Learning outcome. Overview of rural economic change in Malaysia How public policy influence rural economy Challenges

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2 Learning outcome Overview of rural economic change in Malaysia How public policy influence rural economy Challenges

3 Rural economy and change Introduction Pre-independence Period Post 2000

4 Rural economy? Economy- about wealth and resources of a community Decision makers- households, firms, government Goods and services, expenditure Wages, rent profit, labour, land, capital

5 dominance of primary industries particularly agriculture and forestry...small scale of commercial and industrial enterprises. (economic perspective)

6 Economic activities (Sector) Agriculture, forestry, hunting Fishing Mining and quarrying Manufacturing Construction Utilities Wholesale, retail trade, Restaurant and Hotel Transport, storage, and communication Financial, insurance, real estate, and business services Community, social and personal services

7 Pre-independence period Dualism between plantation and traditional subsistence. Plantation dominated by European. Specialized in a few commercial cropsmainly rubber. By independence all land fronting the trunk roads in the west coast of Peninsular Malaysia had been alienated for plantation.

8 The subsistence include traditional small holders sector such as Malay peasants who strongly encourage by the British to continue with the traditional rice cultivation. The British felt it so crucial that Malay subsistence agriculture be continued and protected that a large portion of the land was earmarked as Malay Reservation Land to be planted mainly with rice.

9 In term of technology and productivity, the subsistence agriculture sector was far behind that of the plantation sector

10 Growth of cultivated land in Malaya by Estate and Subsistence Sector, (Area cultivated ( 000 hectares) Year Estate Subsistence Total (39.6%) (60.40%) (100%) (39.80%) (60.20%) (100%) Source: Fong Chan Onn, 1989:120

11 Major Crop in Malaya under colonial Administration, Crop % Rubber Small Holding Estate Wet Padi Coconut Palm oil Pineapple Coffee Tea Total Source: Fong Chan Onn, 1989:121

12 The Period Increased government intervention in agriculture sector Infusion of technology and management in subsistence sector to improve yields and incomes diversify Urgent task to the sector s almost total dependent on rubber for export earning

13 Early 1960s the government restrict the alienation of new land to private plantation New land for plantation could only be alienated by government agencies or organization with substantial public sector interest Rapid process of disinvestment by the European owned plantation (bought over by Malaysian)

14 Sime, Darby & Co. Limited[edit] In October 1910, British businessmen William Sime and Henry Darby established Sime, Darby & Co., a fledgling player in the lucrative rubber industry. The company later diversified to cultivating palm oil and cocoa and met with enormous success. At the time of the company's founding, William Middleton Sime was a 37-year-old Scottish adventurer and fortune seeker. He had two failed ventures behind him one in import-export business and the other in coffee plantations - when he left his job as a mercantile assistant insingapore. Henry Darby was a wealthy 50-year-old English banker who owned property in Northern Malaya. In the late 1970s just under half the equity in Sime Darby Holdings was acquired by Malaysian investors mainly through Tradewinds (Malaysia) Sendirian Berhad. In December 1979 with the incorporation of two new Malaysian entities, Sime Darby Berhad (SDB) and Consolidated Plantations Berhad (CPB), Sime Darby moved its headquarters to Kuala Lumpur and became a Malaysian registered and managed concern. In 1981, the group became a wholly Malaysian-owned company after former Malaysian Prime Minister Mahathir Mohamad engineered a raid by Pemodalan Nasional Berhad to take over the group at the London Stock Exchange. By 1983, the Malaysian equity stood at over 54%.

15 Rubber still the principle crop Challenges from synthetic rubber Replanting program under rubber replanting schemes Development of new clones developed by RRI

16 Oil palm and Agricultural diversification Favourable edible oil prices and suitability of climate and soil conditions. Encouragement to convert rubber to oil palm Role of government agencies such as FELDA

17 Area Developed by (Ha) Year Rubber Oil palm Others Total Total %

18 Rice: The subsistence Crop Goal of 90 % self sufficiency in rice production by end of 1960s from about 50% in 1956 Extensive drainage and irrigation projects (double cropping) Research and development activities Government Guaranteed Minimum Price (GMT) Formation of MADA; MUDA; FAMA 1965

19 Year Planted area ( 000 ha) Padi Produc tion (000 tonnes/ ha) Average Yield (Tonnes/ha ) Rice Prod ucti on (000 tonn es) Consu mpti on (000 tonn es) % 1957/ / / / / / /

20 The Period Sustained diversification and modernization Continued Revitalization of padi sector Restructuring of the Sector

