KUALA LUMPUR, April 27 — Finance Minister Lim Guan Eng today said that the government has decided to allocate RM500 million in loans for replantation of oil palm to smallholders.

He said the loans will be given to individuals or small planters at an annual interest rate of 2 per cent per annum.

“In order to ensure the demand for palm oil is not just enjoyed by large companies the government has expanded its outreach to help smaller planters.

“The government has prepared loans up to RM500 million for replanting efforts and we hope these loans will help alleviate the financial burden on some of the farmers.

“Besides that, there will be RM50 million in easy loan funds also available at 2 per cent per annum to pay for the raw materials and the purchase of certified and high-quality seeds for planting,” he said in a statement today.

Lim said the government hopes that these new innovations will increase productivity and income of smallholders.

The provisions for the loan were made available after China has agreed to buy more palm oil from Malaysia, as Malaysia inked a framework agreement with the country to reinstate the Bandar Malaysia project.

During Prime Minister Tun Dr Mahathir Mohamad’s five-day official visit to China, the two countries signed a framework agreement and two memoranda of understanding (MoUs), one of which is to enhance palm oil trade and China’s investments in the downstream palm oil business.

Under the MoU related to palm oil, signed by Primary Industries Ministry’s secretary-general Datuk Dr Tan Yew Chong on behalf of Malaysia, China agreed to buy an additional supply of at least 1.9 million tonnes of edible oil from Malaysia over five years starting 2019.

The volume is valued at RM4.56 billion, based on an average price of US$600 per tonne.

Lim said besides the government will also provide help to farmers in obtaining their Malaysian Sustainable Palm Oil (MSPO) certification.

Lim said the government has allocated RM100 million in grants in order to achieve a 100 per cent MSPO certification by 31 December 2019.

“In the 2019 Budget speech the government had allocated RM30 million for MPSO certification to encourage more holders to obtain their certificates.

“We are adding more money to the fund until it reaches RM100 million. In the meantime, the government will bear all the costs for MPSO certification for the existing 70 per cent of applicants whose plantation size is between 40-100 acres,” he said.

Lim said the aid for smallholders was necessitated due to the low prices of palm oil.