MALAYSIAN ECONOMY

Development of the Agricultural Sector

INTRODUCTION

• The agricultural sector has contributed to the growth and major contributors to national income and export earnings

• It’s become basis of economic growth and main contributor in national economy prior to the 1970s

• The agricultural sector initially derived from the increase in the production of livestock, fisheries, and other miscellaneous crops

• The agricultural industry more valuable cash crops owing to the increase in earnings from major commodities such as palm oil, rubber and food commodities

• It has enabled the sector to retain its workforce and shore up the economic downturn of the 1997 financial crisis

SCENARIO OF THE NATIONAL AGRICULTURAL SECTOR

Pre-Independence Period (1800-1957) Before Independence, the agricultural

sector was characterized by dualism between the plantation sector and the smallholder sector. Plantation sector was dominated

largely by Europeans and it specialized in a few commercial crops such as rubber and palm oil

The smallholder sector were owned mostly by Malay peasants who were involved in traditional rice cultivation. Chinese and Indian immigrants grew a variety of crops on small plots such as pepper, tapioca and vegetables

The composition of agricultural crops during this era can divided into 2 categories:1. Major crops (rubber, palm oil & rice)Provide most of the export earning for the

country2. Minor crops (food crops, fruits & spices)Create employment & income for the

smallholder Before Independence, there were distinct

differences in terms of economic organization and technology between smallholder subsistence and plantation sector. As a result, the productivity and income levels of the sectors differed greatly

After Independence (1957)• The period after Independence

until 1970 saw increased government intervention which to improve productivity and income in the subsistence sector and reduce high dependence on rubber for export earnings

• Malaysia inherited an economy largely based on the export of tin and rubber

• Continued with large-scale planting (with some diversification) of export commodity cash crops such as oil palm

• Started cultivating oil palm because the major foreign plantations seized upon the opportunity of strong export demand for vegetable oils and shorter immaturity period of oil palm compared to rubber tree

• Agriculture led by rubber and palm oil continued to be the dominant contributor

THE IMPORTANCE OF AGRICULTURAL SECTOR

Backbone of the economy

at independence, it contributed 39.3% to GDP, generated 58.3% of a total employment and about 50.0% to export earnings.

After independence, economy underwent a diversification, so the contribution declined.

In 1980, still contributed 22.9% of total GDP, 39.7 % to employment and less than 22.9% to export earning.

THE IMPORTANCE OF AGRICULTURAL SECTOR

Diversifying and shielding the economy

In recent years, agriculture is considered a vital sector to the economy of Malaysia it play its role in diversifying and shielding the economy from external shock.

The increase in earnings of major commodities, particularly palm oil and pepper as well as food commodities, enabled the sector to retain its workforce and withstand the economic downturn of 1997-1998.

Development to rural areas

By promoting the agricultural sector, we are bringing development to rural areas thus reducing imbalance in urban-rural development especially in the less developed states.

THE IMPORTANCE OF AGRICULTURAL SECTOR

Increased self-sufficiency

In the past, the country relied on other countries to meet a significant proportion of our food needs. However lately, countries which have traditionally supplied us with food experienced growing population and are rapidly industrializing (eg Thailand, Vietnam, Indonesia). They may not be able to supply us food as much as before. Furthermore, currently Malaysia is only self-sufficient in the production of eggs, poultry and fruits. For food security reasons, we must try to increase self-sufficiency in other foods especially meet, rice and milk.

Improve balance of tradeThe food import bill has been a long standing problem in Malaysia. In 1970, the country had a deficit of RM407.8 million and the food import bill has been growing steadily. In 2000, import of food items reached RM13.0 billion and expected to increase to RM22.0 billion in 2005 Increased food productionThe sector contributed not only as a supplier of raw materials to the resource-based industries, but also in term of food production and Malaysia aim to be centre/hub for ‘halal’ food production

AGRICULTURAL PROGRAMMES

In-Situ Development-is the effort by the government to improve productivity in existing agricultural areas.-It is comprised replanting, crop diversification and integrated agricultural development projects (IADPs). Agricultural consolidation and rehabilitation programmes were also implemented

under in-situ development to improve yield and productivity in the small holdings.

IADP Designed to revitalize and rehabilitate in-situ existing agricultural areas facing

problems of low productivity, low income and high rate of poverty. Some IADPs started as large-scale irrigation projects aimed at increasing

productivity and income of farmers and to increase self-sufficiency of rice production.

