EXECUTIVE SUMMARY OF NATIONAL AGRICOMMODITY POLICY (2021-2030)

Executive Summary 47

48 National Agricommodity Policy 2021-2030 (DAKN2030)

BIOMASS

Scaling Up
The Circular
Economy Through
Agricommodity
Biomass

Agricommodity biomass is an important focus area in the DAKN2030 to scale up the
circular economy for increased sustainability, and to expand value creation opportunities.
The two main sources of Agricommodity biomass are oil palm biomass (estimated availability
of 92 million tonnes dry weight per year), and timber and wood-based biomass with an estimated
availability of 7.8 million cubic metres (m3). Reducing, reusing and recycling resources (the 3R
concept) in the production and manufacturing cycle while preventing waste will increase efficiency
of the Agricommodity sector through reduced dependence on natural resources while promoting
sustainable production and consumption.

Opportunities to unlock biomass utilisation and expand the circular economy have not been
fully captured. Two main issues, among others, need to be resolved. Firstly, feedstock must be
secured at fair prices amidst complex logistical issues, while balancing the priorities of upstream
and downstream players. Secondly, barriers to investment must be addressed to encourage the shift
towards higher-value product development.

A strategic plan will be developed to support Agricommodity biomass industry development
towards scaling up the circular economy. This strategic plan will detail out the implementation of
proposed strategies to collect and process Agricommodity biomass, and define suitable targets for
the proposed indicators.

50 National Agricommodity Policy 2021-2030 (DAKN2030)

Preliminary Way Forward 2021-2030

10 15

Indicators Strategies
& Targets

1 2 4 5

SUSTAINABILITY PRODUCTIVITY MARKET DEVELOPMENT INCLUSIVENESS
Promote the circular Develop an industry Position Malaysia as a Create
economy concept in the Leading Agricomodity
Agricomodity sector ecosystem that Biomass Hub income-generation
• Enhance the utilisation optimises costs, opportunities for
efficiency and • Encourage local Smallholders,
of biomass in current adoption of
Agricomodity value technology Agricomodity biomass Bumiputera and MSMEs
chains • Invest in R&D&C to solutions • Develop the capacity of
• Develop certification
standard for the improve efficiency and • Ensure MSMEs to utilise,
agricomodity biomass tecnology adoption export-readimess by manufacture and
industry • Fully utilise and complying with certify higher-value
develop infrastructure technical specifications biomass products
and logistics networks and global • Encourage smallholder
sustainability standards participation in the
circular economy
• Increase export • Promote entry of
promotion of entrepreneurs into
processed products ancillary services

• Capture opportunities
across the circular
economy

3

VALUE-CREATION
Facilitate financially viable ventures into high-value biomass industries
• Set up collection centres and establish transparent data
• Devise fair pricing mechanisms to unlock consistent supply of feedstock
• Mainstream the use of OPT as timber raw material
• Incentivise industry to invest in the production of high-value products

Executive Summary 51

Flagship Programme 10:

Agricommodity Circular Economy (Ace)

Background Biomass is a strategic, high-impact industry for economic growth in
the Twelfth Malaysia Plan (RMKe-12) due to its potential in creating
Objectives significant additional value in line with circular economy principles.
Target Biomass plays a key role in scaling up the adoption of circular economy
Segments approaches in the agricommodity sector. Building on ecosystem
development efforts over the past decade, a comprehensive approach
will be taken to unlock the utilisation of existing oil palm feedstock and
timber waste, including incentivising the development and uptake
(market acceptance) of higher value-added products and services
among industry players.

Several initiatives are in the pipeline, mainly for oil palm and wood-based
biomass, for example:

National Biomass Action Plan formulation to define a detailed
development roadmap and implementation plan for the Biomass
industry

Up-to-date feedstock database to identify sources of supply, and
facilitate large-scale acquisition of biomass resources

Oil Palm Trunk (OPT) for furniture and wood-based products
Biogas for energy to reduce Greenhouse Gas (GHG) emissions at

palm oil mills
Premium poultry feed substitute made from Palm Kernel Cake

(PKC)
R&D&C&I for high-value applications from biochemical and bio

products
Study on the establishment of biomass hub in the southern

peninsula

In the medium to long term, similar opportunities will be explored and
expanded for other Agricommodity biomass feedstock available in the
rubber, cocoa, pepper and plant-based fibres industries.

