Plantation Industries and Commodities in Malaysia

Mohamad Sanuri Shahid Deputy Secretary General (Strategic Planning and Management) Ministry of Plantation Industries and Commodities, Malaysia Global Islamic Financial Forum (GIFF 2012) 19th Sept. 2012

SCOPE OF PRESENTATION
Overview of Plantation Industries in Malaysia Profile of Commodities Export Performance National Commodity Policy 2011-2020 Financing Prospects in Commodities:
Upstream Downstream

Conclusion
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OVERVIEW
Plantation commodities - since pre-independence era (pepper, rubber, coffee and coconut) Rubber and tin twin pillar of economy Crop diversification - oil palm was promoted esp. through FELDA Downstream ind. devt. resource based industries Contribution of plantation commodities:
GDP 7% Export earnings - RM141 billion (2011) Employment - 705,000 (local - 365,000; foreign - 340,000)
(Note: upstream sector incl. smallholders)
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MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES (MPIC)

Main Stakeholders: 6 Boards, 5 Councils & Industry Associations

Malaysian Palm Oil Board (MPOB) Malaysian Rubber Board (MRB) Malaysian Timber Industry Board (MTIB) Malaysian Cocoa Board (MCB) Malaysian Pepper Board (MPB) National Kenaf and Tobacco Board (NKTB)
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Malaysian Palm Oil Council (MPOC) Malaysian Timber Council (MTC) Malaysian Timber Certificate Council (MTCC) Malaysian Furniture Promotion Council (MFPC) Malaysian Rubber Export Promotion Council (MREPC)

PROFILE OF COMMODITIES
Planted Area (Hectarage)
Commodities Oil Palm Rubber Cocoa Pepper Tobacco Kenaf Total Estates 4,302,283 339,722 1,080 207 4,643,292 (76.6%) Smallholders 697,826 682,978 19,463 14,593 4,242 1,279 1,420,381 (23.4%) Total (ha) 5,000,109 1,022,700 20,543 14,800 4,242 1,279 6,063,673

EXPORT PERFOMANCE OF COMMODITIES (2011)

2010 Commodity (RM Million ) Oil Palm Rubber Timber Cocoa Tobacco Pepper Total 62,222.72 26,217.70 20,330.55 4,189.47 1,034.95 198.37 114,193.76 83,395.51 32,422.85 19,833.99 4,215.44 1,058.88 284.70 141,211.37 2011 % Change 34.03 23.67 (2.44) 0.62 2.31 43.52 23.66 (average)

MALAYSIAN COMMODITIES AT THE GLOBAL STAGE

Largest exporter of rubber glove

Largest cocoa grinder in Asia Pacific

Largest exporter of palm oil products

5th largest producer of pepper

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3rd largest producer of natural rubber

8th largest exporter of furniture

MAJOR PALM-BASED PRODUCTS EXPORT DESTINATIONS

EU 1.94 MnT (RM 5.35 billion) USA 0.71 MnT (RM 2.53 billion) Pakistan 0.76 MnT (RM 2.36 billion) Middle East & Northern Africa 0.72 MnT (RM 2.46 billion)

Japan China, PR 0.43 MnT 2.02MnT (RM 1.67 billion) (RM 6.39 billion) India 1.18 MnT (RM 3.85 billion)

Total Export Volume & Value For Q2 2012: 11.61 Mn T (RM 36.06 billion) Total Export Volume & Value For 2011: 24.27 Mn T (RM80.41 billion)

Source: MPOB

MAJOR NATURAL RUBBER EXPORT DESTINATIONS

Total Export Volume & Value For Q2 2012 e: 353,355 tonnes (RM 3.75 billion)
China Others (RM 1.10 billion) China (RM 1.47 billion) Germany South Korea USA Iran Netherlands (RM 0.11 billion) France Brazil Brazil (RM 0.13 billion) France (RM 0.05 billion) Iran (RM 0.08 billion) South Korea (RM 0.16 billion) Including export of compound to China Netherlands Others

USA (RM 0.11 billion)

Germany (RM 0.54 billion)

EXPORT VALUE OF TIMBER BY PRODUCTS (Q1/ 2012)

Mouldings 195 4% BJC 241 5% Fibreboard 275 5% Other Products 146 3% Veneer 80 2% Chipboard/ Particleboard 75 1% Wooden Frame 33 1% Rattan Furniture 5 0%

Wooden Furniture 1,531 31%

Logs 448 9%

Sawntimber 621 13%

Plywood 1,271 26%

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NATIONAL COMMODITY POLICY 2011-2020

National Commodity Policy (NCP) 2011-2020 was launched on 17 February 2012 The NCP provides strategic direction for the development of the plantation and commodities industry until 2020 Strategic thrusts commodity sector to further transform the

