Deep-rooted land allocation policies cultivate remarkable success

FELDA is implementing unique models of land development and settlement in Malaysia and has been widely acclaimed for its key role in eradicating rural poverty and creating land ownership

Malaysia’s palm oil industry has been registering extremely positive results over the past three years thanks to a significant increase in global palm oil prices and demand, as well as promising growth in the use of new products that call for palm oil. The production of Malaysian crude palm oil increased markedly by 12.1% to 13.35 million tons in 2003 from 11.91 million tons in 2002. The production of crude palm kernel oil also rose substantially by 11.6% to 1.64 million tons from 1.47 million tons the previous year. Currently only 10% of Malaysia’s palm oil is exported in crude form. The majority is refined in the country before export, and then sent abroad for further refining into oleo-chemicals and other derivative products by international partners such as Unilever, who is currently using Malaysian palm oil to make pharmaceutical products in Holland. China is the largest export market for Malaysian cooking oil, where 2.6 million tons are consumed per year.

Malaysia’s largest palm oil producer, and indeed the world’s largest, is the Federal Land Development Authority (FELDA). Originally created in 1956 to channel financial assistance to state governments for land development programs, FELDA’s role was later expanded to include the task of implementing land development programs throughout the country. The agency has since gone on to win international acclaim for its unique models of land development and settlement, and for its success in translating Malaysia’s ‘Land for the Landless’ schemes into prosperous realities, creating land ownership for more than 100,000 families in the country. FELDA has been recognized for its key role in the eradication of rural poverty in Malaysia, and the World Bank has said that it is one of the most successful land organizations in the world, attributing its success to FELDA’s ability to combine the efficiency of the private sector with the public service of a government agency. The company’s models are now being studied and adopted in various parts of the world.

MOHD YUSOF NOOR Chairman of FELDA

Today FELDA represents the single largest plantation in the world, with 811,140 hectares. It contributes over 20% of the total Malaysian palm oil production and 12% of its total rubber production. The agency employs over 20,000 people and has projects throughout Malaysian territory stretching from the country’s northern border with Thailand to its southern border with Singapore. Chairman Mohd Yusof Noor comments, “On July 1, 2006, FELDA will have completed its first 50 years of development, and we believe this is a most appropriate time to review our achievements.” He continues, “We endeavor to strengthen FELDA over the next 50 years to be one of the main global players in the palm oil industry, while reducing our dependence on this one source of income through downstream activities.” With 72 palm oil mills and seven refineries, FELDA is also Malaysia’s largest miller and palm oil refiner.

Apart from its commercial success, FELDA’s most important contribution to Malaysia has been its impact on the quality of life of the country’s rural communities. The agency’s land development programs have not only been successful in transforming the agricultural sector from being subsistence-based to being commercially motivated, but have also led to the reduction of poverty and the general improvement in living standards for its settlers.

Under FELDA’s development program, each settler was allocated roughly ten acres of agricultural area, as well as half an acre for a housing lot. The agency placed its first group of settlers in 1958, and has since placed more than half a million people on 275 schemes throughout the country for the cultivation of palm oil, rubber and sugar cane. Additionally, FELDA dedicates 10% of its annual profits to the funding of social projects, such as schools and medical clinics on settlement townships and the funding of higher education for the children of settlers. Dr. Noor states, “FELDA has succeeded in raising the living standards of the rural poor and created vibrant and viable communities of palm oil and rubber smallholders throughout the country. Our achievements can also be measured by the improved opportunities for advancement and higher quality of life of the settlers and their children through better education, housing, and social amenities.”

According to Dr. Noor, FELDA will continue to expand its downstream operations in the future and to cultivate mutually beneficial joint ventures. The agency currently operates more than 20 joint ventures with international partners, and has found this to be an enjoyable and profitable way to expand its dealings. Dr. Noor adds, “The agency is constantly on the lookout for partners in the palm oil and other sectors, both downstream and upstream. We are very happy with the American partners who are with us already, and if there are others interested in working with us, then they are most welcome.”