Malaysia risks RM7bil loss without palm oil replanting
13/11/2025 (New Straits Times), Kuala Lumpur - Malaysia risks losing RM7 billion in export revenue if it fails to replant oil palm trees across 520,000 hectares of ageing plantations.
Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani said the country's replanting rate in 2024 was about 2 per cent — well below the ideal target of 4 to 5 per cent annually.
"If we fail to replant trees aged over 25 years, covering 520,000 hectares, we could potentially lose almost RM7 billion in export revenue.
"That is why, as palm oil is the biggest contributor to our agriculture sector, we must continue replanting consistently," he said during the Oral Question and Answer Session in the Dewan Rakyat.
Malaysia, the world's second-largest palm oil producer after Indonesia, relies on the crop not only for billions in export revenue but also to supply products ranging from cooking oil and bread to cakes, cookies, cosmetics, soaps and biofuels.
Johari also said the ministry remained concerned and was working to address the issue, which stemmed partly from limited funds available to smallholders.
"For example, in 2024 the government allocated around RM100 million, and in 2025 only RM50 million. Of the total funds allocated, 50 per cent is considered a grant, while the remaining 50 per cent is treated as a loan.
"The government also bears part of the interest on these loans under the Oil Palm Smallholders Replanting Programme 2.0 (TSPKS 2.0).
"Throughout the implementation of this programme, the ministry has identified that replanting costs continue to rise. The ministry is also formulating a new scheme to increase financial assistance next year," he said.
He added that the ministry had requested RM1.4 billion under the 13th Malaysia Plan to support the palm oil industry, but the government lacked sufficient funds.
"The RM1.4 billion would have averaged RM280 million annually, but we only received RM100 million — so there's a shortfall. Therefore, I have met with banks to see whether they can help smallholders by allowing them to use their plantations as collateral for loans.
"I will also request that the government provide an interest subsidy in the future," he said.
Johari said that among organised smallholders, the replanting rate was only 1 per cent in 2024, while among independent smallholders it was 1.7 per cent, compared with 2.5 to 3 per cent among major plantation companies.
"There are many issues related to this. Firstly, when palm oil prices are high, many smallholders are not willing to replant.
"When prices increase, they fear losing income because replanting means they will not have yields for a period.
Secondly, when prices are high and they enjoy good sales, they do not set aside part of their income as a sinking fund for replanting.
"So when prices start to fall and it's time to replant, they no longer have money to do so. This is one of the factors affecting replanting, resulting in 520,000 hectares of ageing trees nationwide," he said.
He was responding to Datuk Seri Dr Ismail Abd Muttalib (PN–Maran), who asked about the ministry's efforts to address low palm oil replanting rates due to the high costs preventing smallholders from replanting.