Unlock greater utilisation of existing Agricommodity biomass
feedstock

Stimulate innovation and value creation in Agricommodity biomass
industries to promote high value-added biomass products

Agricommodity biomass feedstock owners
MSMEs and large corporations manufacturing high-value products

from biomass

52 National Agricommodity Policy 2021-2030 (DAKN2030)

Lead Agency Lead Agency: MPIC – BBA, MPOB, MTIB
and Relevant Relevant Stakeholders: Agricommodity biomass feedstock owners,
Stakeholders
Expected biomass industry players
Outcomes
Reduced waste and carbon footprint in the Agricommodity sector, in
line with circular economy approaches

New products and business opportunities created in Agricommodity
biomass, increasing value creation and generating more jobs for
skilled workers

Executive Summary 53

54 National Agricommodity Policy 2021-2030 (DAKN2030)

Executive Summary 55

BIOFUELS

Promoting Biofuels
As A Source Of
Clean Energy

Palm oil is one of the most efficient sources of biofuels, with only 0.26 ha of planted area
needed to extract 1 tonne of palm oil as compared to rapeseed oil (1.25ha), sunflower oil (1.43ha),
and soybean oil (2 ha). Biofuels in the DAKN2030 context are palm oil-based, covering palm
biodiesel and biogas from Palm Oil Mill Effluent (POME), which is an application of ‘waste to wealth’ in
the circular economy.

Palm Biodiesel

Primary challenges for the advancement of the palm biodiesel industry are centred on price
competitiveness relative to gas oil (fossil fuel sources), low utilisation of existing production capacity
and increasing sustainability requirements from core markets.

Ten indicators and targets were identified to drive development of palm biodiesel over the next 10
years. Seven strategies were prioritised for implementation.

56 National Agricommodity Policy 2021-2030 (DAKN2030)

Way Forward 2021-2030

10 7

Indicators Strategies
& Targets

1 2 4

SUSTAINABILITY PRODUCTIVITY MARKET DEVELOPMENT
Encourage certification Increase biodiesel Protect existing

and build consumer utilisation markets and explore
support S3. Increase biodiesel plant new opportunities

S1. Encourage the use of capacity utilisation S6. Address existing
certified sustainable market barriers that
feedstock and limit palm biodiesel
certification of output exports

S2. Build consumer S7. Explore and break into
support for biodiesel as new export markets
a source of clean
energy through
fact-based
communication

3

VALUE-CREATION
Drive development and testing of new applications
S4. Maritime: Drive development and testing of maritime

biodiesels – tests with auxiliary engine OEMs; field
trials on board ships
S5. Aviation: Develop and pilot solutions for biojet fuel

Executive Summary 57

Flagship Programme 11

B20/B30 Biodiesel

Background The nationwide rollout of the B20 programme is ongoing and currently
planned for implementation in phases subject to infrastructure
Objectives readiness. Plans are being put in place to increase biodiesel blending in
Target phases to B30 by 2030 for land transport and other subsidised sectors.
Segments However, the programme rollout could proceed earlier depending on
infrastructure readiness, technical verification by vehicle manufacturers,
development of B30 biodiesel standards and engagement with various
stakeholders.

Estimated Crude Palm Oil Estimated GHG Avoidance for the
Consumption for the National National Biodiesel Programme (CO2

Biodiesel Programme eq Tonnes/Year)
(Tonnes/Year)

Biodiesel B10 Programme for the Transportation Sector

533,589 1,602,000

Biodiesel B20 Programme for the Transportation Sector

1,067,178 3,202,000

Biodiesel B30 Programme for the Transportation Sector

1,600,767 4,802,301

Expand the usage of palm oil downstream products, as well as a
mechanism to manage crude palm oil (CPO) stock and stabilise CPO
prices

Reduce the rate of greenhouse gas (GHG) emissions in line with the
aim to reduce GHG emission intensity of Gross Domestic Product
(GDP) by 45% by 2030 (relative to 2005 rates)

Help to reduce the country’s dependence on fossil fuels as part
of national energy security efforts, while scaling up the circular
economy

Land transportation and other subsidised sectors
Users of diesel vehicles

58 National Agricommodity Policy 2021-2030 (DAKN2030)

Lead Agency Lead Agencies: MPIC and MPOB
and Relevant Relevant Stakeholders: Petroleum companies and storage depots;
Stakeholders
Expected biodiesel production companies; automotive manufacturers
Outcomes
Supporting economic growth based on green energy
Reducing the intensity of carbon emissions from the transportation

sector
Encouraging the production of Palm Methyl Ester (PME)

