Modernizing Rural Areas

By Professor Dr.Dimbab Ngidang

1. Introduction

The purpose of this paper is to provide inputs not only for the formulation of policy instrument(s), but also for practitioners directly involved in project planning and implementation in rural areas to achieve the desired goal of high income policy in the 10th Malaysia Development Plan. Hopefully, with a wide range of inputs provided by five more papers presented in today’s economic seminar will help the State and Federal Governments rectify shortfalls in delivery, coordination and monitoring mechanisms pertaining to socio-economic issues and practices with respect to project planning and implementation encountered in the post-independence in the past 47 years or so.

Inaccessibility to public goods, lack of credit worthiness and poverty are some of the common labeling being used to portray the prevailing socio-economic environments of rural population against the backdrop of economic growth in the post-independence. But this may not be true for all cases if a fine-grain analysis is applied because socio-economic problems are locality, region and ethnic specific.

Thus any external intervention to connect the high income policy in the New Economic Model (NEM)3 to modernizing rural areas, be it affirmative action or NGO-initiated project, undoubtedly requires both the former and the latter to deal with typically deep-rooted agrarian roots and/or culture of more than a million indigenous peoples in Sarawak. For that reason, any form of planned intervention cannot afford to ignore three fundamental elements of agrarian transition in the process of modernization.

First and foremost, the target beneficiaries of such transformation are rural people. The second fundamental element involves transforming the traditional agriculture sector into a dynamic economic sector, where the majority of rural households are dependent upon for their livelihood. And the third fundamental element is a contentious issue of native customary rights land (NCR) inherited from their pioneering ancestors: lands that they use for a wide range of agro-economic activities including food production, orchards and for cash crops cultivation.

Why should the high income policy revolve around people, land and traditional sector? Simply because participation of rural people in the high income economic activities is invariably tied to a sustainable land use. We all know that in addition to labor, NCR land is the only “wealth” or resource rural people still have now. That being the case, then it is most appropriate that structural and legal impediments concerning land use should be addressed so that rural people can use their land to the optimal level; only productive land use can guarantee both gainful employment and food security for rural people. Without addressing the above-mentioned issues intervention efforts to bring about high income earning for rural people living in the traditional sector remains problematic.

2.0. High Income Strategies for Rural Areas

Assuming that infrastructure (roads) and facilities (that serve as development arteries for delivery of public goods and services to rural people) are already in existence, the next question is how best then the Federal Government can design and implement affirmative action projects and/or programs if the high income policy is to benefit rural population in Sarawak? Given the regional peculiarities (in terms of the distribution of ethnic groups) in Sarawak today and also against the backdrop of fundamental issues that I have just stated in my introduction, to answer that question, the following high income strategies for rural people are proposed.

Strategy # 1: Creating Economic Activities in RGC

With all intents and purposes, RGCs are created for economic growth, but for growth to occur economic activities must first be created in rural areas. Eleven Rural Growth Centers (RGCs) have been created throughout the state in the 9MP: Pembangunan IT Luar Bandar, RGC Kedop, RGC Long Lama, RGC Telaga Air, RGC Pedawan Complex, RGC Mid-Layar/Nanga Spak, RGC Beladin, RGC Sundar/Awit-Awit, RGC Gedong, RGC Balingan, RGC Long Semadoh and RGC Ba Kelalan. In view of RGCs’ potential benefits, many more RGCs should be established in rural districts, but RGCs should not be too close to the town because it defeats the purpose of establishing the center.

Therefore, for RGCs to become the center for economic growth, the Federal Government should provide more funding to assist the state to use RGCs to create economic activities for rural population in order to bring rural peripheries to the mainstream economic development. RGCs cannot become functional centers for production, procession, markets, buying and selling in rural areas without economic activities. How do you to create economic activities in RGCs? In what manner then this should be done?