Improved irrigation, drainage facilities, complementary inputs and other agricultural support services such as subsidies, credit and marketing were introduced.

Example of IADP ; Muda, Kemubu, Besut, Sungai Manik and Kelantan Utara. Other IADPs are based on mixed crops, the replanting of rubber, coconut,

pineapple or rehabilitation through diversification into more profitable crops such as palm oil and cocoa as in Johor Barat, Pahang Barat and Negeri Sembilan Timur.

AGRICULTURAL PROGRAMMES

Land Consolidation and Rehabilitation

Land consolidation aims at consolidating enlarged fragmented and uneconomic holdings. Uneconomic holding has been identified as a major factor contributing to low productivity and low income among farmers. Enlarged farms benefit smallhalders.

FELCRA, establish in 1966, has been entrusted the role of land consolidation and rehabilitation such as consolidation od unused government land, rehabilitation of unsuccessful state-managed schemes and management of youth land development programmes.

By 1985, total land development and rehabilitation under FELCRA was 81.8 thousand hectares under RISDA and 448.3 thousand hectares under other state agencies. By the late 1970s, with increasing scarcity of land in Peninsular Malaysia, FELDA began expanding its scope of activity to Sabah and Sarawak.

TABLE : LAND DEVELOPMENT AND REHABILITATION BY FEDERAL AND STATE AGENCIES.

Agencies RMK 21971-1975

RMK 31976 - 1980

RMK 41981-1985

Total

FELCRA 23.6 27.1 31.1 81.8

RISDA 19.2 12.3 9.8 41.3

Others State Agencies

144.0 146.2 158.0 448.2

Total 186.8 185.6 198.9 571.3

R&D ACTIVITIESTABLE : DEVELOPMENT ALLOCAT ION FOR AGRICULTURE 1996-2005 (RM M ILL ION)

Programme/Subsector 7MPExpenditure

8MPAllocation

New Land Development 475.9 274.2

Regional Development 807.0 570.1

In-situ Land Development 2941.9 2265.1

Forestry 143.8 225.2

Fishery 456.3 414.3

Livestock 176.3 127.5

Support Services 354.3 719.0

Irrigation and Flood Mitigation 1929.9 2170.2

Other programmes 844.9 1094.4

Total 8139.3 7860.0

TABLE : PUBLIC DEVELOPMENT EXPENDITURE FOR AGRICULTURAL

PROGRAMMES IN THE FIVE-YEAR PLANS (RM BILLION)

Programme 1ST MP 2ND MP 3rd MP 4th MP 5th MP 6th MP 7th MP 8th MP

In-Situ 0.6 0.4 1.3 3.0 6.3 3.6 3.0 2.3

Land Development

0.4 1.0 2.7 3.9 4.4 2.7 0.5 0.3

Other Programmes

0.1 0.3 0.6 1.6 1.0 2.1 4.6 5.3

Total 1.1 1.7 4.6 8.5 11.7 8.4 8.1 7.9

AGRICULTURAL PROGRAMMES

Agricultural Support Services

Include R&D activities, marketing, agricultural credits, training and institutional development programme.

TABLES : R&D ACTIVITIES BY VARIOUS AGENCIES.

Agencies R&D activities

PORIM -Breeding new high-yielding varieties-Enhancing and diversifying palm oil utilization-Improving production efficiency-Promoting non-food applications of palm oil

RRIM - production of new forms of natural rubber- New applications of rubber-Increasing productivity through the improvement of labour saving techniques-Breeding new high-yielding clones with shorter maturity periods, higher quality latex and rubber wood

MCB -Focus on cocoa processing-Post-harvest technology-End product development

MARDI -developing efficient farm management-Developing processing technologies for food sector-Breeding high-yielding and disease resistant varieties of paddy, durians, pineapple and tobacco.

TABLES : R&D ACTIVITIES BY VARIOUS AGENCIES.

Agencies R&D activities

MARDI -Introducing more modern and efficient processing technologies-Developing new method of packaging-Diversification and commercialization of agro-based industry-Intensifing transfer of technology

FRIM -Focus on forest plantations-Focus on energy from biomass (agricultural waste)-Developing wood processing technology-New forest end products-Developing fast-growing local species that produce quality timber

AGRICULTURAL PROGRAMMES

Marketing

Are directed at consolidating traditional markets, penetrating new markets and promoting product.

Example , new markets for palm oil have been establish inALgeria, Brazil, Cuba etc.