Biogas from
POME

Since 2014, the installation of biogas capture facilities has been a mandatory requirement
for the issuance of new palm oil mill licenses and for the approval of mill capacity expansion.
As at December 2020, only 28% of the 457 palm oil mills in the country have installed biogas
capture facilities. However, 48% of these mills do not utilise the biogas for energy, but are flaring
the captured gas. There is a big opportunity to expand biogas capture and utilisation as part of the
circular economy.
Six indicators and targets were identified to drive outcomes for increased biogas utilisation over the
next 10 years, with seven strategies prioritised.

60 National Agricommodity Policy 2021-2030 (DAKN2030)

Way Forward 2021-2030

6 7

Indicators Strategies
& Targets

1 5

SUSTAINABILITY INCLUSIVENESS
Biogas capture facilities Supporting rural

in all mills electrification
S1. Continue educating S7. Include biogas as part

and encouraging mills of the solution in rural
to install biogas electrification schemes
capture facilities

2

PRODUCTIVITY
Invest in R&D&C to
increase feasibility of

grid connection
S2. Invest in R&D&C, i.e.,

database, feasibility
study and technical
evaluation on grid
connection

3

VALUE-CREATION
Tap into the potential from biogas capture
S3. Promote power generation where feasible
S4. Facilitate mills to convert biogas to bio-CNG
S5. Introduce a bio-CNG blending mandate
S6. Develop mill cluster schemes

Executive Summary 61

Addressing Cross-Cutting
Priorities Holistically

Four cross-cutting priorities – Smallholder Well-being, Bumiputera Advancement, Entrepreneurship
and MSME Growth, and Impactful Delivery – will have a disproportionate impact on the sustainable
growth and development of the Agricommodity sector. Addressing these priorities holistically
requires cross-department and cross-agency support within MPIC, as well as collaboration with
other ministries and agencies, and external stakeholders. Overarching strategies for each Cross-
cutting Priority are highlighted below. Commodity-specific strategies have also been identified
within each commodity chapter, and are summarised in Chapter 11: Cross-cutting Priorities.

Smallholder Well-being

Smallholders are the backbone of commodities such as rubber, pepper, cocoa and kenaf. The
economic empowerment and welfare of smallholders has always been prioritised, with various
forms of support provided to increase their productivity and incomes. Despite these efforts, low
productivity and incomes persist due to many factors including limited adoption of technology, low
rates of replanting with more advanced planting materials, and inconsistent application of good
agricultural practices.

Smallholder well-being is vital, not just for the growth of the Agricommodity sector, but also towards
achieving the national aspiration of shared prosperity. The Government will continue to support
smallholder well-being, including ensuring coordination and alignment across all relevant ministries,
agencies, State Governments and corridor authorities.

Smallholder Well-being: Develop "Smart"
Smallholders by modernising services and

increasing use of technology

Implement New Managment Models
or Strengthen Existing Schemes
Implement new models or strengthen existing schemes to organise and support
smallholders (e.g., Modern Co-op, Contract Farming arrangements, Cluster Farms,
Social Enterprise) for better yield, output and income

Optimise Social Safety Net programmes
Optimise existing social safety net programmes to help smallholders maintain income
streams and prepare for retirement- profile smallholders to understand their needs,
provide more targeted, needs-based assistance and strengthen outcomes tracking

Expand Service Delivery Methods
Increase use of technology and expannd delivery of extension services, e.g., online
information-sharing and coaching, mobile counters to reach smallholder where they are

62 National Agricommodity Policy 2021-2030 (DAKN2030)

Bumiputera Advancement

The Bumiputera community is a driving force of the Agricommodity sector’s growth, with high
upstream participation rates, especially in smallholder-oriented commodities and as employees
within Agricommodity-related government-linked companies (GLCs). Participation in the
downstream segment is limited, for example MSMEs in furniture-making or small-scale chocolate
production for retail markets. Among others, the Bumiputera community faces two major
challenges in advancing participation in the downstream segment: insufficient technical knowledge
or skills and limited track records, which impede access to capital.

Strengthening Bumiputera advancement is crucial towards reducing wealth and income
inequalities in the country. Therefore, advancing Bumiputera participation and ownership in the
Agricommodity sector - especially in midstream and downstream - will continue to be a priority
during this policy period.

