10/08/05 - MALAYSIA is blowing the dust off its long-neglected farmingsector to look for new sources of economic growth and to reinvigorate itspolitical heartland.

After decades of rapid industrialisation, which turned Malaysia into amanufacturing powerhouse with modern cities and a thriving middle class,growth in key manufacturing exports has begun to stutter, sendingpolicymakers back to the farm.

"The strength that we have is in agriculture and agri-biotechnology," saidIskandar Mizal Mahmood, head of Malaysian Biotech Corp, which isspearheading a drive to raise crop yields and exploit the tropicalcountry's 15,500 plant species.

"We have a lot of diversity. We have not yet scratched the surface," hetold Reuters in an interview yesterday.

Iskandar Mizal Mahmood

With competition from China taking some bounce out of manufacturing,Malaysia is looking to biodiversity to sustain its US$118bil economy. Thestate-funded Biotech Corp, formed in May to identify and nurture biotechventures, wants to increase the yield of main crops such as palm oil, riceand cocoa.

The agricultural sector's share of the economy has fallen to 8.3% fromone-third in the 1960s. In a country where most people still live in thecountryside, this slide worries the prime minister.

Datuk Seri Abdullah Ahmad Badawi is set to make rural development a keyelement of the country's next five-year plan covering 2006 to 2010.

"I believe the successes to be achieved by the plantation sector will helpthe government fulfil its vision to make the agriculture sector one of themain driving forces of the country's economy," his deputy, Datuk SeriNajib Tun Razak, told reporters at a plantation commodities biotechnologyconference on Tuesday.

Malaysia, Southeast Asia's third largest economy after Indonesia andThailand, is the world's top producer of palm oil but lags in otherpreviously key crops such as cocoa and rubber.

While the plantation sector, especially oil palm growers, has invested intechnology and marketing and pushed into downstream opportunities likebiofuel, Malaysian rice farmers produce much less than they are capableof. Rice growers in central Malaysia produce about 5.5 tonnes per hectare,versus a po-tential of 13.5 tonnes per hectare, according to the MalaysianAgricultural Research and Development Institute.

"Biotechnology is a means for Malaysia to diversify into new growth areas.It's a natural fit given our comparative advantage in natural resources,"said Yeah Kim Leng, chief operating officer of economic research outfitRAM Consultancy.

Malaysia also hopes to find commercial uses for some of its native plantspecies. A coffee made from the root of a rainforest tree called TongkatAli is already sold in Malaysia and abroad as a kind of herbal Viagra.Other rainforest plants are being studied for possible use in thetreatment of AIDS. The government wants biotechnology to contribute 2.5%of gross domestic product by 2010 and 5% by 2020, and is using taxincentives to help draw the required investment. - Reuters