Getting to grips with the labour shortage problem

  • Commodities Premium
  • Saturday, 02 Feb 2019

BELOW are excerpts from the exclusive interview with Primary Industries Minister Teresa Kok:

The labour shortage is one of the most important issues confronting the oil palm industry, leading to annual crop losses. Is there a plan to establish a long-term policy on migrant labour, specifically for the sector?

My ministry will continue to work with the relevant ministries such as the Human Resources Ministry and Home Ministry. Most recently, I jointly conducted a dialogue session with Human Resources Minister M. Kulasegaran and the stakeholders to address the foreign worker issue, expedite the recruitment process and facilitate the industries in hiring foreign workers.

When I first took office, the labour shortage in the plantation sector was about 50,000 workers. But it has now come down sharply to about 15,000 workers, according to statistics from the Malaysian Palm Oil Association. Thanks to my constant meetings with the stakeholders and relevant ministries, the results are already showing.

Apart from this, my ministry will continuously encourage research and development in the palm oil sector to explore other alternative harvesting techniques, particularly through the use of robotics and state-of-the-art technology.

The government will also incentivise smallholders and plantation companies through grants and tax incentives to encourage mechanisation in the estates.

The recent freeze on new oil palm acreage expansion in Malaysia has so far received mixed views. What are your views on this?

Land and forest are under the purview of state governments. As such, it is important that the ministry works hand-in-hand with the state governments on issues relating to new land development for oil palm cultivation from forest and peat land. Yes, my ministry is proposing to put a limit on new land development for palm oil cultivation, especially from permanent forests.

A limit of 6.5 million hectares is currently being studied. However, land belonging to smallholders including native customary rights land will still be allowed as “the last frontier for cultivation”. New planting from the conversion of existing agriculture land will still be allowed.

However, I think planters should start to think out of the box to plant other crops apart from oil palm. In the rural areas of Sabah and Sarawak, smallholders are mostly dependent on the middlemen, who collect the fresh fruit bunches to be sent to palm oil mills. At times, these middlemen tend to exploit these smallholders. Hence, I believe smallholders with smaller holdings between five ha and 10ha should consider venturing into other potential commercial crops such as coconut, bamboo and agarwood.

The ministry will also continue to focus and increase the value of other commodities such as rubber, cocoa, timber, pepper and kenaf.

Will the government consider reducing some high cess payments, levies and sales taxes, including the corporate tax, for planters this year?

This matter is being studied carefully, as it will have revenue implications on the government and affect taxpayers, including the smallholders. My ministry has initiated discussions with the Finance Ministry and stakeholders for a review of the existing tax structure. Bear in mind that there is specific tax fixed by the state governments such as the sales tax on crude plam oil or CPO in Sabah at 7.5% and Sarawak at 5%, as well as the local council. This is beyond the federal government’s jurisdiction.

However, there will be ongoing discussions between my ministry and the respective state authorities for their consideration.

In Malaysia, oil palm growers are subject to taxes and levies, which include the Malaysian Palm Oil Board (MPOB) cess of RM11 per tonne for CPO and crude palm kernel oil (CPKO), the MPOB price stabilisation cess of RM2 per tonne for CPO and CPKO, a windfall profit tax of 3% when the prices exceed RM2,500 per tonne in Peninsular Malaysia and 1.5% when CPO prices exceed RM3,000 per tonne in Sabah and Sarawak, and the prevailing corporate income tax of around 24%.

Will the smallholders nationwide be able to meet the mandatory Malaysian Sustainable Palm Oil (MSPO) certification deadline by the end of this year?

The government is committed in getting 100% of the plantation players and smallholders to implement the MSPO by the end of this year via vigorous efforts by the MPOB and the Malaysian Palm Oil Certification Council.

The MSPO Standard requires compliance with Good Agricultural Practices (GAP) and Occupational Safety & Health regulations besides the legality of land tenure and knowledge on social concerns and environmental issues.

By implementing GAP diligently, smallholders will be able to improve their productivity and also improve the quality of their produce. This will eventually enhance their income and help offset the cost to maintain the MSPO certification status.

The MPOB is also organising independent smallholders into “sustainable palm oil clusters” to reach out and provide technical support to expedite MSPO certification.

To expedite the implementation, the government has provided incentives of RM135 per hectare to independent smallholders to cover the cost of training, auditing, personal protective equipment and chemical storage facilities, while organised smallholders under Felcra and Risda are given RM10 per ha.

As of December last year, 22% of the total oil palm area had obtained the MSPO certification countrywide. I believe that if the MSPO is implemented effectively, it would enhance the image of our palm oil worldwide. This will also provide a stronger footing for Malaysia to counter the anti-palm oil campaigns in the European Union.

For the calendar year 2019, what is your estimate for the revenue from palm and palm products compared to last year? What are the reasons for your projection?

The total export revenue for palm and palm products this year is projected to reach RM75bil, up 10.7% against the estimated RM67.74bil earned last year. The forecast is in line with the expected increase in the palm oil export volume coupled with the expected firmer CPO price in the global market and improvement in palm oil stock levels.

I believe that industry players should also take the risk and venture into diversified and niche business activities to increase their profitability through higher value-added products. Some of the value-added businesses to be further enhanced include oleochemical finished products, biomass, biodiesel, food and phytonutrients.

The Pakatan Harapan government will continue to provide incentives under the 11th Malaysia Plan (2016-2020).

As such, industries are encouraged to seize this opportunity.

Compiled by Zunaira Saieed

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