Budget 2024: Revise windfall levy for Sabah, Sarawak, oil palm growers - MPOA

KUALA LUMPUR: The Malaysian Palm Oil Association (MPOA) had called on the government to revert the rate of the windfall profit levy (WPL) for Sabah and Sarawak to 1.5 per cent in the upcoming Budget 2024 from the current three per cent.

Given the further increase in the cost of production, the association also beseeched the government to revise the WPL price threshold upwards by RM500 per tonne of crude palm oil (CPO) to RM3,500 per tonne for Peninsular Malaysia growers and to RM4,000 per tonne for Sabah and Sarawak growers.

MPOA also called for tax incentives to support large-scale replanting initiatives, recognising its critical role in safeguarding the sector’s future productivity to support its supply chain and sustaining competitiveness.

Its chief executive officer, Joseph Tek Choon Yee, said that while growers carry out replanting programmes annually, larger replanting hectarage must be immediately pursued.

"Accelerated replanting involving the private sector nationwide is imperative to achieve a large area of replanted hectarage to ensure the sustainability of the oil palm sector with uninterrupted support for its supply chain while enhancing productivity with new planting material and better agricultural practices,” he said at the MPOA National Palm Oil Conference 2023 today.

Tek said that the staggering statistics reveal that there are currently 660,000 hectares, or about 11.6 per cent of the country’s total oil palm planted area, with trees at or above 25 years old and overdue for replanting.

He pointed out that by 2027, the aged palm area will grow to 770,000 hectares if the replanting rate continues at less than two per cent of the total planted area a year.

"By 2027, there will be close to two million hectares, constituting 33 per cent of the total planted area, having trees which are 20 years old and above,” he said.

Set against the ageing age profile of the oil palm trees, MPOA has called on the government for replanting tax support to be accorded to the private sector to entice a larger footprint of accelerated replanting.

"We appeal to the government to extend the reinvestment allowance (RA) tax incentive to specifically include the replanting of oil palm and to allow utilisation of RA against the company’s statutory income.

"This calculated move is also a strategic manoeuvre that promises to substantially improve oil palm productivity, boost the nation’s gross domestic product and fortify future tax revenue,” he said.

On the issue of labour, Tek said the association has appealed for the uplifting of the freeze and an increase in the foreign worker recruitment quota for the plantation sector.

He said this adjustment is urgently needed to ensure the continued and sustainable operation of the sector and to address the skills gap among the incoming foreign workforce.

"Swift action in uplifting the quota is imperative to meet the sector’s labour demands and maintain its productivity and competitiveness,” he said.

Finally, MPOA hoped Budget 2024 would include enabling incentives to drive mechanisation in the estates and automation in the mills, particularly for the smallholders and small individual-owned mills.

"At the same time, there should be an appreciation among the policymakers that despite the substantial reduction in the labour deployment in the estates of about 35 per cent over the last 15 years, the estates are still in need of a significant number of foreign workers,” it added. - Reuters

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