Rubber : traditional markets such as the United States and European Union were consolidated through export promotion programmes.

Rice : BERNAS is the body responsible for improving efficiency in the processing and marketing of rice in the country.

MCB : promotes cocoa in overseas markets. Its has strengthen traditional market such as France, Germany and Netherlands and entered new markets such as the China.

AGRICULTURAL PROGRAMMES

- FAMA

- Is responsible for securing markets base and looking at market potential for local produce, particularly fruits and vegetables. Also promoted horticultural products such as fruits amd flowers to East Asia, Europe and the Middle East and South Africa. Beside that , provide an information to the producer about market requirement and educate farmers how to plant, sort, clean, grade and pack their product.

- Farmers’ market are the places where farmers can sell their produce directly to buyers.

- FAMA also help local markets/farmers to market their product to distribution centre. The product are repacked, graded and branded for specific retailer and hypermarkets.

AGRICULTURAL PROGRAMMES

Agricultural credits

Bank Pertanian (BPM) provides agricultural credit to farmers and fishermen to enable them to expand agricultural activities as well as to venture into new areas while commercial bank and finance companies give agricultural loans to plantation companies.

AGRICULTURAL PROGRAMMES

Training programmes

-are provided by several agricultural agencies such as LKIM, FOA, FAMA and RRIM.

- The training programmes cover several areas such as agronomic practices, farm management, marketing, post-harvest handling processing and agribusiness, while extension services include new agricultural technique and technologies to encourage more farmers and fishermen to used new and modern technologies to increase productivity.

AGRICULTURAL PROGRAMMES

The Institutional Development Programme

- Include farmers’ organization, fishermen’s associations and farmers’ cooperatives. They were establish at national, state and local levels to modernize the smallholder sector by encouraging active participation of farmers and fishermen.

CONTRIBUTION TO GDP

The primary sector(agriculture, forestry and mining) made up contribution at the year of independence was 45% in comparison to the secondary sector’s(manufacturing and construction) 11%

The share of the sector in the GDP decreased from 29.9% in 1970 to 22.9% in 1980, 18.7% in 1990. Thus in 1999, the agricultural sector accounted for 9.4% of the GDP , 8.4% in 2000 and decreased further to 8.3% in 2005

Despite the decline of agricultural contribution to GDP, its continues to receive high priority in national development planning. The reason is because hard-core poverty in this sector remains significant. Poverty eradication encompasses an important issue in national development progress. The agricultural sector is seen to be necessary or very important in reducing the urban-rural disparity gap

CONTRIBUTION TO EMPLOYMENT

Agricultural has increased job opportunities and created alternative sources of income. However, the total employment in the agricultural sector declined over the years while those in manufacturing increased.

Agriculture was a major source of employment, providing 15.69% of total employment ,in 1998 and in 1999, 45.38% was rural based, of which 37% was involved in agriculture. In 2000, 15.3% of total employment stated a 1423 thousand employee and tend to decrease in 2005(13.3%) and 2010(10.9%)

These reduction in percentage of the workforce obviously that employment in the agriculture sector contracted due to the increased use of labour-saving technologies, thus causing labour shortage as local labour force moved into economic sector for higher wages; the beginning of mechanization in the sector and improved farm management

The employment in this sector was expected to decline further due to low rubber prices and scarcity of logging areas

CONTRIBUTION TO THE IMPORT & EXPORT Agricultural is an important foreign exchange earner. Export earnings

increased from RM 13.9 billion in 1985 to RM 35.4 billion in 1995. Total share in exports, declined from 36.7 to 19.2% in the same period

Malaysia has a significant food import bill which rose to RM 13 billion in 2000 from RM 7.8 billion in 1995, owing to the depreciation of the Malaysian ringgit and changes in consumer taste kilogramme, down from 319 sen a kilogramme in 1997Palm Oil Rubber Paddy

•The major export earning comes from palm oil exports; comprised palm oil, palm kernel oil, palm kernel cake, oleo chemicals and finished products exceeded RM 6.3 billion in 1993 to RM 12.89 billion in 1997

•Dampening of rubber prices worldwide has resulted in an average price for all grades of rubber at 283 sen

•Rice is the staple and security food crop of the country and the 3rd widely planted crop in Malaysia after palm oil and rubber•High competition from imported rice causes problems to farmers since domestic farmers (the cost of production much higher than the neighboring countries & insufficient supply

