Planters to urge Govt to repeal windfall levy

KUALA LUMPUR: The Malaysian Palm Oil Association (MPOA), which represents the country’s plantation industry, will appeal to the Government to consider repealing the Windfall Profit Levy Act 1998.

Vice-chairman Boon Weng Siew said: “Our members consider the Act as a form of double taxation on planters as well as a deterrent to local and foreign investments in the stock market.”

“We feel that the Act is unfair especially when most estate owners are facing high costs of production due to high fertiliser prices,” he told StarBiz after chairing the MPOA AGM yesterday.

Citing new oil palm plantations in Sarawak, Boon said it was ironic to see plantations that were not even paying income tax having to pay windfall tax “when they are making losses due to high capital cost and low yields.”

Despite the rise in crude palm oil (CPO) threshold price for collection of the windfall profit tax under the recent mini budget, he maintained that the system “is flawed and unfair to new plantations or those undertaking replanting activities.”

For planters in Peninsular Malaysia, the CPO threshold price was raised to RM2,500 per tonne from RM2,000 and RM3,000 for those in Sabah and Sarawak.

From July to September 2008, MPOA estimated that about RM260mil of windfall profit tax was collected from oil palm plantation players by the Government given the surge in CPO prices to a record RM4,486 per tonne.

Boon expects estate owners in the peninsula to start paying windfall tax from this month onwards as the average CPO price would reach RM2,500 per tonne and above.

Meanwhile, MPOA chief executive Datuk Mamat Salleh warned local industry players of the latest palm oil market challenge given the “unfavourable” default in green house gases (GHG) emission figures for palm oil.

He said the application of GHG emission criteria especially in the European Union in terms of carbon stock, carbon emission and climate change GHG could adversely affect new oil palm developments especially on forest and peat land.

“While the GHG emission criteria may have limited effects on the use of palm oil as biofuel, MPOA is concerned when the criteria are extended to food since the export of local palm oil is mainly for food use,” added Mamat.

On the country’s biofuel programme, he said: “This should be implemented as an integrated project by the Government under the automatic pricing mechanism for the fuel supply to the domestic fuel market.”

He said the palm oil sector should not be looked upon as the “only” source to cross subsidise the fuel sector. To date, some RM200mil allocation from Malaysian Palm Oil Board’s Palm Oil Price Stabilisation Fund has been used to subsidise the biofuel programme. For latest Bursa Malaysia indices, charts and other information click here

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