KUALA LUMPUR: The following are excerpts from a Business Times exclusive interview with Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong.
Question: What is your vision and mission for the commodity industry?
Answer: A: First, I would like to thank the prime minister (Datuk Seri Najib Razak) for his confidence in me to take on the responsibility to lead this ministry. A lot of people say I knew beforehand (but the truth is) I do not know.
When the announcement of my appointment to lead this ministry was made, I was in China. I arrived in the morning that day to take part in the World Economic Forum.
I remember sharing the same stage with Haier, the world’s biggest white goods manufacturer. I came back to Kuala Lumpur on the same night. For the record, it was never discussed in the Cabinet. This appointment is the prerogative of the prime minister.
Yes, I agree with you, this job has big responsibilities. We really have to work hard. The export value for commodities, which covers palm oil, rubber and the downstream businesses, is around RM117 billion. This is the second-largest export contributor after electrical and electronics (E&E). When we talk about value-add, to me, it has to be commodities. On the other hand, the E&E sector has a lot of imported content.
Plantation and its downstream activities are a very important sector for the country. It’s not all about big oil palm estates, big glove factories. It is also about 600,000 smallholders and their families. Commodity exports make up eight per cent of the country’s gross domestic product (GDP).
There are so many things to learn. There are many people giving me a lot of ideas. But I told them I need at least three weeks to get to know and understand things better. It is the first week now (This interview was conducted on July 14). Maybe some of the questions you ask me, I don’t have the information now. I just moved in here last week (two weeks ago). Everything is still fresh.
I want to share a story with you. That day, an industrialist came to me and showed me samples of red palm oil.
Now, in certain parts of China, many children of the poor suffer from Vitamin A deficiency. When the children are given vitamin capsules, they don’t like them but when we put red palm oil (that contains Vitamin A) into biscuits, the children eat them.
We see that red palm oil is able to reduce serious health problems. The rate of eye problems, such as night blindness, reduced from more than 20 per cent to five per cent.
These are the simple things that, to me, show the goodness in palm oil. There are a lot of things we can do, practical ways we can carry
out studies to reduce health problems. There are a lot of challenges ahead but I’m confident about this sector.
Q: How do you view the commodity sector’s contribution to our economy?
A: The commodity sector is doing quite well. Although it is not as big a part of the economy as last time because over the years the services sector has contributed more, commodity exports are very important.
We’re the world’s biggest producer of rubber gloves. I was quite surprised when I got to know our rubber glove exports alone amounted to RM13 billion. We’re the second-biggest producer and exporter of palm oil after Indonesia. We are the world’s six biggest producer of rubber. Our pepper exports, which are for food use, amounted to RM500 million. These export earnings are contributed by smallholders.
We have to work on generating more global demand for our commodities. If we can generate more consumption, the prices can go up.
With commodity export value of around RM115 billion now, we would like to aim for a five per cent increment. This percentage may seem small but the impact is big because the amount is big. That is why I agree with the prime minister that the commodity sector is so important. We really need to work harder in going further downstream to increase our value-added exports.
We always think China is Malaysia’s biggest trading partner. Yes, that is in terms of imports and exports. But in the last two years, Singapore is Malaysia’s biggest export market. Singapore is a small country with a small population. A big part of our exports goes out to and through the Singapore port.
The figures (from the Statistics Department) show Singapore is our biggest export market because they value-add a lot of our commodities from cocoa to everything else. If we were to do more commodity downstreaming here, the contribution to our country would be higher.
Q: How do we encourage more downstreaming of our commodities?
A: I think we need to go into more research to value-add our commodities. When I was minister in the Prime Minister’s Department, I was looking after Malaysia Innovation Agency and we were promoting value-added activities from biomass and biofuels. The way forward has to be innovation in product development and manufacturing processes.
I noticed that nowadays, people are talking more about the environment. When I was at the World Economic Forum in China, it was not just profit maximisation. They are starting to put in environmental cost into their products.
So, that’s why when it comes to biomass and biofuels, Malaysia has a natural advantage. The natural resources are grown here. So when we value-add on the downstream products, they should be a lot more cost-competitive.
Q: What is your view on the smear campaigns that the palm oil industry is currently facing — compared to the 1980s when the late Tun Lim Keng Yaik defended against United States soya farmers who defamed palm oil?
A: I see the campaign against the palm oil industry is ongoing and unrelenting. I look at the videos on YouTube and I’m surprised. I see orangutans are still being used as biodiversity propaganda against the palm oil industry.
France is advocating for increment of tariffs against palm oil and this initiative will probably be tabled again in September. France may not be a big consuming country of palm oil but we are more concerned about the consequences. If France raise taxes on palm oil, there will be a domino effect. The other European countries are going to follow. We have to fight against this perception.
