Agricultural sector has long been a major national economic contributor in Malaysia. Oil palm is by far the most important plantation crop in Malaysia, accounting for 5.0 million hectares in planted area and a production of 18.9 million tonnes of crude palm oil in 2011 (MPOB 2012). At the same time, it also generates large amounts of biomass as empty fruit bunches (EFB), mesocarp fiber (MF), palm kernel shell (PKS), and palm oil mill effluent (POME) from the palm oil mills and pruned oil palm fronds and felled oil palm trunks in the plantations. It was estimated that a total of about 80 million tonnes of dry oil palm biomass was produced in 2010 and is expected to increase to about 100 million tonnes by 2020 (Agensi Inovasi Malaysia 2011).

On current course, most of the solid biomass will remain in the plantations with a small amount being utilized for bioenergy generation. The oil palm biomass could be more efficiently used for the production of higher-value-adding bioenergy, bio­fuels, and bio-based chemicals. The timeline of technology availability for the development of the biomass industry is outlined in Fig. 2.4.

A scenario of utilizing an additional 20 million tonnes of oil palm biomass by 2020 for higher-value uses has the potential of contributing a gross national income (GNI) of additional RM30 billion to the national economy by 2020 (Agensi Inovasi Malaysia 2011). In addition, the National Biomass Strategy 2020 offers Malaysia a way to meet its renewable energy target, reduce emissions (12% CO2e abatement), and create about 66,000 jobs. The strategy also offers an opportunity for Malaysia to build several biofuel and bio-based chemical downstream clusters to ensure the nation benefits from the downstream value creation potential. It also creates addi­tional businesses opportunities in other related industries.

To ensure this opportunity is realized, the government is taking decisive and concerted efforts across ministries and agencies as well as engaging extensively with the private sector to realize these investment opportunities. The government is committed to generating new wealth creation from biomass and making it a reality for the nation with the establishment of 1Malaysia Biomass Alternative Strategy (1MBAS) taskforce as a one stop point of contact for all biomass utilization activi­ties (Agensi Inovasi Malaysia 2012).