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Effects of Trade Liberalization on Agriculture in Malaysia: Institutional and Structural Aspects The CGPRT Centre The Regional Co-ordination Centre for Research and Development of Coarse Grains, Pulses, Roots and Tuber Crops in the Humid Tropics of Asia and the Pacific (CGPRT Centre) was established in 1981 as a subsidiary body of UN/ESCAP. Objectives In co-operation with ESCAP member countries, the Centre will initiate and promote research, training and dissemination of information on socio-economic and related aspects of CGPRT crops in Asia and the Pacific. In its activities, the Centre aims to serve the needs of institutions concerned with planning, research, extension and development in relation to CGPRT crop production, marketing and use. Programmes In pursuit of its objectives, the Centre has two interlinked programmes to be carried out in the spirit of technical cooperation among developing countries: 1. Research and development which entails the preparation and implementation of projects and studies covering production, utilization and trade of CGPRT crops in the countries of Asia and the South Pacific. 2. Human resource development and collection, processing and dissemination of relevant information for use by researchers, policy makers and extension workers. CGPRT Centre Working Papers currently available: Working Paper No. 18 CGPRT Crops in Indonesia: A Statistical Profile by Muhamad Arif, Hasrat Madiadipura and Harry Zulfikar Working Paper No. 19 Gender Issues in Upland Agriculture by Nico L. Kana Working Paper No. 20 Market Prospects for Upland Crops in India by Praduman Kumar Working Paper No. 21 Market Prospects for Upland Crops in Thailand by Kajonwan Itharattana Working Paper No. 22 Market Prospects for Upland Crops in the Philippines by Josefina M. Lantican Working Paper No. 23 Market Prospects for Upland Crops in Pakistan by Muhammad Ramzan Akhtar Working Paper No. 24 Market Prospects for Upland Crops in China by Cheng Guoqiang Working Paper No. 25 Market Prospects for Upland Crops in Indonesia by Memed Gunawan Working Paper No. 26 Market Prospects for Upland Crops in Vietnam by Dao Huy Chien (Continued on inside back cover) Effects of Trade Liberalization on Agriculture in Malaysia: Institutional and Structural Aspects The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area of its authorities, or concerning the delimitation of its frontiers or boundaries. The opinions expressed in signed articles are those of the authors and do not necessarily represent the opinion of the United Nations. WORKING PAPER 34 Effects of Trade Liberalization on Agriculture in Malaysia: Institutional and Structural Aspects Tengku Mohd Ariff Tengku Ahmad CGPRT Centre Regional Co-ordination Centre for Research and Development of Coarse Grains, Pulses, Roots and Tuber Crops in the Humid Tropics of Asia and the Pacific CGPRT Centre Jalan Merdeka 145, Bogor 16111 Indonesia © 1998 by the CGPRT Centre All rights reserved. Published 1998 Printed in Indonesia National Library: Cataloguing in Publication Tengku Mohd Ariff Tengku Ahmad Effects of Trade Liberalization on Agriculture in Malaysia: Institutional and Structural Aspects /Tengku Mohd Ariff Tengku Ahmad -- Bogor: CGPRT Centre, 1998. xxvi, 112 pp.; 25.5 cm. -- (Working paper series; No. 34) Bibliography: 3 pp. ISBN 979-8059-87-5 1. Malaysia – Trade Politics I. Title II. Series 380.130.959.5 Table of Contents Page List of Tables............................................................................................................................ ix List of Figures ......................................................................................................................... xiii Glossary of Acronyms.............................................................................................................. xv Foreword .................................................................................................................................. xvii Acknowledgements ................................................................................................................. xix Executive Summary ................................................................................................................ xxi 1. Introduction 1.1 Why protection? ...................................................................................................... 1 1.2 The move towards liberalization ............................................................................. 3 1.3 Objective of study ................................................................................................... 4 1.4 Organization of the study ........................................................................................ 4 2. The Malaysian Economy 2.1 Introduction .............................................................................................................. 5 2.2 Malaysia in general ................................................................................................... 5 2.3 The economy ............................................................................................................ 5 2.3.1 Structural composition of the economy ........................................................... 6 2.4 The Malaysia agricultural sector ............................................................................... 9 2.4.1 The structural composition of Malaysian agriculture ...................................... 10 2.4.2 The palm oil subsector ..................................................................................... 12 2.4.3 The paddy subsector ........................................................................................ 14 2.4.4 The tobacco subsector ...................................................................................... 16 2.4.5 Tapioca, sweet potato and maize subsectors .................................................... 18 3. Malaysia’s Trade Policies 3.1 Introduction .............................................................................................................. 23 3.2 Evolution of Malaysian trade policy ......................................................................... 23 3.3 Phases in Malaysia’s economic policy planning ...................................................... 24 3.3.1 The first phase: growth and diversification policy, 1956-1970 ....................... 24 3.3.2 The second phase: national integration with growth and the new economic policy era, 1970-1990 ..................................................................................... 24 3.3.3 The third phase: united society, balanced development and the national development policy, 1991-2000 ....................................................................... 25 3.4 Policy evolution in the agricultural sector ................................................................ 26 3.4.1 The National Agricultural Policy (NAP) ......................................................... 26 3.4.2 The National Agricultural Policy, 1992-2010 (NNAP) ................................... 26 3.5 Incentives in agriculture ........................................................................................... 27 3.6 Public development expenditure in the agricultural sector ....................................... 28 3.7 Review of Malaysia’s trade policy ........................................................................... 29 3.7.1 Trade policy formulation process .................................................................... 29 3.7.2 The trade regime .............................................................................................. 29 v 3.8 Other policy measures in palm oil, rice, tobacco and upland crop subsectors ......... 37 3.8.1 Policy measures in the palm oil industry ......................................................... 38 3.8.2 Policy measures in the rice industry.................................................................. 39 3.8.3 Policy measures in the tobacco industry .......................................................... 41 3.8.4 Policy measures in the upland crop subsector .................................................. 42 3.9 Financial policy ........................................................................................................ 42 3.9.1 Agricultural credit policy ................................................................................. 43 3.10 Infrastructural developments affecting international trade ..................................... 44 3.10.1 Expenditure for infrastructural development ................................................. 44 3.10.2 Roads ............................................................................................................. 45 3.10.3 Seaport ........................................................................................................... 45 3.10.4 Airways .......................................................................................................... 47 4. Performance in International Trade 4.1 Introduction .............................................................................................................. 51 4.2 Macro trends in trade ................................................................................................ 51 4.2.1 Macro trends in agriculture and non-agriculture .............................................. 53 4.3 Direction of trade .....................................................................................................
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