06/09/2007 (Bernama), Kuala Lumpur - Malaysia's 2008 Budget must come with clearer policies for the agriculture sector including non-oil commodities such as palm oil so as to take it to a significantly higher level, a tax expert says.
"Our resources are aplenty (and) we should be maximising this," Dr Veerinderjeet Singh, Taxand Malaysia Sdn Bhd's Managing Director told a Bernama Roundtable on the 2008 Budget recently.
He said renewed emphasis on developing both upstream and downstream activities in agriculture as contained in the Northern Corridor Economic Region bodes well for the sector and farmers.
"We hope the Northern Corridor will help to boost the agriculture sector," he said.
Rather than any new tax incentives for the agriculture sector, he said the incentives could be channeled to more non-physical matters such as clearer policies.
Inter-Pacific Research Sdn Bhd's Head of Research, Anthony Dass, said that nevertheless, the country's continuing focus on agriculture was timely.
This was in view of the booming commodity prices, particularly palm oil, as skyrocketing crude oil prices have prompted the need for alternative fuels globally, he said.
Although manufacturing, construction and services were given more prominence for some time now, "we are now going back to agriculture and trying to look at upstream and downstream activities.
Such a move is crucial as a more diversified economy with a wider range of significant contributors to gross domestic product gives some kind of comfort to the economic growth ," he said.
Citing the importance of agriculture, he said Malaysia remains in the comfort zone thanks to higher palm oil and crude oil prices despite the slowdown in the global economy especially in the United States.
"Commodities have again come back to partake in the country's growth in a bigger way and provide the kind of revenue needed for the government. So, I think it is a good strategy to move backwards a bit and it is important to ensure that the agriculture sector is not ignored in its totality," said Anthony.
Hence, specific growth areas such as the NCER which focuses on agriculture are important. "We have earmarked them quite well."
Over time, the contribution from the agriculture to the GDP would improve, he said.
Yong Poh Chye, the executive director of Tax Advisory and Management Services Sdn Bhd, said earnings derived from palm oil expanded further with the production of oleochemicals, with entrepreneurs now venturing into biodiesel.
"So, we have to commercialise agricultural products and by-products. If we don't, then we won't do any better. So, let it be fruits, vegetables or even meat, commercialisation is very important," he said.
Anthony concurred as commercialisation adds value significantly to agricultural products which otherwise would fetch considerably lower prices at the farm level.
Veerinderjeet said it was also very sensible to encourage conglomerates to take the lead in spearheading the agriculture sector as they have the required capital to sustain agri activities till their investments bear fruit.
"You cannot have agriculture remaining the way it has been. Tax incentives have been there all the time but it has not taken off in the past largely because it takes a while for you to make profits in agriculture.
"You can't make profits overnight in agriculture," he said.
Nevertheless, there are some issues that need to be addressed such as connectivity between the producers and the final users, he said.
"The larger conglomerates are able to take up bigger roles and create a whole value chain without using middlemen.
"This is what the NCER would allow in terms of expanding the reach of all the players in the agriculture sector," he said.