Intervention efforts should be institutionally integrated and/or coordinated as follows:-

• Because capital and expertise are needed to start agro-economic activities people living surrounding RGCs should be given both technical and financial assistance for planting industrial crops (rubber, cocoa, oil palm and rubber, rice ), tapioca, pineapple, banana, fruit trees, engage in aquaculture and so forth.
• Relevant government agency (FAMA) should play a direct role in providing market for agricultural produce and/or linking local producers to buyers so that people can sell their produce.
• RGCs should be supported by processing facilities and/or cottage industries, which can also guarantee market for local producers.
• Federal government should extend its entrepreneurship programs to RGCs.
• For RGCs to effectively functional, RGCs must be fully equipped with infrastructure and facilities, adequately supported by market, processing facilities and of course, financial backing from the central government is crucial.

Strategy # 2: Direct Intervention for Rural Population Affected by Mega Projects

Where there are mega projects being implemented in Sarawak in the tenth Malaysia Plan (10MP), irrespective of whether it is a heavy industry, hydropower (HEP) project, construction of highways and modern facilities under the Sarawak Corridor Renewable Energy (SCORE), the Federal Government should allocate sufficient fund to assist the state for creating and implementing economic activities alongside these mega projects.

We must learn from the past experiences in Batang Ai and Asap in Bakun. The SALCRA farm scheme in Batang Ai does not generate enough income for setters there nor does the resettlement scheme for settlers in Asap, let alone generating high income earning. We are not saying that they are not without income; they lack expanded economic opportunities to earn extra income. When resettlement scheme at Tunu is implemented there is also a strong possibility that settlers there will not likely to earn sufficient income like their counterparts in Batang Ai and Asap. This is why sufficient federal funding should be allocated to help the state government creates diversified high income generating economic activities for communities directly affected by mega projects.

Now, the same rationale of people-oriented approach in NEP should also be invoked for creating economic activities in order to expand economic opportunities for the affected communities not only in SCORE, but also alongside all government-funded development projects elsewhere. When the nation-state invokes a positive discrimination approach, it is not impossible for rural people to capture a fair distribution of socio-economic benefits and/or spin-off effects of the construction of HEP dams, establishment of heavy industry, infrastructures (roads) and modern facilities cutting across the hinterlands of Sarawak.

That tall order of social responsibility has been discharged in NEP and should be continued for the sake of inclusiveness in the high income policy in NEM so that people in the peripheries are brought into the fold of mainstream economic development. Therefore, mixing the correct ingredients in a balancing act between striving for economic growth and inclusiveness of rural peripheries in NEM to create high economy is certainly for the interest of the nation-state so that the lower income groups especially in rural areas are not being left out in the 10MP and beyond.

Strategy # 3: More Funding is needed for Creating Economic Activities in the existing Resettlements Schemes.

A critical mass concept in advancing rural areas, especially Sarawak with its population sparsely scattered across the state, has been advocated, promoted and emphasized in the past four decades by the post-independence governments. The idea is that if people can be regrouped from isolated remote rural areas into a critical mass and relocated in strategic locations, it is feasible to provide infrastructure, services, facilities etc., in view of high cost of development if people remain staying in their respective inaccessible longhouses in remote rural areas.

Not many objected to the concept because of the perceived benefits. But now we are not short of critical mass created for a variety of reasons, rationale and ideology in the post-independence Sarawak. And where there are existing critical mass such as the pioneer land resettlement schemes, security resettlements and hydropower resettlement schemes, it is logical that more federal funding is urgently required for implementing affirmative action programs for the purpose of creating economic activities in the following resettlement schemes.

Between 1964 and 1974, a total of 5,544.9 hectares of rubber plantations were established at Triboh, Melugu Skrang, Meradong, Sebintek, Lambir and Lubai Tengah by the Sarawak Land Development Board (SLBD). Following RISDA concept in Peninsular Malaysia, rubber planting schemes in Sarawak then were intended to elevate rural poverty by relocating poverty stricken Iban population onto land-based resettlement schemes where infrastructure, basic facilities and amenities were provided for.

The purpose was to move Iban shifting cultivators from low yield traditional hill rice cultivation to a plantation-based economy that could guarantee a sustainable livelihood than their former longhouses. Also, in the case of Melugu and Skrang land development schemes, these rubber schemes were not only designed for both socio-economic purposes, but also out of an urgent need to provide security for longhouse dwellers during the military confrontation with Sukarno’s regime in the 1960s.

