber producers there have implemented sustainable forest management practices, including large-scale replantation programs, and are also investing heavily in R&D to develop new species. Abdul Hamed Bin Hj Sepawi, Executive Chairman of one of the country’s largest timber producers, Ta Ann Holdings, comments, “We try to follow the European model on how to develop sustainable operations. We work closely with the experts from different parts of the world, including Australia, Vietnam, and Thailand. We also look at the problems others have experienced and try to learn from them. Really, sustainability is our primary focus.”

Ta Ann currently exports 95% of its products to Japan, and consequently has been successful in meeting strict Japanese quality requirements. Moving forward, Ta Ann hopes to continue to develop new value-added products while remaining at the forefront of technological developments. Mr. Hj Sepawi adds, “Our aim is to employ the best technology and, at the same time, to build stronger integrated upstream and downstream operations.”