Problem of Agricultural Sector

 Increasing labor shortage, wages & cost of production as well as

ageing farm labor & preferences for non-farm jobsa. Labor shortage resulted in large acreage of idle agricultural landb. Cost of production which includes wages and inputs is relatively high

compares to countries like Thailand and Vietnamc. The agricultural sector has become extremely dependent on foreign

labor. In 2003, the plantation sector employed 327490 registered foreign workers or about 23% of total agriculture workforce. It is forecast the figures will increase as many Malaysians prefer to work in other sector

Not enough R&D in food cropsAgricultural is very vulnerable to factors like changes in climate, disease

and pest infestation. In the case of large scale aquaculture, disease outbreaks will be a major problem unless and until quality control, good management practices and disease control are taken care of

Poor productivity and quality of agricultural product

a. Slow pace of replanting. Malaysia palms that are more than 25 years will become less productivity and hence increase cost of harvesting. Replanting needs at least 5 years before they can start producing yield.

b. Traditional farming obviously yield lower productivity and quality. Traditional farming still makes up a bulk of our agricultural sector.

Remedy / Solution:

i. Agricultural programs focus on transforming traditional farming into commercial farming to increase productivity, competitiveness with particular focus on commercialization which includes marketing.

ii. Consolidate small farm via group-farming concept

Shrinking acreage of land under agriculture

a. The agriculture sector competes with other sectors for land when the economy moves toward industrialization.

b. The cost of production of agricultural products in the neighboring countries is cheaper, this would affect international demand for local agricultural products. Lower cost of land and labor of the neighboring countries would force Malaysia to intensify on adding value to their product output (better yield outcome).

c. Thus the government should gradually withdraw subsidies to promote efficiency and prepare for challenges of market globalization.

Relatively low growth rate (compared to other sector)

A lack of capital impedes its rapid transformation, structural

change and integration with manufacturing. A slow rate of

technological development and innovation with regard to

product development, process and packaging also contributed

to low growth rate

Lacks investors & Attitude problems

a. The agriculture sector in Malaysia lacks of investors because it is risk venture due to the perishable factor. As in the food processing sector, high capital investment is a constraint to investors.

b. The attitude of farmers has not been encouraging. For example, high-yield breeds have been introduced to farmers but they tend to neglect their farms and do not manage them

Export-oriented cropsDespite efforts to diversify, Malaysian

agriculture has remained predominantly export-oriented. By

1990, about 70% of the total cultivated agricultural area and 75%

of the gross crop out-put could be attributed to the perennial export

crops of rubber, palm oil and cocoa

MEASURE TO REDUCE THE AGRICULTURAL PROBLEMS

Problems of land size : smallholders are encouraged to practice group farming by consolidating individual plots into a single farm.

Increase food prodcution : systematic and integrated approach (similar to rubber and palm oil plantation) should be created for other food crops and more should be allocated for R&D in food crops. Encourage large scale and organized farming, intensifying land used, improving agronomic practices, as well as using modern technologies and management.

Encourage successful farming and to overcome the problems of ageing small scale farmers: DOA has introduced the Incubation Programme to create a group of young, skilled and motivated entrepreneurs.

MEASURE TO REDUCE THE AGRICULTURAL PROBLEMS

Increase rate of development in rural areas : to discourage rural youth from migrating to urban areas for better paying jobs. They can also have additional sources of income. Production of primary commodities will be reoriented to improve productivity and competitiveness through integrated programme with livestock, wider crop practices and mechanization (foreign workers should be a short-term measure. To achieved a positive balanced of trade and reduced food import and increased export : by producing more food not only from the fruits and vegetables sub-sector but also the livestock and fisheries sub-sectors. Promoted the production of natural products such as medical plants as well as non-forest products such as herbs and aloevera as new sources of growth for local and export markets.

MEASURE TO REDUCE THE AGRICULTURAL PROBLEMS

Encourage private sector investment : introduced several incentives example, by encouraging the production of quality and safe product through the scheme called the Farm Accreditation Scheme Malaysia or Skim Akreditasi Ladang Malaysia (SALM). The DOA is working towards making the SALM certification acceptable to importing countries.

FAMA (Federal Agricultural marketing Authority)

Was formed in 30 September 1965, to monitor, coordinate, control and develop product marketing of Malaysian agriculture, including import and export

Agricultural products under FAMA service's field are vegetables, fruits, grain and herbal, livestock and aquaculture

Functions:• Coordinate agriculture marketing activity both in private sector or

department / government agency• Improve marketing system and expand new market of Malaysian

agriculture development • Collaborating with private sector and department / government

agency to create efficient and effective agriculture marketing system

• Develop an efficient management in agriculture industry, marketing activity or agricultural products processing

• Involve directly in agriculture industry, especially in marketing activity and products processing.