You know, we see all the videos on YouTube saying “Do not eat Nutella chocolate because it contains palm oil”. Everybody knows that oil palm is the most efficient oil crop, generating four tonnes per hectare per year. But we see all this propaganda. The lobby against palm oil is so strong. We have to work harder to fight this stereotype. The Malaysian Palm Oil Council (MPOC) has been working hard but the lobby against palm oil is getting stronger.
This lobby has never stopped. I remember (during) Tun Lim Keng Yaik’s time... in the 1980s, he went to the US to fight the American Soy Association’s unfair campaign. The lobby has gained momentum. Now, the lobby is multi-faceted with propaganda alleging oil palm cultivation is not sustainable, planting on peat soil is polluting and the palm oil is not healthy. These are all false. To me, palm oil is healthy.
Q: Following the setting up of the Council of Palm Oil Producing Countries (CPOPC) late last year, what is the progress?
A: Malaysia and Indonesia have always cooperated. My counterpart from Indonesia is coming here at the end of this month. We hope to formalise the CPOPC in the next few months and to have the head office in Jakarta.
I hope we can look into areas where we can cooperate to fight against the propaganda. There is no point competing against each other. We should look at ways where both countries can win. Of course, at a later stage, we will be inviting other oil palm countries to join CPOPC.
Indonesia and Malaysia initiated CPOPC because collectively, we produce 85 per cent of the world’s palm oil. I will talk with my counterpart in Indonesia. We must be resolute in fighting this propaganda against the palm oil industry.
I’m just telling you if I’m a young fella or a mother and I see all these propaganda videos on YouTube, it strikes my head. We have to be very careful about these allegations, which are not true. If, at the end of the day, consumers don’t buy, we would have big problems in our palm oil sales.
I cannot understand why people say oil palm cultivation is bad. When I fly, I look down from the plane. I see oil palms, I know these trees are producing oxygen just like other trees in the forest. Oil palms are good for the environment. Half of Malaysia’s landmass is gazetted as forest.
Q: How do you view the palm oil industry’s productivity?
A: In view of fierce competition from other oil crops such as soya, rapeseed and sunflower, we need to press on with raising productivity at our estates. The Malaysian Palm Oil Board (MPOB) has done a lot of research with the Cantas but there are limitation to mechanisation. If the oil palms are taller than the hand-held Cantas, this harvesting tool is not so useful.
The country’s average oil extraction rate (OER) is only 20 per cent. A lot of smallholders are only getting around 19 per cent. If we can bring up this OER in a few years time to 24 per cent, that is an immediate 20 per cent increase in productivity from now.
I am from Teluk Intan. The whole economy of Teluk Intan depends on palm oil. So, when the price of palm oil goes up, the whole town enjoys more business, from the supermarkets to the restaurants.
I have been through a time when FFB (fresh fruit bunches) was sold as high as RM700 per tonne and when prices fell to as low as RM80 a tonne, well below the production cost. Today, FFB is trading at around RM450 a tonne.
I think the MPOC is doing a good job. We have to maintain the effort. Yes, there is cess but it’s not much. It is just enough for their marketing effort. I have met and talked with a few of the council members, who are also captains of the industry. In fact, in two weeks, there will be a marketing event organised by MPOC in China.
Q: Oil palm fruit harvesting and rubber tapping are labour-intensive. There seems to be a runaway problem among foreign workers. How is the government dealing with this?
A: This foreign worker problem of running away from their current employment at the estates to work elsewhere is a nationwide issue.
The ministry concerned in legalising foreign workers is looking into this matter. I think, in a few months, there will be a strict system to identify and control. We cannot have foreign workers running here and there. Running away will turn them into illegals. That is why the government is making so much effort to eradicate (the problem of) illegal workers. With the new system, I hope, this problem can be reduced.
Going forward, we cannot go on relying on labour-intensive practices. I know planters are making effort to raise their productivity. To their credit, they have shown me productivity have gone up. From one worker harvesting FFB across 4ha, planters have doubled their productivity to 8ha as they mechanise more processes.
I understand there is a shortage of harvesters across Peninsular Malaysia, Sabah and Sarawak. Due to the workers shortage problem, planters tell me harvesting rounds are longer than usual. This meant the FFB harvested are not so fresh. That affects the FFB quality when it gets to the mill.
Planters are hoping this problem can be quickly resolved. I’m working on this and I will be talking to the ministry concerned. I know this problem is very serious, the planters are telling me. It’s not only in Sabah and Sarawak, it is also prevalent here in Peninsular Malaysia. Additional reporting by Ooi Tee Ching