20% Plantations Land Surrendered for Renewal of Leases?

Officials are considering a proposal for plantation companies to return 20% of land leased from state governments as a condition for the renewal of their leases. The Deputy Prime Minister (DPM) said the proposal is being reviewed by the Bumiputera Economic Council in collaboration with state governments and the Federal Territories Ministry.

The DPM as chairman of the council’s steering committee, said the proposal is part of the government’s effort to ensure that the returned land benefits the people.

Upon the expiry of the lease, typically given for 99 years during the colonial era, 20% of the estate land is returned if the lease is to be renewed. This 20% will be returned to the state government, which can then develop it for the benefit of the people, according to the DPM.

Source: https://en.wikipedia.org

Sometime in March 2024, the DPM made comments about Bumiputera Land Corporation to preserve land for the community. (Please see my blog article on the same subject matter published 18 March 2024). If the land lease size exceeds 50 acres (20.23ha) for agricultural land or 20 acres for industrial use, the proposal calls for 20 percent of the land to be handed back to the government upon lease renewal or extension. The returned portion of land would be then overseen by the corporation. 

If you had a small plantation of 50 acres growing oil palm for instance, and if you were non-bumiputera, you have to give up 10 acres upon lease renewal or even a mere extension. That will impact your yearly output. The amount of fresh fruit bunches decreases by 20 percent and so will your revenue. Profit may decrease even more than that because of loss of economies of scale. The corporation may hand it over to a privileged bumiputera who can then sell it back to the original lessor for a huge premium. That’s a quick and easy way to make money.

All of that is going to impact both domestic and foreign direct investments. In five (or less) cycles of lease renewals, I may have nothing! 

Reference:

Govt mulls taking 20% of plantation land for renewal of leases, Bernama/FMT, 1 September 2024