Agencies in the Agricultural Sector

LKIM (Fisheries Development Authority of Malaysia)

Is an authorized body under the Ministry of Agriculture and Agriculture Base Industry that was incorporated under Act 49, Malaysia Fisheries Development Board act 1971

This act took effect on all states within Peninsular Malaysia on November 1st 1971; in Sarawak on July 1st 1973 and in Sabah on August 1st 1995

2 main objectives:

1. The first was to raise the income levels of fishermen

2. Secondly, to develop and expand the fisheries industry, including deep-sea fishing, processing and marketing.

FELCRA (Federal land Consolidation & Rehabilitation Authority)

Establish in 1966 Its objective is to develop rural

sector by helping its community to participate in national economic activities, thus improving their standard of living

Since September 1st,1997, FELCRA is known as FELCRA Berhad due to its corporatization. It is no longer a Statutory body but has becomes a fully Government owned company.

With the change of its corporate entity, FELCRA now able explore new business opportunities, in line with national development aspiration

Armed with plantation management and core activities skills, FELCRA is now diversifying its activities into industrial and service sectors as well as other growing business areas

MADA (Muda Agricultural Development Authority)

Establish on Jun 30th 1970

Was born under an emergency decree with the initial Bahasa Malaysia name “Pihak Berkuasa Kemajuan Pertanian Muda”.

Its inauguration was officiated by the late Tun Hj. Abdul Razak Hussein who was the acting Prime Minister of Malaysia as well as the acting Director of Operations in a ceremony at the Balai Besar Building in Alor Star, Kedah Darul Aman.

The formation of MADA was approved by Parliament under Act No. 70, the Muda Agricultural Development Authority Act, 1972. Under this Act, the duties of MADA were outlined as follows:-

To improve, encourage, assist and manage economic development projects in the Muda area, and to plan and manage within the Muda area all agricultural development as assigned to it by the State Governments of Kedah and Perlis.

Two main objectives were set by MADA based on the aspects of human development and commodity. The objectives were:-

To improve the socio-economic well being of a large portion of the rural population

To increase the rice production for national requirements.

Rubber Research Institute of Malaysia (RRIM)

Is the custodian of the rubber industry in Malaysia

Established on 1st January 1998, it has under its fold three well establish agencies (RRIM, MRRDB & MRELB), which are now merged into one, which have contributed significantly to the development of the rubber industry for the last 78 years

The primary objectives is to assist in the development and modernization of the Malaysian rubber industry in all aspects from cultivation of the rubber tree, the extraction and processing of its raw rubber, the manufacture of rubber products and the marketing of rubber and rubber products

FRIM (Forest Research Institute Malaysia)

One of the leading institutions in tropical forestry research, both within the country and abroad

Founded by British colonial forest scientist in 1929, the former Forest Research Institute with Dr. F.W. Foxworthy as its first chief research officer, became a statutory body governed by the Malaysia Forestry Research and Development Board under the Ministry of Primary Industries in 1985 and then in 2004, FRIM became a statutory body governed under Ministry of Natural Resources and Environment

Promote sustainable management and optimal use of forest resources by generating knowledge and technology through research, development and application

MCB (Malaysian Cocoa Board)• The Act for the establishment of

the MCB was passed by Parliament in July 1988 and was gazette as ACT 343 on 8 September, 1988. MCB was officially in operation on 18 July, 1989.

• The Malaysian Cocoa Board (MCB) is a federal statutory research and development agency under the Ministry of Plantation Industries and Commodities.

• The main objective is to develop the cocoa industry in Malaysia to be well integrated and competitive in the global market.

• The main functions cover:- To conduct and promote research on production, processing, storage and consumption;- To conduct and coordinate activities and policies on research;- To improve quality;- To regulate marketing activities;

FELDA (Federal Land Development Authority)

Established on 1 July 1956 under the Land Development Ordinance

It’s functions provided under the Act (Amendment 1991) are as follows:

- Carry out and implement land development projects

- Promote, facilitate and undertake the development, management and economic, social, agriculture, settlements, industrial and commercial as well as other ancillary activities in the areas where authorized Felda land development projects or areas owned by Felda and the company.        

