Palm planters seek replanting tax incentive

MPOA chief executive Joseph Tek. - AZLINA ABDULLAH/The Star

KUALA LUMPUR: The Malaysian Palm Oil Association (MPOA) has called for government support in the form of a replanting tax incentive in efforts towards addressing the financial barrier to replanting old age palm trees nationwide.

The association is urging for the inclusion of oil palm replanting under the existing reinvestment allowance (RA) scheme and to allow 100% utilisation of RA against the plantation company’s statutory income, said its chief executive Joseph Tek.

MPOA also highlighted that replanting is not merely an expense but a prudent investment in industry productivity, gross domestic product growth and future tax revenue for the government’s coffers.

“Replanting is a reinvestment, a calculated move to fortify our industry’s future and secure uninterrupted supply chains.

“It’s time for a concerted action to ensure the sustainability and prosperity of the Malaysian palm oil sector,” Tek said in a statement issued in conjunction with MPOA’s seminar in Sabah on the imperatives of oil palm replanting.

In Sabah alone, he noted there is an urgent need for accelerated replanting to address the challenge of over 500,000ha of ageing oil palm trees of 20 years old and above.

Furthermore, the absence of effective mechanisation solutions – specifically for cutting bunches for tall palms and collecting loose fruits – compounds the issue, leading to declining yields and crop losses especially in tall palm harvesting scenarios.

Tek also highlighted the paradoxical nature of replanting decisions, whereby immediate financial gains often deter investment in replanting endeavours despite long-term sustainability concerns.

He proposed a strategic replanting approach aligned with the cultivation cycle to ensure a balanced age profile in plantations, mitigating risks and fostering resilience.

“The catch lies in the necessity for sufficient funding to support this well-thought-out replanting programme with financial backing that balances short-term financial gains and the long-term vitality, emphasising the need for foresight and fiscal prudence,” explained Tek.

Meanwhile, Plantation and Commodities Ministry deputy minister Datuk Chan Foong Hin, who officiated MPOA’s seminar in Sabah, said the state saw commendable replanting effort last year with 61,421ha underwent replanting.

This signifies a notable 4% replanting rate per year in Sabah in 2023, which was a significant leap from around 36,218ha in 2022.

According to Malaysian Palm Oil Board (MPOB) data, the replanted area of Sabah represented 47% of total replanting in Malaysia of 131,917ha in 2023, signifying the state’s pivotal role in driving industry rejuvenation.

Chan also urged all industry players to embrace the challenges that lie ahead with ageing and tall oil palm trees with conviction and the willingness to reinvest in accelerated replanting.

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