KUALA LUMPUR, Oct 19 (Bernama) -- Prime Minister, Datuk Seri Dr MahathirMohamed said when presenting Budget 2002 at the Dewan Rakyat that thenation is endowed with fertile land can be utilised for the cultivation ofcrops and the rearing of livestock.

However, he said the growth of the agriculture sector has beenconcentrated only on the production of a few commodities such as rubberand palm oil.

These commodities are subject to price fluctuations, thus affecting theincome of the smallholders and others.

"We are also (unduly) reliant on food imports, which exceeded 11 billionringgit last year. It is, therefore, vital to diversify the agriculturesector to produce higher value added products," he said.

Mahathir also noted that currently, an approved agriculture project iseligible for 100 percent allowance on capital expenditure where theexpenditure is allowed from the aggregate income (income from allsources).

This incentive is provided for prawn farming, floriculture and theplanting of approved fruit and vegetables and herb farming, the breedingof fish including ornamental fish, cockles and oysters.

Moreover, he said, poultry will also continue to be the main component ofthe livestock sub-sector.

"To ensure self-sufficiency in poultry, I propose that the rearing ofchicken and ducks in the Eastern Corridor of Peninsular Malaysia, Sabahand Sarawak be granted pioneer status with income tax exemption of 85percent or investment tax allowance of 80 percent for a period of fiveyears.

Mahathir also said that as Malaysia is a major producer of rubber, timberand palm oil, the nation must further promote resource-based downstreamactivities such as vulcanised rubber and furniture which have thepotential to contribute towards economic growth.

"Those companies which reinvest in the production of such resource-basedproducts are granted income tax exemption of 70 percent or investment taxallowance of 60 percent for a priod of five years," he added. -- BERNAMA