Unfortunately, for reasons beyond their control, these land resettlement schemes were a failure and rubber schemes were abandoned. Some settlers who managed to payback their loan had already given land titles, but most lands are still locked under SLDB’s control because of the repayment failure for their outstanding loan, while in some cases, landownership had already changed hands. In recent years only Skrang scheme has been replanted with oil palm.

In 1972, five security land resettlement schemes at Sukuau, Nanga Tada, Nanga Dap, Jagau, and Nanga Ngugun were established in the Sibu Division designed primarily to relocate the Iban who had been harassed by the communist terrorists operating in the division.

The Nanga Sekuau resettlement scheme was initially established by SLDB on 26 February 1972, but was later handed over to the Rejang Security Command (RASCOM). A total of 400 families were involved in a pepper-based farm scheme to assist the settlers made their living in the new environment. The area was successfully being replanted with oil palm under the Federal Land Consolidation and Rehabilitation Authority (FELCRA).

In the case of Nanga Tada, Nanga Dap, Jagau, and Nanga Ngugun resettlement schemes,5 the affected Iban were relocated from remote longhouse communities in Kanowit district. A cocoa-based farm schemes were established by FELCRA for the settlers. The farm schemes were not quite successful, but FELCRA also abandoned its plan to replant these schemes with oil palm because of unfavorable terrain. No apparent viable solution to this problem is in sight. Some of these Iban are third generation settlers. After 30 years of displacement, going back to their former longhouses may not be a viable option for now in the absence of roads, facilities and amenities.

In 1982, 3,600 people were displaced as a result of the construction of the hydroelectric power (HEP) dam at Batang Ai, Sri Aman Division. About 1,595 families were resettled in the land scheme in 1982, of which each family was allocated 4.5 hectares of farmland: 2 hectares of rubber, 1.2 hectares of cocoa and 0.4 hectares for a garden plot, whereas the remaining 0.8 hectare for rice cultivation is yet to be given. Cocoa farm scheme was abandoned after cocoa price plunged in the 1980s and has been replanted with oil palm.

Although the resettlement scheme provided facilities and infrastructure, the farm scheme has not been able to provide a sustainable income for the settlers, and the lack land for rice cultivation seems to add to the problem of food insecurity, while the aquaculture project in Batang Ai has long been discontinued for lack of funding and found to be not economically viable to run due to high cost of feed and limited market outlets.

In the 1990s, 15 longhouses, comprising of Kayan, Kenyah, Kajang, Ukit and Penan people with a total affected population of 9,4289 were resettled at Asap, Belaga district in Kapit Division. Three acres of land were allocated per household at Asap resettlement scheme.

In short, there are very little economic activities in these government-created resettlement schemes today. The same argument of insufficient income also befalls all these schemes; they are not with income, but not adequate enough for supporting sustainable livelihood. Perhaps, a thorough assessment of these projects is also necessary.

Given the sacrifices they have rendered to the nation-state over the years, surely the existing critical mass in the above-mentioned schemes deserve special attention in terms of federal allocation for implementing affirmative action programs in the 10MP.Federal funding is crucial to helps create economic activities in these resettlement schemes whether in the form of cottage industry, aquaculture, commercial orchards and vegetable production or food processing, etc., with supporting technical advisory services by relevant agencies and a guaranteed market for their products.

Strategy #4: Weave out Eligibility Requirement for Federal Funding for Boom Crops

The eligibility for funding or assistance from federal agencies to participate in rubber, oil palm, cocoa and pepper schemes should weave out the requirement of land title for farmers with the certification of Tuai Rumah and/or Penghulu.

There are about 150,000 farming families in Sarawak, of whom majority are indigenous peoples or Dayaks who are typically subsistence farmers. By nature of their agrarian roots they inherit NCR land from their pioneering ancestors. As far as tenure security is concerned, they may have customary rights to their NCR lands but without title and not credit worthy by any institution standard; because they cannot use NCR land for collateral, undertaking investment activities beyond subsistence economy is impossible.

