Sarawak palm oil industry – A catalyst for rural development


In the first of a two-part write-up on Sarawak’s palm oil in industry, Sarawak Oil Palm Plantation Owners Association (Soppoa) looks at the impact of the industry on rural growth and development

The rise of the palm oil industry in Sarawak

The palm oil industry in Malaysia is more than 100 years old whereas in Sarawak earnest large scale planting only started in the early 1990s and is less than 60 years old here. In peninsular Malaysia rural developments were brought about by the cultivation of oil palm through government schemes like Felda, Felcra, and Sime Darby, Tabung Haji and independent smallholders associations, transforming rural communities into self sufficient, middle class households with comfortable lifestyles.

The main drivers for development were road constructions to these rural communities where oil palms were cultivated, resulting in accessibility and spur even more agricultural activities as well as support industries for these developments.

“The most important aspect of oil palm cultivation is opening up of idle lands or conversion of lands (padi, cocoa and others) for oil palm cultivation, especially along the fringes of large oil palm estates, giving rise to thousands of smallholders oil palm farmers,” Eric Kiu Kwong Seng, Chairman of Sarawak Oil Palm Plantation Owners Association (Soppoa) said during an interview recently

Kiu said there are basically two main impact from these types of developments; the large scale oil palm estates brought in huge number of workers and investments in land preparations as well as infrastructures like roads, water supplies and electricity while the smallholders were able to benefit from the new roads and made their rural lands accessible and for planting.

“These developments, especially in rural areas where most of the large estates are located in Sarawak, created massive employment opportunities as well as demand for food, services, transportation and logistics supports, entertainment, housing and mobile communications vendors,” he explained.

Due to the rise of many large estates in rural areas in Sarawak, the surrounding rural centers all also experienced rapid growth as the main suppliers for the demands from these new estates, mills. In turn, more complimentary businesses also sprung up in these rural centres to cater to the ever increasing demand of the workers in the estates.

A typical large oil palm estate will need hundreds of workers during the early stage of planting and the number of workers continues to grow as the estates developed including machineries’ servicing, roads maintenance, estates upkeep, spreading of fertilisers, pests controls and drivers for trucks and other machines.

“Similarly like in peninsular Malaysia, with Felda, the state government also set up the Sarawak Land Consolidation and Rehabilitation Authority (Salcra) for native land owners in Sarawak to benefit from the development of their lands through oil palm cultivation group scheme. These land owners enjoy the opportunity to work with Salcra and also to work on their own lands if they chose to do so,” Kiu continued.

Many of these rural land owners benefited from being subsistent farmers to smallholders of oil palm cultivations and entrepreneurs with better incomes and brighter prospects for their families, especially the children who can further their studies.

He said that with growth and development of these rural centres, the state benefited from the ever increasing economic wealth generated, both directly and indirectly from the palm oil industry’s rise.

He added that the state government assisted to the growth of the palm oil industry through joint ventures with private companies and also infrastructures like roads, airports, ports and other amenities. In return, the sale of palm oil from Sarawak generates revenues for the state through sales tax, land tax and corporate taxes.

“The benefits arising from the cultivation of oil palms are numerous, both directly and indirectly, especially from the spill over effects like increasing demands for goods and services which are all contributing to the growth of the rural areas and the state in general.”

“Nevertheless, we should also note that a lot of sacrifices are made for the rise of the palm oil industry here, in particular the foreign workers who leave their families to come here, the officers and researchers from the government ministries and agencies involved in the industry, expats from other parts of Malaysia working here and locals working in rural estates throughout the state. Hence, Soppoa aims to bring ever more wealth generation to the industry and to benefit the state and its people in the long journey of making the palm oil industry here a model for others,” he said.