Joseph Tek Choon Yee
Chief executive officer
Malaysian Palm Oil Association (MPOA)
MPOA welcomes the allocation of RM70mil for the campaign to increase the level of sustainability of the oil palm industry. The association awaits the details on tax incentives for mechanisation and automation for the commodity sector.
Additionally, MPOA acknowledges the RM1bil biodiversity sukuk initiative aimed at exploring carbon credit and tax deductions for conservation and rehabilitation with a focus on tree planting.
However, MPOA’s call for review of the windfall profit levy (WPL) was not included in the budget. This is a burden on the palm oil sector which operates as a “price taker and not a price maker.”
The association has previously urged the government to take recognisance of the state sales taxes where the current levy rate disproportionately burdens the oil palm growers and therefore the need to revert the rate of the WPL for Sabah and Sarawak to 1.5% from the present 3%.
In view of the increased in the cost of production, MPOA had highlighted to the government about a revision of the WPL price threshold by RM500 per tonne crude palm oil (CPO) from RM3,000 to RM3,500 per tonne for growers in Peninsular Malaysia, and from RM3,500 to RM4,000 per tonne for Sabah and Sarawak.
While the budget had allocated RM100mil for smallholders’ replanting assistance, it is anticipated that this will only address a small fraction of the critical replanting needs of the nation.
The allocation for 7,000 independent oil palm smallholders would only translate to replanting of between 5,000ha and 6,000ha.
There will be more than 560,000ha of oil palm trees of above 25 years of age by 2027.
MPOA has urged the government to provide replanting tax support to the private sector. This mechanism includes the replanting of oil palms under the present reinvestment allowance which will encouraging greater investment by the private sector. The funding for replanting would have been sourced from the private sector although it would translate into reduced tax revenue in the short term.