Kuala lumpur: The Ministry of Plantation and Commodities (MPC) has clarified that the tariffs imposed by the United States have not impacted the input costs of oil palm plantations in Malaysia. Minister Datuk Seri Johari Abdul Ghani stated that this is because the majority of inputs used in oil palm planting activities are sourced domestically.

According to BERNAMA News Agency, Johari explained that the tariffs are irrelevant to Malaysian oil palm plantations as most necessary inputs are procured locally. He noted that while some chemicals and fertilizers, including nitrogen, phosphorus, and potassium (NPK) fertilizers, are imported, they do not pass through the United States. Johari addressed these points during a question and answer session in the Dewan Rakyat, responding to Datuk Seri Ismail Abd Muttalib (PN-Maran) regarding the potential impact of increased agricultural input costs due to the Agreement on Reciprocal Trade (ART) between Malaysia and the US.

Additionally, Johari revealed that the ministry is developing a new scheme to alleviate the increased costs of oil palm replanting, previously funded by the government, slated for implementation next year. He mentioned that smallholders often face challenges in securing loans, prompting him to engage with banks to explore potential financial support options that do not rely on government funding. Johari indicated that he would seek an interest subsidy from the government, potentially subsidizing four per cent if the interest rates are high.

The minister also stated that the MPC is in negotiation with the Ministry of Finance regarding the provision of the interest subsidy. He mentioned the possibility of launching a new scheme aside from the existing hybrid model. The government has allocated funds under the Smallholder Oil Palm Replanting Financing Incentive Scheme (TSPKS 2.0), which offers a combination of a 50 per cent grant and a 50 per cent loan. For 2024, RM100 million has been allocated to the MPC, with RM50 million set aside for 2025.

In response to a supplementary question from Datuk Dr Richard Rapu Aman Begri (GPS-Betong) about the government’s plans to assist smallholders in replanting oil palms over the next five to ten years, Johari warned about the potential loss of nearly RM7 billion in export revenue if replanting of oil palms over 25 years old is not carried out. He pointed out that Malaysia’s oil palm replanting rate in 2024 stood at around 2.0 per cent, which is below the targeted rate of four to five per cent per year.