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NATIONAL COMMODITY POLICY 2011-2020 : THE SEVEN THRUSTS

Thrust 1: Strengthening Commodities Industries in National Economic Development Thrust 2: Elevating Modernisation of the Commodity Industry Thrust 3: Diversifying Production of High Value-added Products Thrust 4: Generating New Sources of Revenue Thrust 5: Enhancing Competitiveness and Market Expansion Thrust 6 : Accelarating the Development of Smallholders and Entrepreneurs Thrust 7: Developing and Strengthening Human Capital in Commodity Industries
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EXPORT EARNINGS (ESTIMATED) (RM Billion)

Commodities 2010 Palm Oil Rubber Timber Cocoa Pepper Tobacco Total 62.9 24.7 20.3 4.2 0.2 1.0 2011 66.99 27.66 23.16 4.32 0.25 1.11 2012 71.34 30.98 26.37 4.45 0.29 1.18 2013 75.98 34.70 30.04 4.59 0.33 1.27 2014 80.92 38.87 34.22 4.73 0.38 1.36 2015 86.0 43.6 39.0 4.9 0.4 1.4 2016 89.18 48.96 41.50 5.10 0.45 1.46 2017 92.48 54.99 44.15 5.31 0.50 1.51 2018 95.90 61.75 46.98 5.53 0.56 1.57 2019 99.45 69.34 49.98 5.75 0.62 1.64 2020 103.0 78.0 53.2 6.0 0.7 7.0

113.3 123.61 134.86 147.13 160.52 175.3 187.05 199.58 212.95 227.22 242.6

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EXPORT EARNINGS, 2010-2020 (RM Billion)

242.60 227.22 212.95
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199.58 187.05 175.30 160.52

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147.13 134.86 113.30 123.61

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0 2010 2011 Total 2012 2013 2014 Rubber 2015 Timber 2016 Cocoa 2017 2018 Pepper 2019 Tobacco 2020 Palm Oil

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FINANCING OPPORTUNITIES IN COMMODITIES

FINANCING IN COMMODITIES: ISSUES & OPPORTUNITIES

Upstream sector:
Govt. is providing assistance to smallholders - new and replanting, mechanisation Large estates are mainly financially independent hence opportunities for financing

Downstream sector:
Limited availability of finance for SMEs Some sectors have less accessibility to finance eg. timber sector - considered as a sunset industry Need for greater flexibility for export credit financing
longer credit period

Opportunities for syariah compliant instrument in commodity trading eg. Bursa Suq Al Sila
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FOREST PLANTATION
Govt. plans to establish large scale commercial forest plantations to supply raw materials for the timber industries 9 timber species promoted incl. rubber, acacia mangium, teak and bamboo Target 375,000 hectares by 2020; 25,000 hectares per year Govt. has approved loans amounting to RM608.34 million (47 agreements) covering 103,700 hectares To date, 62,308 hectares have been developed About RM2.4 billion of loans still needed

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FOREST PLANTATION

Ladang Hutan Getah LTC , Bornion Timber Sdn Bhd 2 tahun

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FOREST PLANTATION

Ladang Hutan species Acacia Mangium

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AGARWOOD
Global export value of agarwood:
Products Chips and Block Oil Powder Total 2006 (RM000) 444,470 35,526 1,417 481,413 2007 (RM000) 544,184 100,365 866 645,415 2008 (RM000) 249,291 83,658 812 333,761

Malaysia is 2nd largest producer of agarwood after Indonesia. In 2009, exports from Pen. Msia valued at RM56.43 million Trade of wild agarwood is controlled by CITES. Malaysias export quota is 200,000 kg per year However, no quota is imposed on planted agarwood
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AGARWOOD PLANTATION

Kuala Lipis, Pahang

Simpang Pulai, Perak

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INNOCULATION OF AGARWOOD

Pokok karas yang telah matang * 5- > 30 tahun

Membuat lubang menggunakan drill sebesar 10mm

Memasukkan bahan inokulan ke dalam pokok karas Hasil gaharu akan mula dituai pada 6 bulan, 12 bulan dan 24 bulan. Semakin lama tempoh hasil tuaian, mutu gaharu akan bertambah.

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AGARWOOD GRADES
Grades of Agarwood Grade A Super Grade A Grade B Grade C Grade D Grade E Others Grade Chips Price Per kilo (RM) 25,000.00 20,000.00 18, 000.00 15, 000.00 8,000.00 3,000.00 500.00 - 1, 000.00 5.00 - 100.00

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CONCLUSION
Plantation and commodity sector will continue to contribute to national economic growth part of NKEAs DKN provides pathway for greater transformation of the commodity sector Financing opportunities in commodity:
large estates forest plantation agarwood SMEs export credit financing
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THANK YOU
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www.mpic.gov.my