Top on the list is shortage of workers, particularly harvesters PETALING JAYA: Oil palm industry players nationwide have made an urgent appeal to the government to effectively address critical issues such as the current severe shortage of workers, burdening cess and taxation, and market access which are eroding the industry’s competitiveness. This appeal is made in a joint-statement by 12 associations – Malaysian Palm Oil Association, Malaysian Estate Owners’ Association, National Association of Smallholders, Sarawak Oil Palm Plantation Owners Association, Palm Oil Millers Association, Palm Oil Refiners Association of Malaysia, Malaysian Oleochemical Manufacturers, Malayan Edible Oil Manufacturers’ Association, the Incorporated Society of Planters, Malayan Agricultural Producers Association, Sabah Employers Consultative Association and Tawau Agricultural Association. Top on the planters’ list is for the government to give priority in resolving the shortage of workers, particularly harvesters in the oil palm estates. This includes the call to consider allowing guest workers, who are currently in their respective countries of origin, to return to Malaysia to work, the statement added. The current freeze on the recruitment of foreign workers due to the Covid-19 pandemic with no new replacements has put the local plantation sector in a tight spot. “If workers are not sufficiently replenished during the peak production season by the middle of this year, the result will be a major production loss with overall national yields coming in below their potential, ” said the associations. Assuming crude palm oil (CPO) and crude palm kernel oil (CPKO) prices of RM3,000 and RM1,800 per tonne, respectively, the associations said the opportunity loss amounts to an estimated RM11.83bil of revenue and profit of RM4.37bil annually. The income tax revenue loss to the government is estimated at RM896mil a year, with average corporate tax rate estimated at 20.5%, as half of profits are earned by SMEs which pay 17% tax rate for the first RM600,000 of profits. Meanwhile, the Malaysian Palm Oil Board (MPOB) cess and other taxes are also burdening the planters. The associations appealed for a review on the present taxation structure which covers the windfall profit levy (WPL), MPOB cess as well as the state sales taxes (SST) in Sabah and Sarawak. “We seek the abolishment of the WPL. “However, if it is not to be abolished, we then seek the government to consider revising the threshold levels – for a start – to RM3,500 and RM4,000 respectively that would have closer semblance to the notion of windfall profit, ” suggested the associations. The current WPL threshold levels are RM2,500 per tonne CPO in Peninsular Malaysia and RM3,000 in Sabah and Sarawak respectively. On the MPOB cess, the industry players appealed that they would not be further burdened with additional cess. The MPOB cess was increased to RM14 per tonne of CPO and CPKO in January 2020 from RM13 previously. It was then further increased to RM16 following the recent gazettement under MPOB Cess (Amendment) Order 2020. Having said that, planters welcome the channeling of RM30mil of the additional cess of RM2 per tonne, which came into force on March 1 this year to support the mechanisation and automation for the oil palm industry. Similarly, the associations have also appealed for a review or abolishment of the SST in Sabah and Sarawak. In Sabah, the state imposes a sales tax of 7.5% on CPO sales when the CPO price exceeds RM1,000 per tonne while in Sarawak, the sales tax on CPO and CPKO is taxed at 5% when the CPO price is above RM1,500 per tonne. “In our calculations, the bigger estates in Sabah and Sarawak paid respectively an estimated 45.9% and 43.2% of their ‘business profits’ to various taxes, substantially due to these sales taxes, ” added the associations. It is estimated that the local oil palm growers contributed an estimated RM5.28bil in taxes, levies and cess to government coffers in 2020, excluding the CPO export duties. With higher CPO prices this year, the association said: “We expect very substantial increases in WPL, SST in Sabah and Sarawak, and income taxes. “Based on our assumptions, the total estimated taxation by the industry for 2021 from income tax, levy, cess and SST, excluding CPO export tax duties, can range from RM7bil to over RM12bil.” On market access, the associations have appealed to the government to expedite and invest more resources and to focus attention on government-to-government (G-2-G) engagements.” The G-2-G should focus on issues such as sustained and increasing anti-palm oil campaigns by Western environmental NGOs, discriminatory trade barriers by foreign governments as well as unrealistic expectations and compliance requirements, and ever-changing sustainability goals and practices.
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