Global trade of natural products, which amounted to RM777 billion in 2006, is projected to triple by 2020. The shift in healthcare, denoted by global growth in nutraceuticals, towards a preference for natural products with therapeutic value provides opportunities for Malaysia to become a significant global player, given our rich biodiversity. However, the majority of local products are largely in the low-end market segment such as fortified beverages. Diversification towards high-end herbal products based on standardised extracts and validated by clinical studies remains weak due to lack of industry champions, weaknesses in local R&D, large investment required for clinical studies and difficulty in penetrating international markets.
Actions
To address these issues and move up the value chain, six programmes will be implemented under a coordinated national project. The aim is to strengthen product quality and marketing efforts to penetrate global export markets for nutraceutical products and botanical drugs. Several popular Malaysian herbs have been identified as the focus, including Tongkat Ali, Kacip Fatimah and Misai Kucing.
Establish four herbal centre of excellence clusters. Each centre will respectively lead R&D in discovery, crop production and agronomy, standardisation and product development and pre-clinical studies. The centres of excellence will be responsible for coordinating research amongst research institutions, establishing strategic research collaborations amongst domestic and international institutions, ensuring quality of research output and obtaining intellectual property rights on the research findings.
Promote and market internationally a national brand as the identity of Malaysia’s healing and beauty tradition. Local herbal products will be exported under the umbrella brand. Government will work with foreign regulators to facilitate the registration of Malaysian herbal products in their markets. This will reduce the need for individual companies to invest in branding and product registration.
Develop herbal cultivation parks in Durian Mentangau and Pasir Raja in Terengganu, Cegar Perah in Pahang and in Rantau Manis, Kelantan. This is to ensure adequate and consistent supply of raw materials. The parks will undertake herb cultivation at commercial scale based on a contract-farming model. Each 400-hectare park will allocate 40 percent of its land to be cultivated by more than 50 out-growers. The out-growers will benefit in terms of technical skills development, production quality assurance, secure off-take and income from the anchor company. It is anticipated that out-growers will have the potential earn RM3,000 per month.
Expand extraction facilities. There are currently limited commercial-scale facilities; most are small or of pilot scale and not designed to operate commercially. New facilities will be built, each with a capacity of 1,000 kilograms per week to supply the industry with reliable, premium quality extracts at competitive cost.
Enablers
The Malaysian Herbal Development Council will be set up to be responsible for the end-to-end development of the herbal industry, including setting strategic directions and developing appropriate policies and regulations for the benefit and growth of the industry. The council will consist of members from both and private sectors and will enable coordination across 24 government, state authorities and private sector bodies currently involved in this sector. While the main EPP for herbal products focus on five popular herbs, two related business opportunities have been identified. There is potential to capture value from the development of other herbs. Funding will be provided to accelerate the commercialisation of new products that are based on these herbs. Local manufacturers will be supported to move up the value chain through the R&D support and marketing efforts. Additionally, the possibility of acquiring a foreign distributor with large distribution networks in strategic.
markets such as the US, EU or China will be studied and pursued. This is to assist in overseas market penetration of Malaysian herbal products.
Funding
A dedicated herbal fund of RM533 million from public funding will be establish beginning from 2011which includes grants to support upstream research and funding of pre-commercialisation activities such as pre-clinical, product development and clinical studies. In addition public funding of RM69 million is needed for facilities upgrade and investment in the herbal park. The private investment in the herbal park and extraction facilities is estimated to be RM237 million. The total capital investment for this EPP is thus RM839 million.
Impact
The targetted GNI from this EPP is RM2.2 billion by 2020 from high-value products based on five core herbs. There will be a total of 1,800 jobs created with opportunities for 300 manufacturers to upgrade their services from mere trading and packaging to high-end manufacturing of innovative formulations as well as prospects for 1,500 rural farmers to move up the value chain into primary processing.
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