Smallholders set to gain from incentives

Going auto: The budget has proposed a matching grant of RM30mil for investment in the mechanisation and automation in the plantation sector.

PETALING JAYA: The Budget 2021 proposals for the commodities sector are mostly skewed towards enhancing the welfare of the smallholders nationwide.

According to Malaysian Palm Oil Board (MPOB) director-general Ahmad Parveez Ghulam Kadir, (pic below) the overall RM50mil incentives would help to ensure the sustainability and the competitive edge of the local palm oil industry.

On the proposed RM20mil allocation for the implementation of the Malaysian Sustainable Palm Oil (MSPO) certification, he said this is aimed at assisting the oil palm industry players particularly smallholders to expedite their MSPO certification with “the government to bear the full cost (of certification) for them.”

The MSPO certification is mandatory for all oil palm planters with operations in Malaysia.

The big plantation players with deep pockets have no issues with the certification but for smallholders, the costly MSPO certification has been a big burden for them to undertake.

Budget 2021 has also proposed a matching grant of RM30mil for investment in the mechanisation and automation in the plantation sector.

Parveez noted that “this will be a good incentive for the local industry players to implement mechanisation to enhance their respective estates’ operation.”

On the provision of special incentives of 60% of monthly salary – with 40% is channeled directly to employers and 20% to local employees – within six months of hiring, this will help to encourage the participation of locals in the sector. Penjana Kerjaya should be well utilised by the oil palm sector to reduce the current severe labour shortage situation.

Meanwhile, industry consultant MR Chandran fully welcomed the allocations for the commodities sectors under Budget 2021.

For the rubber sector, the government has proposed for an increase in rubber latex production with incentives amounting to RM16mil.

In addition, a RM300mil rubber production incentive has been allocated for rubber smallholders affected by the current low rubber prices.

Chandran noted that “increasing the latex production is imperative to meet the local demand of the rubber gloves and latex-dip manufacturing industries.”

This is given the large volume of latex currently being imported by local glove companies from neighbouring countries, he said.

“Both the RM300mil incentives for rubber smallholders and RM16mil to enhance latex production will go a long way to reduce imports, if efficiently implemented, ” he added.

Under Budget 2021, the government is also proposing a RM500mil revolving fund for forest farming development.

“This certainly sends out a positive message to all the critics pertaining to the alleged deforestation in Malaysia.

“The conservation and rejuvenation of degraded forests is critical to conserve wildlife and biodiversity because they constitute our most precious wealth and are an important constituent of the various food chains and food webs, ” explained Chandran.

On the other hand, several plantation associations were disappointed that their proposals were not considered by Budget 2021.

One major proposal that was discounted by Budget 2021 was a rescind or a revision of the planters’ windfall profit levy (WPL).

“It is quite odd that this WPL has not been implemented on other industries, which have also made huge profits, ” stressed Chandran.

The WPL is paid by oil palm plantations when the CPO prices move above RM2,500 per tonne for Peninsular Malaysia and RM3,000 per tonne for Sabah and Sarawak.

“Over the past 20 years, the CPO prices have fluctuated from a high of RM3,000 per tonne to a low of RM1,200 per tonne.

“During the low price regime, both big and medium-sized plantations and smallholders have been incurring losses, ” he said, adding that planters also are facing labour shortage that leads to crop losses and this is affecting their profitability.

Over the past 20 years, the cost of production to produce per tonne of CPO has also increased substantially.

Therefore, it was proposed that the WPL be abolished so as to assist plantations and smallholders during these challenging times, added Chandran.

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