MDEC, CIMB Islamic ink US$2.4 mil MOU to scale Agtech pilot
By Tan Jee Yee April 5, 2021
- Goal to digitalise farming processes; attract youth to agriculture sector
- Digital adoption in agriculture estimated to spur 30% rise in jobs by 2025
The Malaysia Digital Economy Corporation (MDEC) and CIMB Islamic Bank Bhd has signed a memorandum of understanding (MoU) on extending an extensive micro-financing programme with an allocation of US$2.4 million (RM10 million) as an initial funding to catalyse digital agriculture technology (Agtech) in Malaysia. This has the potential to be increased to US$6.04 million (RM25 million) as the programme progresses.
Prior to this, MDEC – via a public-private partnership with the Pertubuhan Peladang Kawasan Kuala Langat (PPKKL) – initiated a pilot project in 2018 to spur yield and quality of crops utilising the latest technologies. PPKKL is the Malay language name for Kuala Langat District Farmer’s Association.
The pilot has seen farmers adopting an Internet of Things (IoT)-enabled fertigation system that reduced monthly fertiliser usage by 20%, lower monthly manpower requirements by 25% and increase the overall quality of yield (Grade A chilies) by up to 90%.
Rais Hussin, chairman of MDEC, said that the funds made possible through the MOU have three objectives – to help farmers increase yields, increase income, and improve food security.
The results are already apparent, as the eLadang pilot project has also seen an overall reduction of operations cost by 30%. Most importantly, Rais highlights that income has seen a 33% hike.
As a culmination of this joint-effort, the MoU signed with CIMB Islamic will enable this initiative to go nationwide at scale and thereby contributing to the nation’s food security and sovereignty.
The facility will lower the access barrier for Malaysian farmers to embark on the digitalisation journey and spur the growth of the agriculture sector for overall improvement, advancement and optimisation.
This is, however, a continuous journey, with the collaboration being one step. As Surina Shukri, CEO of MDEC said, the journey forward will touch into using digital tech to improve logistics. For now, the focus of the initiative is to provide capital to help farmers adopt 4IR technology.
“The MDEC and CIMB Islamic collaboration will provide another growth avenue for farmers as they embrace the digital economy and gain even more relevance in this new era of disruption. It will also serve to encourage more youngsters to till this field and form the next crop of Malaysia’s agricultural industry,” said Ronald Kiandee, Minister of Agriculture and Food Industries.
Current key Agtech initiatives by MDEC, such as the eLadang programme, have successfully benefited 548 participants as of December 2019. (While the programme is ongoing, MDEC has not shared the 2020 data.)
Of this, 78 farmers have utilised digital farming technology, leading to a 20% increase in their productivity. Three digital labs were also formed to train, certify and drive digital technology adoption in farming.
Saifuddin Abdullah, Malaysia’s Minister of Communications and Multimedia, said that this marks a significant milestone for both MDEC and CIMB Islamic, as they have brought the agro-sector into the digital realm by providing access to next-gen technologies like IoT (Internet of Things), artificial intelligence (AI) and big data analytics (BDA).
“This is in line with the industry’s 30% expected growth rate in productivity. Now this sector can quickly adopt digital technologies as part of Malaysia’s drive to propel forward the digital economy aligned with MyDigital. This collaboration is the next step to digitally transform the agriculture sector on a national level,” he continued.
The next chapter
MDEC said that the MoU marks a new chapter in the agency’s push in agricultural innovation to encourage the adoption of the latest digital methods, such as AI, IoT and Big Data Optimisation, to increase crop yield and quality.
The partnership with CIMB Islamic will offer affordable agricultural financing facilities at 3.5% per annum. This will not only benefit the current crop of farmers but also encourage more youngsters to break into this business. Through the MoU, CIMB Islamic will extend funding support and incentives to aid digital transformation of the agriculture sector. CIMB will also continue to support MDEC as well as to progressively collaborate with relevant industry partners to elevate the use of AI, IoT and BDA in farming.
On top of that, both parties will continue to advocate and validate digitalisation across the agriculture sector. This includes engaging and further enabling the supply and demand ecosystems; key stakeholders; industry players; as well as end-users and consumers within the entire marketplace.
MDEC said that with the proliferation of the use of digital technology in the agriculture sector, an estimated 30% increase in job opportunities will be created by 2025 in this sector.
Wide usage of Agtech will also drive more youth into this sector, most of whom will be needed to manage and run these innovations. Under the MDEC eLadang pilot project, 70% of 548 participants trained up to December 2019 in Agtech hail from the Under-40 age group.
“The support from CIMB and MDEC enables farmers to go digital and further reinforces the potential opportunities that the agriculture sector offers, especially with upskilling and digital growth. This is certainly complementary with the Agrofood Value Chain Modernisation Programme that was introduced in Budget 2021,” said Ronald.
The agriculture minister added that conversations surrounding agriculture have already moved beyond conventional agricultural practices, and now into smart farming, AI and drone usage – processes that involve 4IR technology.
“Agriculture cannot avoid applying these technologies in order to increase productivity yield, reduce cost and lower reliance on labour. There are digital technology in other sectors that can be applied into agriculture,” he added.
Rais stresses that the Agtech focused micro-financing initiative with CIMB is designed to expand and encourage the adoption of digital tools in agriculture nationwide. “With the partnership with CIMB Islamic, we can bring this initiative nationwide and immediately modernise our agriculture sector and create opportunities for many in line with the Malaysia Digital Economy Blueprint.”
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