Starting in April 2004, Felda is placed under the Prime Minister and Minister responsible for the Felda is Dato 'Sri Mohd Najib Tun Abdul Razak, the Prime Minister of Malaysia

Malaysia Agricultural Research & Development Institute (MARDI)

Established at the early establishment 1971-1972

With the main objectives of generating and promoting new, appropriate and efficient technologies towards the advancement of the food, agriculture, food and agro-based industries

Managed and guided by the regulations and policies set by the MARDI Governing Board and consented by the Minister of Agriculture And Agro-Based Industry. In matters pertaining to finance the consensus of the Minister of Finance is also obligatory

Whereas, the Scientific Council ensures that MARDI technical programs attain the highest quality and level of competence

Fulfill with the functions: To conduct researches in the fields of science, technical, economy,

and social with regards to Production, utilization and processing of all crops (except rubber, oil palm and cocoa), livestock and food and also Integrated farming

Provision of various forms of trainings to cater for the development of the food, agriculture and agro-based industry

To conduct commercial research and production To develop, promote and exploit the research findings To provide extension services to the agriculture, food and agro-

based industries

Green Book Strategy

Introduced by 2nd Prime Minister, Tun Abdul Razak Hussein on Dec 20, 1974 which in based concept of ‘backyard farming’

As one of the strategies under Food Security Policy involving a total allocation of RM 4 billion to ensure adequate food supply and stable food prices

Emphasized more on greater involvement by the people in agriculture and vegetable farming for their own consumption while the rest will be sold to the public

Main objective is to maximize land development involving short-term crops, group farming, breeding of fresh water fish and enhancing the marketing of agricultural product beside increasing national food production and raising the people’s income to reduce inflation

National Policy

Objectives:•The maximization of income through optimal utilization of resources in the sector•Increase the food production for local market such as paddy, vegetables, fruits & poultry

Main strategies involved (land development, In-situ development, support services)Strategies:•Government invested heavily on institutional building• new land developments for oil palm & cocoa (by Felda, Risda, Felcra)• in-situ development to resolve uneconomic farm size & low productivity among small holders (aimed to improve productivity in existing agricultural areas by providing infrastructure and other services)

•Was introduced in 1984 to modernized & revitalized the agriculture sector, to lesson poverty & raise efficiency•Focus on expansionary policy on export crop i.e. oil palm & cocoa

•Was introduced in 1992•It was undertaken as Malaysia’s Vision 2020 which introduced in 1990•This policy encouraged alternatives use of agricultural land for higher value added activities•It was market oriented, commercialized, efficient, competitive & dynamic

Strategies:1. Optimization of resource

utilization was encourage to diversify out of export crop cultivation into other activities

2. Acceleration of Agro-based industrial development which generate more off-farm opportunities for smallholder to earn additional income

3. Enhancement of R&D are needed to overcome the production process, labor and other constraint in the agriculture

4. Greater participation of private sector were needed in order to transform the agriculture sector into a competitive and efficient sector

5. Human resource development is a key strategies to achieve increased productivity and output of both labor and land

Emphasis of NAP 2♦ To further strengthen and enable agriculture

sector to contribute substantially to the economic growth of the nation

♦ Increasing productivity, efficiency & competitiveness

♦ Increasing land areas for palm oil (plantation crop)

♦ Development of agro-based industry♦ Acceleration the transformation of the sector

into a dynamic and commercialized sector

Objectives:•The maximization of income through optimal utilization of resources in the sector•Increase the food production for local market such as paddy, vegetables, fruits & poultry

•Continued NAP 2•Takes into account the 1997-1998 Asian Financial Crisis & the liberalization of the financial market•Concerned on:

- Food security- Increase productivity &

competitiveness- Inflation

- Private sector investment- Enhance export of domestic food production

- Deepen linkages with other sectors

- Reduce dependency on imports

- Venture into frontier areas as well as utilize natural resources efficiency

Strategies:

•Aimed to tackle the problem of resource constraints(land & labour) and focuses on sustainable agricultural development

•Agriculture and forestry are viewed as mutually compatible and complementary

•Aimed to create a large production base for both sector

•Is adopted to reinforce and complement the cluster-based agro-industrial development

•Identified in the 2nd Industrial Plan (1996-2005)

i.e. processed (halal) food from livestock industry, juices and cocktails from fruits or salad dressing from oil palm

Product-based Approach

The Agro-Forestry Approach