homegrown industries

The budget announcement made a special call on the plantation and commodities industries. How relevant are these industries to the Malaysian economy?

Commodities are an important sector as it was our second-largest export group after electronics in 2015. In terms of the net effect on the country, commodities are the biggest since it is a homegrown industry as opposed to electronics, where we manufacture for multinationals. The sectors cover all, from growing raw materials to downstream and upstream processes, and therefore value is added throughout the entire production chain. Also, it is not just an industry with a few big players; there are nearly 1 million smallholders. The total sector affects the livelihood of 3-4 million people in Malaysia, and because it is so vital for our economy and the inclusivity of society, our administration places strong emphasis on it. Commodities are set to receive a great deal of new investment in R&D because we believe this industry is still the way forward for the country.

What should be done to drive innovation throughout the industry’s supply chain?

We need to work together with the private sector to spur innovation. The largest researcher of palm oil is the government-linked Malaysian Palm Oil Board (MPOB), which is an active player in the field of innovation. The key priority for all research should be commercialization and findings should be applied to practice as soon as possible to reap the benefits of these investments. We seek to ensure that there is a robust public-private partnership (PPP), and we also call upon our universities to engage in research with private industry. This should guarantee that any breakthroughs can be commercially developed, thereby adding value throughout Malaysia. As an example, biomass is an exciting research area. In palm oil production, it is still treated as waste, but fortunately the perception of the industry is changing. About 20 to 30 years ago, at the end of their productivity, rubber trees were cleared from the land and treated as waste. However, today rubber wood is valuable and is used for premium furniture. This is analogous with the situation in palm oil, because the byproduct of the palm oil industry, which is much of the tree itself, can be used in a variety of applications, from generating electricity to furniture. Biomass is one of these applications, and because of our abundant resources, there is great potential for this industry.

How has the rubber industry advanced, and how do you envision encouraging sustainable growth here?

The example of rubber gloves is indicative of where the market is heading—Malaysia is the world’s largest exporter of rubber gloves. There was a time when each glove weighed 5-6 grams, but technological innovation has allowed us to halve that weight. This means large savings in terms of resource use, safety, and strength; the product is substantially better today. The industry revolves around constant innovation; however, innovation is not just science—marketing is also a key component. Malaysia is also one of the biggest manufacturers of condoms, and our best producers can make a condom for USD0.03 and sell them for USD1. That value capture is a product of marketing and how we go about selling the product. The most important element here is technology and continuous innovation. We support the private sector in developing new technologies that can increase production. Recently, we launched the Rubber Research Institute Malaysia (RRIM), and now when factories purchase rubber from small holders there is a machine that measures the exact amount of dry rubber content, making pricing structures and purchasing processes more transparent and efficient. In the long run, we have to focus on industrial research and science in the various commodities markets. It is not a sunset industry; it is the future of the country.