Business

Wednesday August 5, 2009

Bank: Huge potential for M’sia in food and agri

By LAALITHA HUNT


PETALING JAYA: The food and agriculture (F&A) sector in Malaysia has plenty of room to grow and local players have been expanding despite the global economic slowdown, says Netherlands-based Rabobank International.

Business development director Kao Chee Ming said the bank had been providing financing to Malaysian companies expanding into places such as the Americas and India.

Bank Negara statistics for the first quarter of 2009 also showed that more than 10% of total loans had been disbursed to the F&A sector by commercial and development banks, Kao noted.

Kao Chee Ming ... ‘Food and agriculture business is not a hot and dirty job.’

“We have also had many requests from clients looking for assets from this sector on fire sales (extremely discounted prices),” he told StarBiz in an interview.

The local F&A sector had plenty of potential, especially since Malaysia was a tropical country, Kao said.

“If the agri sector can be big for the Netherlands, a country which is one-eighth the size of Malaysia, the growth potential for F&A in Malaysia is certainly there.”

In terms of fish production, he noted that while Malaysia had a longer coastline than Thailand, the country’s fish trade was currently seven times smaller.

This indicates promising potential, and that “in terms of aquaculture, there are 130 identified aqua zones for local and foreign direct investments.”

Kao also observed that national investment agency Khazanah Nasional Bhd’s wholly-owned subsidiary Blue Archipelago Bhd had started a 1,000-acre prawn farm.

“Blue Archipelago would also assist with the infrastructure, upstream services and downstream marketing,” he said.

Kao also touched on the need to change the perception that the F&A business was a “hot and dirty job,” and that people could be involved in other areas of the sector such as trading, food processing, logistics and marketing.

The future of the local agriculture sector should involve automation and precision farming like in the Netherlands, where it had enabled farmers to yield 50kg of tomatoes per sq m compared with 12kg per sq m in Malaysia, he said.

Another area of growth in the sector was clean energy and carbon reduction, with Rabobank a well-known buyer of carbon credits.

Kao noted that over the past six years, the bank had completed over 20 transactions in Asia in clean energy and carbon credits.

“In Malaysia, the combination of renewable energy and carbon reduction from the F&A sector makes the space even more interesting to us,” he said.

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