KUCHING : Modernisation and commercialisation of Sarawak’s agriculture sector must be developed and managed by corporate entities, Deputy Chief Minister Datuk Amar Douglas Uggah said today.
And he said the government had provided a RM100million seed grant or venture capital to a newly created “special purpose vehicle” as investment capital to drive the new direction on modernising the state’s agriculture
“By giving the corporate sector a bigger role in developing and managing commercial agriculture, we can ensure comercial viability while reducing the financial burden on the government,” Uggah, who is also the Minister of Modernisation of Agriculture, Native Land and Regional Development, told the state assembly when winding debates on his ministry.
He said to the special purpose vehicle is to identify commercially viable agriculture businesses for investment.
Once identified, a subsidiary company will be formed to manage and operate the business, he added.
“The SPV may finance the business either from its own resources or it may form joint ventures with suitable private partners.”
Uggah said the key feature of what he termed, the “SPV business model”, was that the SPV will divest itself of its equity in the venture once the business becomes successful and achieves a sound financial footing.
The SPV will be a new corporate entity created under the existing state statutory body, he also told the assembly.
Uggah said the new business model to modernise the state agriculture sector was due to past attempts in handling the many issues in the agricultural supply chain “have not been very effective”.
“Serious bottlenecks still remain.
“Therefore, it we are to bring about the agriculture transformation and achieve a quantum leap in agriculture production and trade, we need to consider other development approaches and adopt new business models that can accelerate agricultural growth.”
Uggah said the new approaches will help raise the income of the rural communities.
“The new business models must be able to harness the financial resources and business acumen of the private sector while leveraging their business management and technical expertise.
He also told the assembly that the government had proposed to set up the Sarawak Agriculture Products Export Corporation to handle the “multi-faceted and complex nature of the process involved in managing the export of agriculture produce in the state”.