Highlights: Malaysia’s 2018 budget for agriculture, food, and halal industries

Photo: Local cakes and snacks, or "kuih-kuih", sold at a street market stall in Kota Kinabalu, Sabah. Lano Lan/Shutterstock

Malaysia prime minister Najib Razak announced the nation’s 2018 budget on October 27, which included grants and other state support for agriculture, food and the halal industries.

The proposed federal government budget 2018 stands at 280.25 billion Malaysian ringgit, a rise of 7.5 percent from 2017.

Revenue collection for 2018 is expected to increase around 6.4 percent to 239.9 billion ringgit.

Fiscal deficit is expected to drop 0.2 percent to 2.8 percent of GDP for 2018 from 3 percent in 2017.

The following are some highlights from the budget speech and the government’s annual economic report that affect the agricultural, food, and halal industries.

AGRICULTURE

- Domestic agriculture production is expected to hit 94,519 million ringgit in 2017, up 5.6 percent from 2016. The sector’s growth is forecasted to drop to 2.4 percent for 2018 and reach 96,834 million ringgit.

- Agriculture exports are expected to rise 23.8 percent in 2017 to 87,160 million ringgit. They are forecasted to grow a very modest 2.9 percent to 89,650 million ringgit in 2018.

- 5 billion ringgit will be allocated to assist farmers, fishermen, smallholders and rubber tappers. Programmes include: 2.3 billion ringgit to provide assistance and incentive such as fertilisers and input to paddy farmers, rubber smallholders and fishermen.

- About 500 million ringgit is allocated to improve irrigation infrastructure and upgrade plantation roads.

- 200 million ringgit for agricultural programmes as new sources of income, particularly the development of dairy industry through the establishment of Lembaga Tenusu dan Ruminan.

- About 140 million ringgit to develop and replant oil palm and enhance marketing programme

FOOD COMPANIES, SMEs

- 120 million ringgit for easy loans to 1,000 1Malaysia Food Truck (FT1M) and 1Malaysia Mobile Food Kiosk entrepreneurs through Bank Rakyat and Bank Simpanan Nasional. The Government will provide a subsidy of 4 percent on the interest rates.

- An additional 1 billion ringgit will go to the Shariah-compliant SME Financing Scheme, increasing the fund size to 2.5 billion ringgit. A subsidy of 2 percent will be provided on profit earned to ease the costs of financing.

- Additional 200 million ringgit to Amanah Ikhtiar Malaysia, the nation’s largest microfinancing lender that is also Shariah-compliant. This will take the fund size to 2.7 billion ringgit.

EXPORTS

- 1 billion ringgit for Export-Import Bank (EXIM Bank) for insurance coverage credit facilities and 200 million ringgit for credit financing facilities to SME exporters. EXIM Bank provides both Islamic and conventional facilities.

- 200 million ringgit for SME training programmes, grants and soft loans under the SME Corp.

- 150 million ringgit for MATRADE (Malaysia External Trade Development Corporation), MIDA (Malaysian Investment Development Authority) and SME Corp to implement promotional programmes and expand export markets including Market Development Grant.

HALAL

- About 82 million ringgit will be allocated for the development of halal industries and products under various agencies.

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