With the implementation of the high income policy in the 10MP, participation of these farming families in boom crops cultivation is important if high income earning among farmers is to be materialized. Addressing the eligibility issue for federal funding is crucial because the term eligibility here is equal to participation and participation is inclusiveness in the high income policy of NEM. Without eligibility to participate it automatically excludes NCR landowners without land title participate in high income economic activities.

Again, if land title is used the same way financial institutions impose credit rating on rural people, then most of rural people are not entitled for assistance from the federal agencies such as RISDA for rubber cultivation; they will be excluded for assistance from MPOB for oil palm smallholder scheme. At least, now, the Cocoa Board has already given a leeway for bona fide NCR landowners in Sarawak for assistance to participate in cocoa cultivation. If other federal agencies (RISDA, MPOB, Pepper Board, FELCRA, etc.,) can provide the same leeway as the Cocoa Board does now, such arrangement will greatly benefit rural people to expand their economic opportunities and get a high income earning.

The post-independence experiences clearly show that the lack of economic activities in rural areas always have the tendency to give way for a hollow core phenomenon to operate in its own devolution, i.e., prevailing socio-economic situations such as rural poverty will continue to drive rural-urban migration, an option so appealing as an escape route to a better alternative livelihood in urban centers. Now, in whichever front we examine the hollow core effect, mobility of labor from rural to urban centers can also create negative effects to both rural and urban areas.

Therefore, it is extremely important for the Federal Government to extend adequate funding and weave out such eligibility requirement for assistance over the use of untitled land for cultivating boom crops cash crops (oil palm, rubber and cocoa and even tree planting) to counter the hollow core effect of rural poverty.

Strategy # 5: MPOB Should Extend Subsidy Scheme to Oil Palm Smallholders

Oil palm smallholder production is a fairly new agriculture sub-sector in Sarawak. In terms of planted hectarage, small-holder production accounts for 3% of the total area under oil palm in the state today. However, smallholder production is expanding over the years. Specifically, the area under smallholder production has increased from 6,801 hectares in 2000 to 15,264 hectares in 2004. Of the total area of 15,264 hectares small-holder oil palm in Sarawak, 72% (11,039 hectares) are in the Miri Administrative Division, while the remaining 28% is distributed in other administrative divisions throughout the state.

In 2004, oil palm accounted for 54.5% of the estimated area under crops (Agricultural Statistics of Sarawak 2004:3). The total area under oil palm increased from 112,783 in 1995 to 543,398 in 2005, of which 97% of the total area of oil palm in Sarawak is managed by large-scale plantations, although the area managed by small-holders increased from 1,000 hectares in 1995 to 18,065 hectares in 2005.

Oil palm is a “golden” crop. And participation of rural people in growing this profitable crop should be aggressively promoted by the relevant agencies. There are many success stories of oil palm smallholders in Sarawak today outside the fold of government-sponsored projects. If more rural people follow such private initiatives with MPOB’s assistance, productive land use is assured and this can guarantee sustainable high income earning. Moreover, many mills have been established by oil palm companies throughout Sarawak today.

These processing facilities serve as a guaranteed market for people to sell their fresh fruit bunches (FFB). Because a guaranteed market is already in existence promoting oil palm expansion is already made easy. For this reason, we believe that it is not impossible to eradicate rural poverty within a short period of time if the Federal Government can channel subsidy scheme through MPOB directly to potential farmers in the vicinity of oil palm plantations so that they too can get high income earning by participating as smallholders to grow this profitable crop.

Strategy # 6: Spread out Federal Assistance in view of the unique Regional Peculiarities in Sarawak in order to reduce economic disparity between ethnic groups and uneven development between regions.

Federal assistance, be it for the purpose of expansion or intensification of boom crops, should not be restricted or confined to certain region primarily because the population distribution of ethnic groups in Sarawak is closely identified by region. Thinking along the same route, not many people will disagree that unique cultures of indigenous peoples are tourism assets for Sarawak; whether it is bad or good, culture can be commercialized. But for some reasons or another, regional peculiarities of ethnic distribution in Sarawak has somewhat been taken for granted for far too long in the post-independence.