21 Regional Development Authorities (RDAs) in Malaysia Project Year taken up Area in million Ha Population 1984 Financial Allocati on JENGKA ,000 N.A DARA , M KEJORA , M KETENGAH , M KESEDAR , M KEDA N.A 21M PERDA N.A N.A

22 KETENGAH Terengganu: Area = 1,303,500 ha. KETENGAH = 444,000 ha. (34%) 22

23 Lembaga Kemajuan Pahang Tenggara (DARA) PEKAN BERA ROMPIN 23

24 IADP Integrated Agriculture Development Project The IADP is an integrated package programme providing capital intensive measures such as providing irrigation, farm machinery and high yielding crop varieties and the provision of infrastructure and services. The objectives were to increase agricultural productivity and farmers income, modernizing agriculture, improving extension services, uplifting the standard of living of the rural population and encouraging farmers to work in groups or organizations.

25 High yield paddy input (seed; fertilizer) irrigation (MADA, KADA, Besut, Seberang Perak) Production credit (Bank Pertanian) IADP Padi marketing (Bernas) Subsidy (Harga minimum terjamin; subsidi harga padi) Program IADP Sektor Padi

26 Program pembangunan In-situ sektor getah Pemasaran Penanaman Semula Pusat memproses getah secara berkelompok Kilang memproses Getah MARDEC Tanam semula secara individu Tanam semula berkumpulan Program mini estet

27 IADP Development Projects Under The Min of Agriculture 1987 Name of projects Period area in Ha No of Families MADA KADA Besut Kelantan Utara Johor Barat I Barat Laut Slangor MADA II Kriang/Sg Manik Negeri Sembilan Timur Rompin Endau Kemasin Semarak Melaka Lembah Klang Perlis Balik Pulau/Sprai Pahang Barat

28 The in-situ land development strategy continued to be given emphasis in rural development during the Sixth and Seventh Plan Period, including replanting programmes, land consolidation and rehabilitation programmes and Integrated Agricultural Development Projects (IADP). Due to limited availability of suitable land in Peninsular Malaysia, the opening up of new land was concentrated in Sabah and Sarawak. The private sector played a more prominent role in the development of new land for agriculture including joint ventures with state agencies.

29 The National Agriculture Policy III (NAP 3) launched in 1998 provided a framework for agricultural development during this period. It contained an overriding goal of income maximisation through optimal utilisation of the sector s resources with the objectives of enhancing food security; increasing productivity and competitiveness; strengthening linkages with other sectors particularly the agro-based industry; exploring and developing new sources of growth; conservation and utilisation of natural resources on a sustainable basis.

30 Rural Economic Development Marketing Integrated regional development through one district one industry Commercial farming Rural tourism Special funding/smi financing

31 Gross Domestic Product by Industry of Origin Sector Agriculture Mining & Quarrying Manufacturing Construction Utilities Transport Wholesale and trade Finance Government Services Other Services Total

32 GDP Growth By Sector year Sector Agriculture Mining & Quarrying Manufacturing Construction Utilities Transport Wholesale and trade Finance Government Services Other Services Total

33 Percentage Distribution of GDP by Sector Sector Agriculture Mining & Quarrying Manufacturing Construction Utilities Transport Wholesale and trade Finance Government Services Other Services Total

34 Distribution of GDP by Major Sector Sector Primary Secondary Tertiary

35 Employed population aged years by industry Industry 1991 % 2000 % Growt h Agriculture, forestry, hunting and fishing Fishing Mining and quarrying manufacturing Construction Utilities wholesale, retail trade, Restaurant and Hotel transport, storage, and communication financial, insurance, real estate, and business services Community, social and personal services others Total

36 Post 2000

37 GDP Growth By Sector Sector Agriculture Mining & Quarrying Manufacturing Construction Utilities Transport Wholesale and trade Finance Government Services Other Services Total

38 Challenges and prospects? Global economy economic crisis and its impact; Full employment Growth through productivity Dynamism of private sector Diversify export Efficiency Distribution/equity

39 10 Ideas in RMKe-10 Economy driven by internal factor Take advantage of multi-ethnic High income through specialization Productivity and innovation driven growth Excellent human resource Equity Concentration and inclusive development Smart partnership Valuing Environmental heritage Efficient/competent government

40 How rural planning can contribute in achieving national vision of innovation driven economy and high income in rural area?

41 Influence demand factor through density and concentration Protection of agriculture resources Identification of sites for rural businesses Bringing ideas from best practices Infrastructure linkages