KUCHING, Sept 13: The Malaysian Palm Oil Association (MPOA) has proposed the federal government revert the rate of windfall profit levy (WPL) for the oil palm plantation sector in Sabah and Sarawak from 3 per cent back to the original 1.5 per cent under the upcoming 2023 Budget.
MPOA chief executive Joseph Tek Choon Yee said following the association’s call to review the WPL in the previous 2022 Budget, the government has raised in the threshold of the WPL from RM2,500 to RM3,000 per metric tonne (pmt) of crude palm oil (CPO) for Peninsular Malaysia, and from RM3,000 to RM3,500 pmt CPO for Sabah and Sarawak, effective Jan 1, 2022.
However, the levy rate in Sabah and Sarawak was changed to align with that in Peninsular Malaysia at 3 per cent.
“While the plantation industry welcomed the RM500 pmt CPO raise in the threshold at that point of time, oil palm growers from Sabah and Sarawak fittingly ‘cried foul’ over what they deemed to be the unjust doubling up of the WPL rate from 1.5 per cent to 3 per cent under the intended ‘realignment’.
“The earlier 1.5 per cent WPL rate has been in place because Sarawak and Sabah growers also have to contend with State CPO sales tax of 5 per cent and 7.5 per cent respectively.
“The government needs to appreciate the struggles by the planters in Sarawak and Sabah that their cost of production is 15 to 20 per cent higher than in Peninsular Malaysia due to higher transportation and all input costs.
“In particular Sarawak, where many (sic) land planted with oil palm are in marginal soils, lower fresh fruit bunches yield and lower oil extraction rates are realised,” Tek said in a statement today.
In view of the further increase in the cost of production in 2022, MPOA also would further beseech the government for another revision of the WPL threshold by RM500 per metric tonne CPO from RM3,000 to RM3,500 pmt CPO for Peninsular Malaysia, and from RM3,500 to RM4,000 per metric tonne CPO for Sabah and Sarawak.
The WPL rate was among five budgetary items proposed in MPOA’s wish-list for Malaysian oil palm industry in the upcoming 2023 Budget.
MPOA also proposed that the government avails direct tax relief or incentives to cover the expenditures incurred by industry players in initiating recruitment programmes and awareness campaigns at the approved source countries to expedite the recruitment process of foreign workers.
This includes imploring upon the government to regulate and impose a fair cap and limit the total charges by the agents on employers.
Next, MPOA also proposed for a waiver or reduction of import duties or tax relief on selected heavy machinery and equipment used in the plantation sector for a specified period, apart from providing government grants to enable plantation companies to acquire critical types of machinery for their operations in the absence of sufficient workers.
At the same time, MPOA proposed that the government waive the 7-year limit on carrying forward of unabsorbed business losses, and to revise and extend the Reinvestment Allowance (RA) for the plantation sector for up to 12 years after declaring maturity.
“The plantation business is a long-haul business in nature, whereby ROI (return on investment) can take up to 15 or more years for plantation companies to break even with the oil palm planting cycle of about 25 years.
“The extension would give ‘the late comers’ to the industry, especially planters in Sarawak and Sabah, a fair playing field compared to the long-established companies in the peninsula to break even and generate profitability from their ventures,” Tek explained.
The last item in MPOA’s wishlist is the setting up of a green revolving fund worth RM500 million for the oil palm plantation sector.
“The capital pool shall provide very low-interest funding for green initiatives for plantation companies especially small and medium-sized players and will be replenishable (revolving), thus allowing for reinvestment in other future projects,” he emphasised. — DayakDaily
