Malaysiakini Letter

MPOA fully supports freeze on export duty and windfall tax

Nageeb Wahab

The Malaysian Palm Oil Association (MPOA) fully supports the initiatives announced by the Ministry of Primary Industries pertaining to the oil palm industry.

The first initiative is to impose an additional RM1 per tonne Crude Palm Oil (CPO) produced as 'Reforestation Cess'. This is to take effect from 1st January 2020.

Second, the ministry is proposing that 50 percent of the windfall profit tax collected by the government to be channelled back to the industry namely as a subsidy to fund the B20 biofuel mandate to be implemented in late 2020.

It is timely that the government shows its commitment to preserving our forests and how serious we are in implementing it.

MPOA also hopes that the government continues to champion the cause of the industry and the plight of its 650,000 smallholders.

The ministry's efforts to get funds to implement the biofuel mandate by requesting the government to allocate 50 percent of the proceeds of the windfall profit tax back to the Industry for the above purpose as well as others.

The industry as a whole is just about to recover from the prolonged low palm oil prices and has suffered in terms of low profits and even losses over a period of time.

To manage this, most have resorted to cutting fertiliser applications notwithstanding the ever-increasing cost of production. 

Coupled with that, the dry spell experienced earlier this year is going to have an effect on yields in 2020. 

The smallholders are basically the group that has suffered the most and shall not be enjoying the better prices as a result.

In this context and for the above reasons, MPOA is of the opinion that the windfall profit tax is to be suspended indefinitely.

This even when prices have surpassed RM2500 per metric tonne beyond that and on a long price recovery trend, if ever the windfall profit tax” is to be retained, the threshold should be increased from RM2500 to RM3000 per mt for Peninsular.

For Sabah and Sarawak, it should be from RM3000 per mt to RM3500 per mt and that the whole proceeds should be channelled back to the Industry and managed collectively solely for the industry needs.

It was also announced that the government will likely continue with the CPO export duty exemption next year to keep commodity prices competitive and the Industry is fully supportive of its implementation.

The current favourable prices have brought a much-needed relief to the industry and better returns to the government in terms of higher corporate tax income should be forthcoming as a reward.

MPOA represents ownership of about two million hectares of oil palm plantation or 40 percent of the planted area in Malaysia 

The writer is the chief executive of the Malaysian Palm Oil Association

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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