IN MALAYSIA
Ghani Senik
Food Technology Research Station
MARDI, 16800 Pasir Puteh
Kelantan, Malaysia
ABSTRACT
Small-scale food enterprises have played a very important role in the Malaysian economy,
particularly in terms of employment generation, better income distribution and as a training
ground for entrepreneurs before they invest in larger enterprises. Small-scale food enterprises
also have important linkages to related industries such as the manufacture of machinery, and food
packaging materials, and suppliers of food ingredients. It is envisaged that small-scale food
enterprises will continue to expand in line with policies and incentives introduced by the
government.
Keywords: Small-scale food processors, resource utilization, potential products, issues and
problems, relevent policies and incentives.
1
Many small-scale food enterprises operate Fish Products
under a simple organizational structure,
consisting of the manager-owner assisted by a On the coast of Peninsular Malaysia,
few workers. especially in the states of Kelantan,
The products are generally relatively Terengganu and some parts of Pahang, fish
cheap and of rather low quality. Marketing is are processed into snacks called ‘keropok’
done directly or through agents. (dried fish crackers). More than 100 small-
scale processors are engaged in this business.
CURRENT STATUS OF FOOD RESOURCE The crackers are made by mixing minced fish
UTILIZATION meat with sago flour, tapioca flour, salt and
monosodium glutamate. The mixture is then
The utilization of food commodities such moulded into cylinders, steamed, cooled, sliced
as meat, fish, vegetables, fruits and grains do and sun-dried.
not differ very much from one part of Other popular products made from fish
Malaysia to another. The utilization of food are fishballs, salted dried fish and fermented
resources can be described under various fish. Salted fish are processed by soaking the
headings. degutted fish in a saturated brine solution
overnight, before drying them in hot sun for
Meat Processing two or three days. These activities are mostly
located near fish landing sites.
Malaysia has more than 32 companies Anchovies are processed by blanching
which are involved in meat processing. The them in a mild brine solution and drying them
major products are sausages, canned chicken in the sun. The product is sold as dried
and canned pork. Cooked long-life meat anchovies, and there is a very good market
dishes in pouches is processed for both demand for them in Malaysia. In some areas,
domestic and export markets. In small-scale anchovies are processed by fermenting them in
processing, meat is made into various a saturated solution of salt for six months.
traditional food products such as meat floss, They are then boiled with tamarind, lemon
dried curried or spiced meats, and meatballs. juice, palm sugar, salt, permitted preservative
There are more than 50 small-scale and other ingredients to make a fish sauce.
entrepreneurs actively involved in this. This product is sold in bottles of various
sizes, usually in local markets.
Dairy Products
Vegetables
The dairy product industry is largely
dependent on imported dairy milk powder. At Most vegetables are grown for fresh
present, Malaysia's imports of dairy products consumption. However there is some
show an annual growth rate of 11.5%. Milk processing of vegetables, such as chili peppers
powder is normally repacked or processed pickled in vinegar, drinks made from ginger,
further into products such as sweetened and pickled amaranthus. The main problem
condensed milk, ice-cream, yoghurt and in vegetable processing is the shortage of raw
flavored drinks. materials. Chili peppers are also being used
Malaysia is also producing some fresh in the preparation of various kinds of chili
milk for local consumption. This is either sauce, used for dipping snack products such
sold as fresh milk or processed into ‘dadeh’, as fish crackers and roasted fish or meat.
a traditional yoghurt drink flavored with e.g. They are also eaten mixed with noodles and
cocoa or rosewater. These activities are being other pasta products.
carried out under the supervision of the Many small-scale entrepreneurs who
Veterinary Service Department of Malaysia, process chili-based products have to depend on
which has processing facilities at its milk imported dried chilis from India or China.
collecting centers in various parts of the Similarly, the tomato puree which is used in
country. These centers also act as marketing tomato sauce factories is imported from
outlets for the fresh milk produced by small- abroad. Soybeans imported from USA, China
scale dairy farmers who own a few dairy and Canada are widely used to make soy
cows.
2
sauce, tofu (=beancurd), and soybean milk traditional fermented product known as ‘tapai’.
drinks and other products. Soybean processing It is processed by cutting the cassava roots
has become a very lucrative business. Today, transversely into lengths of 5 - 7 cm, or into
total sales from the soy sauce industry alone cubes 2 - 3 cm across. The pieces are then
account for more than US$ 41 million each inoculated with a traditionally prepared yeast
year, and this is increasing. culture. MARDI has developed pure cultures
Pumpkins are grown widely after the of Amylomyces and Saccharomyces which are
tobacco crop in tobacco-growing areas of available for sale to the industry. After 3 -
Kelantan. Pumpkin has become a traditional 4 days, the product is ready to be marketed.
dish during certain parts of the year. It is Again, this activity is being carried out by
processed by cooking it in a heavy syrup of small-scale processors who either plant their
palm sugar. Pumpkin is also widely used in own cassava or buy it from traditional farmers
the preparation of traditional cakes. It is who grow cassava as part of their normal
recorded that more than 20 kinds of traditional agricultural activities. Thus this product is
cakes are prepared from pumpkin, but these very much localized in rural areas. Tapai is
have yet to be promoted commercially. They normally sold in open-air markets or in street
are normally processed by family households stalls. Similarly, sweet potato is being
and sold in traditional outlets such as processed into flour and snack products.