Bumiputera Advancement:
Build Next-Gen Bumiputera Agricommodity
businesses in midstream and downstream

Support to Navigatte Options
Maximise all options provided by goverment with support and guidance as needed to
comply with requirements
Create New Opportunities
Develop o pool of high potential Bumiputera entrepreneurs, including youth with
opportunities to expand into midstream and downstream manufacturing and services:
incubate ventures through intrapreneur programmes
Build Networks
Match Bumiputera entrepreneurs with Joint-Venture and Commercialisation
opportunities, including access to funding; create platforms for partnership and gather
data to provide more targeted support

Executive Summary 63

Entrepreneurship and
MSME Growth

There are currently 2,787 known Agricommodity enterprises 1, of which more than 70% are in Timber.
The remaining are scattered across rubber, cocoa, pepper and kenaf/plant-based fibres.
Barriers to entry into the Agricommodity sector are high due to the large capital investments and
technical knowledge needed. Other challenges include low adoption of e-commerce and digital
tools, and weak linkages to R&D&C to access commercialisation opportunities. MSMEs also face a
limited ability to attract, access and afford skilled talent.
Moving forward, Agricommodity entrepreneurs and MSMEs will be groomed further in line with the
national agenda of creating an Entrepreneurial Nation in Malaysia by 20302.

Entrepreneurship & MSME Growth:
Expand services and drive inoovation

Develop Smart Services
Empower Entrepreneurs and MSMEs to provide Agrocommodity services with
mentorship and exposure to new technologies; prioritise business models that
transform to entire value chain
Support MSME-led innovation
Raise innovation capability through cross-industry linkages; set up an Innovation
Venture Fund to finance innovation R&D, prototype development and scale-up
Attract upstream Agrocommodity Entrepreneurs
Partner with cooperatives and social enterprises to expand commercial farming,
procurement and marketing methods, develop farm-to-table products and increase
access to markets, including online channels

1

64 National Agricommodity Policy 2021-2030 (DAKN2030)

Impactful
Delivery

Implementing the DAKN2030 will require a whole of government approach with a focus on efficient
and effective delivery. This requires a shift in the way things work – digital transformation, simplifying
processes and speeding up decision-making to facilitate industry growth and development.

Impactful Delivery:
Increase Efficiency of Maximum Impact

Reprioritise focus area
Align programmes and activities to five policy thrusts
Reduce overlaps and ensure seamless delivery of services
Take a whole of goverment approach to address cross-jurisdiction issues
Digitalise End-to-end Services
Expand digital adoption and remote working to increase engagements across

goverment, and with industry
Implement creative solutions to serve industry better, e.g., technical advise via

online communication channels
Strengthen Performance Management
Conduct quarterly performance reviews, including setting up a dashboard to track

results
Strengthen data collection, data management and analysis
Prioritise collection of baseline data and target-setting for new indicators
Develop Technical Capacity
Prioritise talent attraction to build expertise and skills needed, e.g., analytical skills,

diigital technologies problem solving and conflict management
Implement succession planning and knowledge transfer to build the next

generation of leaders

Executive Summary 65

Conclusion

Advancing Agricommodity Together

The next 10 years from 2021-2030 are crucial,
starting with post-COVID recovery which is
expected over 2021-2023, and shifting towards
advancement of the Agricommodity sector
to 2025 and 2030. The DAKN2030 lays out a
policy framework that sets a clear direction
with ambitious targets for the Agricommodity
sector across five policy thrusts, including scaling
up and realising the potential of the circular
economy. Prioritised strategies and enablers will
be implemented to achieve the DAKN2030 Vision:
Advancing Agricommodity for Sustainability and
Shared Prosperity.

The Government is committed to continue taking a whole of government approach, working with
industry players and all other stakeholders for the Agricommodity industry’s sustainable growth and
development. Continued collaboration and engagement will ensure that together, positive impact
will be created for the Agricommodity sector and for Malaysia.

66 National Agricommodity Policy 2021-2030 (DAKN2030)



KEMENTERIAN PERUSAHAAN PERLADANGAN DAN KOMODITI (KPPK)
No. 15, Aras 6-13,
Persiaran Perdana, Presint 2,
62654 Putrajaya, MALAYSIA

(603) 8000 8000
(603) 8000 3482
www.mpic.gov.my
[email protected]
@myMPICMalaysia
@mpic_my
mpic_my
CCTV MPIC