Failure to take that into account will naturally make distribution of public goods such as services, development allocation and project implementation is not only challenging, but can be even more problematic and contentious in the future as a consequence of an uneven development.

It is in recognition of this fact that it is important that federal assistance to the state should be spread out in view of the unique regional peculiarities currently existing in Sarawak today in order to reduce economic disparity between ethnic groups and uneven development between regions.

For instance, if funding and/or projects are not earmarked for Baram and Lawas, the Lun Bawang and the Kelabit will be left out in the exercise; if projects are not planned and implemented for Belaga, the Kayan and Kenyah will be deprived; if Kapit and Sri Aman are left out the Iban there will be excluded; the same applies to the coastal areas, the Malays and the Melanau will be left out if similar projects are not allocated for the coastal zone. The Bidayuh too will be left out if similar projects are not extended to Serian in Samarahan Division and to Bau and Lundu in Kuching Division.

3.0 Final Remarks

There are two distinct routes in which economic growth and the high policy in NEM can be interpreted. First, by definition and design, major projects will generate more revenue for the nation, state and big corporations, but do not really generate economic benefit for the common people especially in rural areas. So as far as the poor masses are concerned, using GDP and per capita income as criteria for economic growth is no longer a valid argument because the two criteria exclude the bottom 40% income group in the overall economic growth equation.

Second, if the economic growth equation in NEM can be construed to ignore two core issues: the distribution of high income and participation for empowering the poor masses, then there is a need to rewrite another economic growth equation specifically for the poor masses using positive discrimination argument and/or approach that will turn the design of economic growth in NEM into intended equitable distribution of high income through greater participation of lower income group in various economic activities. When the masses are given expanded economic opportunities only then it is in tandem with Chief Minister, YAB Pehin Sri Haji Abdul Taib Mahmud’s policy of the politics of development.

SUMMARY

With its regional peculiarity of ethnic distribution, modernizing rural areas in Sarawak can be problematic without greater participation of various ethnic groups in the transition process in order to achieve equitable distribution of income. If economic growth in NEM is to benefit rural constituencies the following agro-economic strategies should not be overlooked in the 10MP.

Strategy #1: The federal government should provide more funding so that the state government can use Rural Growth Centers (RGCs) to create economic activities for rural population. For RGCs to effectively functional, RGCs must be fully equipped with infrastructure and facilities, adequately supported by market, processing facilities, entrepreneurship programs and of course, financial backing from the central government is crucial.

Strategy #2: Where there are mega projects being implemented in Sarawak in the 10MP the Federal Government should allocate sufficient fund to assist the state for creating and/or implementing economic activities alongside mega projects. In the past when mega projects such as HEP Batang Ai and HEP Bakun were implemented, neither SALCRA farm scheme in Batang Ai nor the resettlement scheme in Asap generates enough income for setters there. The same fate can befall settlers at Tunu resettlement scheme. This is why sufficient federal funding should be allocated to help the state government creates diversified high income generating economic activities in order to capture spin-off effects of mega projects not only under SCORE, but also for all government-funded mega projects elsewhere.

Strategy #3: Where there are already critical mass in existence such as: (1) pioneer land development resettlements implemented by SLDB ; (2) security resettlement schemes under RASCOM, and (3) HEP resettlement scheme at Batang Ai and Asap, Bakun, federal funding is urgently required for creating economic activities for settlers in the existing resettlement schemes. They lack income because they are inaccessible to expanded economic opportunities for supporting sustainable livelihood.

Strategy #4: The eligibility for assistance from federal agencies to participate in rubber, oil palm, cocoa and pepper schemes should weave out the requirement of land title for farmers with the certification of Tuai Rumah and/or Penghulu.

Strategy #5: Federal Government should channel subsidy scheme through MPOB directly to farmers in the vicinity of existing oil palm plantations so that they can get high income earning from planting a profitable crop like oil palm.

Strategy #6: Federal assistance should be spread out in view of the unique regional peculiarities of ethnic distribution in Sarawak in order to reduce economic disparity between ethnic groups and uneven development between regions. – The Broken Shield.