restaurants, office canteens, coffee stalls and
market stalls. Fruit
3
190°C. The crisp slices are then cooled and bottled coconut sap and palm sugar. These
packed in plastic. Products of this nature are products are sold domestically. The scale of
normally processed by women’s groups, under such processing is small, and methods of
the supervision of various government agencies production are traditional and very laborious.
involved in improving the livelihood of rural Other products from coconuts are canned
people. green coconut milk, nata de coco*, various
This type of venture tends to expand as hard candies, copra, vinegar and ‘kerisek’, a
time passes, particularly in terms of local product made by roasting grated coconut
technological improvement, product meat and grinding it into a paste. Kerisek is
diversification and market coverage. widely used in traditional cooking.
There are several other types of banana
snacks, including banana crackers with various Sago
flavors, sugar-coated banana snacks, salted
banana snacks and spicy banana snacks. Sago palms are abundant in Sarawak,
These products are available in packs of and are found sporadically in swampy areas in
various sizes, and are normally graded into other parts of Malaysia. Sago palms in
various categories based on shape, size and Sarawak are utilized for the production of
color, in keeping with market requirements. sago pearls and starch. Sago starch is used
Durian is popularly known as the ‘King as a stabilizer and thickener, and as a
of Fruits’ in Malaysia. Besides being eaten substitute for modified corn starch. Malaysia
fresh, it is processed into various traditional is exporting more than 25,000 mt of sago
products such as durian cake (locally known starch each year, worth more than US$4
as ‘lempuk’), the fermented ‘tempoyak’, or million, to Singapore, United Kingdom, Hong
dodol (durian cooked with glutinous rice, palm Kong and Taiwan. Many of the sago
sugar and coconut milk). processing factories are small establishments
Durian can also be processed into which use traditional methods of starch
modern products such as durian powder, extraction. Efforts are being made to
which in turn can be used for biscuits, cakes modernize their production. Another popular
and ice-cream. Durian is also being used to product made from sago is tabaloi, a snack
make candy. The flesh is cooked with food which has been modernized in its
condensed milk and sugar until a moisture production.
content of 10% is reached.
Coffee
Palm Based Products
Coffee is grown under coconut palms in
The most widely utilized palms are Malaysia, either in plantations or on
coconut and sago. Other species are found smallholder farms. Dried coffee beans are
sporadically, but it is not economic to process used for the production of various types of
them. coffee powder and coffee powder mixtures.
There are more than 20 small-scale processors
Coconut of coffee powder in Malaysia. About 45% of
the beans they use are produced locally, the
Coconut palms are found abundantly remainder are imported. Coffee powder
throughout Malaysia, and are grown on mixtures are produced by roasting the beans
plantations as well as by smallholders. mixed with granulated sugar, margarine and
Coconut meat is processed into desiccated other permitted fillers, and grinding the result
coconut, instant milk powder, and instant into a coarse or fine powder.
coconut cream powder. These products are
being manufactured on a large scale to cater Cocoa
for local and export markets. Products from
small-scale food processors are limited to a Malaysia is the world’s fifth largest
few product lines such as coconut candy, producer of cocoa beans. The beans are sold
* Nata de coco: Green coconut milk mixed with sugar and fermented in an acidic medium to form a firm, clear jelly. (Ed.)
4
dried as a primary product to the processors, a dough mixer, a roller, a moulder, an oven
who in turn process the beans into cocoa and a bread slicer. The capital cost for
butter, cocoa powder and chocolate. Cocoa setting up a bread factory is around
liquor and cocoa are also produced in small US$70,000 - 80,000.00.
quantities. Cocoa butter is processed for Supermarkets, minimarkets and retail
export, while cocoa powder and chocolate are shops are the usual market outlets for this
sold on the domestic market. type of product.
Rice is used in the manufacture of
Spices vermicelli, pastries and various snacks. These
products are made by small processors in both
At present there are more than 150 urban and rural areas. Wet products made
small-scale processors of spices, most of from rice are numerous. These include
whom produce around 100 - 200 kg of traditional cakes and buns made in the early
finished product per day. Ground pepper and morning and sold by evening the same day.
curry powder are common spices, but each These products are sold on food stalls, and in
processor produces more than one product school canteens, restaurants and markets, and
line. Marketing is normally confined to the many Malaysians have the habit of eating
local community. Malaysia’s spice industry is them for breakfast. These products have the
worth more than US$12 million per year, and potential for further development, but need
is continuing to expand. improvement in terms of preparation,
The technology for producing spice packaging and machinery usage. Glutinous
powders is very simple. Coarse grinding is rice is used in the manufacture of a puffed
followed by fine grinding. The machinery snack product called ‘bepang’, by mixing it
used is normally a hammer mill with various with palm sugar and glucose syrup as a
sieve sizes for coarse grinding, and a series of binder. This snack product is popular
two to three disc grinders for fine grinding. throughout Malaysia, and is available in many
In some factories a more advanced grinding forms and flavors. A number of other
machine is used. traditional products are made from rice.
