Thursday September 9, 2004 - PLAYERS in the agriculture sector areanticipating good incentives in Budget 2005 such as less tax, better linksbetween productivity and wages, and strong emphasis on the training ofagricultural workers to take the industry to greater heights.

They also believe those involved in food processing and agriculture-basedbusinesses would be among the major beneficiaries in line with thegovernment's aspiration to turn agriculture into a strong engine of growthfor the economy and make the country self-reliant in food production by2010.

Agriculture was last year identified as the third engine of growth forMalaysia, registering 5.5% growth after the manufacturing and servicessectors.

Prime Minister Datuk Seri Abdullah Ahmad Badawi had also given prominenceto the sector stating that incentives for the agriculture sector would bereviewed by the Agriculture and Agro-Based Industries Ministry and theFinance Ministry to raise private sector investment in large-scale foodproduction.

Companies must strive to become big players in food production rather thanlimit themselves to plantation crops such as oil palm and rubber, he saidat the recent Budget Consultation meeting in May.

National Smallholders Association president Datuk Mazlan Jamaluddin hopesthe proposal to make Malaysia the halal food centre for beef export willbe well considered by the government.

We hope the government can make it a standard practice among plantationcompanies and smallholders to introduce cattle rearing under tree crops,he said.

Given proper incentives and financing boost, Mazlan said the livestockindustry could transform into a highly lucrative business for smallholdersand plantation companies.

Another incentive for consideration is the genuine R&D tax incentive forthose involved in the agriculture businesses.

Mazlan also wants the government to consider the Association of PublicListed Companies' proposal on flexibility to be given to agriculture-basedcompanies seeking public listing on Bursa Malaysia.

Due to the long gestation period for agriculture companies, we hope theywill be given similar flexibility enjoyed by the infrastructure companieslisted on Bursa Malaysia with less stringent requirements on the profittrack record,” he added.

On issues pertaining to plantations generally, Malaysia Palm OilAssociation (MPOA) chief executive M.R.Chandran said the associationwants, among other things, the government to extend the replantingincentive scheme to next year by providing an additional RM200mil and forareas where palm oil yield per hectare is below 2.5 tonnes instead ofusing the 25-year age criteria.

At the moment, 20% (728,00ha) of total planted area is over 19 years ofage.

Chandran said accelerating replanting was crucial to reduce high stockpileof crude palm oil (CPO) and replanting with high yielding new plantingmaterials can increase the national oil yield per ha to 4.8 tonnes nextyear or up by 33% from the current level of 3.6 tonnes.

MPOA is also asking for the government to recognise the R&D portion of thecess payments of RM11 per tonne in CPO/Palm Kernel Oil and 3.85 sen per kgfor rubber as contributions to approved research institutes like MalaysianPalm Oil Board (MPOB) and Malaysian Rubber Board (MRB).

We are asking the government to accord double deduction for cesscontributions to MPOB and MRB, he added.

MPOA also wants the Government to assist in the development ofinfrastructure such as water, electricity, roads and ports for the thepalm oil industry in Sabah, which has the largest oil palm area inMalaysia, accounting for about 30% of the total hectarage.

Chandran said the future expansion for oil palm cultivation would remainin east Malaysia with Sabah being more suitable than Sarawak.

By 2010, Sabah's CPO production is expected to increase six million tonnesand palm kernel 1.4 million tonnes.

Meanwhile, United Plantations Bhd executive director Carl Bek Nielsensaid: “As the agriculture sector has been prominently earmarked as themajor growth engine for Malaysia, I hope there will be more tax exemptionsand incentives in Budget 2005.