KUALA LUMPUR: An allocation of RM1.4 billion under the Smallholder Oil Palm Replanting Financing Incentive Scheme (TSPKS 2.0), applied for by the Ministry of Plantation and Commodities for five years, is targeted to cover oil palm replanting across 82,979 hectares (ha).
Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani said the allocation forms part of the ministry’s long-term strategy to ensure that Malaysia’s palm oil industry remains sustainable, competitive, and able to deliver optimal returns, particularly to independent smallholders.
He said that although the government currently allocates RM100 million annually for the implementation of TSPKS 2.0, covering a target of 5,900ha, the amount channelled to smallholders remains insufficient.
“Therefore, the ministry will seek a larger allocation to be distributed to all smallholders, estimated at an average of RM280 million annually.
“We have yet to receive approval, but we will make the request,” he said when winding up the debate on the 13th Malaysia Plan or the ministry in the Dewan Rakyat today.
Johari stated that the current cost of oil palm replanting is high, ranging from RM18,000 to RM20,000 per ha.
“Although the RM1.4 billion over five years can only support part of the replanting needs of independent smallholders, it is an important first step to strengthen ongoing support for them, who represent 14.6% of Malaysia’s total oil palm planted area,” he said.
The low replanting rate has led to an increase in the acreage of old palm trees, hampering growth in fresh fruit bunches productivity.
The average replanting rate for oil palm recorded only 2% between 2014 and 2024, below the targeted 4% annually, while the area of old palm trees over 25 years old increased from 5.6% (302,004ha) in 2014 to 9.3% (520,067ha) in December 2024.
Meanwhile, he said that to achieve the ideal replanting rate of 4% annually, the ministry continues to support plantation companies, operators and smallholders in implementing replanting programmes to ensure old and unproductive palm trees are felled and replaced with high-quality planting materials.
On the proposal to use the windfall profit tax and the reinvestment allowance to strengthen oil palm replanting efforts, Johari said the matter falls under the jurisdiction of the Ministry of Finance (MoF).
He added that the Plantation and Commodities Ministry has submitted the proposal to MoF during the 2025 Budget session, and it is being reviewed. – Bernama