The preparation of mixed spices has
undergone some changes quite recently. In POTENTIAL PRODUCTS TO BE PROMOTED
place of the traditional dry powders, many
consumers prefer various forms of paste. Many food products which are being
These are relatively new products, and are processed by small-scale entrepreneurs are
more convenient to use. highly acceptable to consumers. These
The spice industry in Malaysia is heavily products have the potential to expand their
dependent on imported raw materials such as market size, especially if there are
dried chili peppers from China and India, and improvements in product quality, and attractive
cloves from Indonesia. Tumeric, coriander packaging. More aggressive market strategies
seed, cumin seed, cinnamon and other spices and promotion are also needed. The
are also imported. availability of good quality raw materials, and
whether it is cheaper to produce these locally
Cereal Products or import them, are also very important
factors to be considered. Some of the
Wheat is the major grain used in the potential products are as follows:
manufacturing of biscuits, bakery products,
noodles, cookies and snack products. Snacks
Malaysia is a importer of wheat grain.
This is milled into wheat flour and processed Fish crackers, a local snack made from
in various ways. Bread is widely consumed fish, are popular among Malaysian people.
in Malaysia, and is produced by more than They are available either as a ready-to-eat
1000 bakeries throughout the country. Most product, or as an uncooked dried product with
of these are small, and make cakes and a moisture content of 5 - 7%, which still has
pastries as well as bread. The machinery to be fried.
used normally includes standard items such as Nutritionally, fish crackers are rich in
5
protein (15% minimum), Ca and P. They are Meat, Fish and Chicken Floss
made in a variety of shapes, sizes and flavors.
This product has export potential. Floss made from meat, fish or chicken
There are also some traditional snack floss is another product which has potential
products based on wheat flour, which are for export. However, this product needs
known by their local names (e.g. gegetas, improvement in terms of quality, packaging
lidah buaya etc.). These products are and labeling.
prepared by deep frying and are packed in
plastic. They have a protein content of 6 - PROBLEMS OF SMALL-SCALE
8%, with 80 - 90% carbohydrate. The FOOD ENTERPRISES
potential of these products is very high, if
they are packaged in an attractive way, and if Major Constraints in Food Processing
a range of products are sold in a single
package as gifts. The establishment and successful
operation of small-scale food processing
Frozen Foods enterprises face several constraints.
6
undertaken by research institutions such as the education tend to be less receptive to new
Food Technology Research Centre, MARDI technologies compared to their counterparts
and some universities. who have a college education. This has made
it difficult to transfer new technology and
Competitive Market improve productivity.
7
guidelines for the establishment of new • Investment tax allowance (ITA), by
industries up to 1995. This represents an which companies can be given an
important measure taken by the Government to allowance of up to 100% with respect
attract private investment to areas offering to quality capital expenditures incurred
greater comparative advantage. The priority within five years;
products identified for active development • An abatement of adjusted income; and a
under the IMP can be classified into resource- • Reinvestment allowance
based sectors and others. The resource-based
sectors cover rubber products, palm oil and Incentives for Exports
wood products, and also include food
processing. In addition to the general incentives,
For food processing, the specific manufacturers producing for export markets are
development objectives of the IMP are as entitled to:
follows: • Export credit financing;
• To develop a modern food processing • An abatement of adjusted income for
industry, meeting Malaysia’s food export;
needs in conformity with modern • An export allowance;
hygienic standards; • A double deduction of export credit
• To establish export oriented as well as insurance premium;
import substituting products; and • A double deduction for promotion of
• To develop industries which utilize exports; and an
more local raw materials and substite • Industrial building allowance
for imported raw materials.
In order to attain these objectives, the Incentives for Research and Development
IMP recommended the designation of all (R&D)
products made from cocoa fruit and vegetables
as priority products for export. Animal feed Incentives for R&D take the form of
has been identified as a priority product for allowable deductions for certain types of
the substitution of local raw materials for expenditures related to R&D activities, a
imported ones. double deduction for contributions to R&D,
As guidelines for the future development and tax exemptions for new firms using newly
of these subsectors, each was provided with a developed technology.
quantitative target with respect to growth rates
in output, exports and imports. Incentives for Training
8
REFERENCES (MIDA) and United Nations Industrial
Development Organization (UNIDO).
Chee, P.L. 1986. Small Industry in 1985. Food Processing Industry, Vol. 11.
Malaysia. Kuala Lumpur Berita Part 3. A report on the Medium- and
Publishing Sendirian Berhad. Long-term Industrial Master Plan of
Food Technology Research Centre, MARDI. Malaysia (1986-1995). Kuala Lumpur.
1992. Situation and Outlook of the Ministry of International Trade and Industry.
Malaysian Food Processing Sector. Vol. 1993. Policy and Status of SMIs in
1. Technical Review of MARDI Food Malaysia. Small and Medium Scale
Technology Research Plan. MARDI, Industries Division, Ministry of
Serdang, Selangor. International Trade and Industry (MITI),
Malaysian Industrial Development Authority Malaysia.