New palm oil cess damages economic recovery – Yong
KOTA KINABALU: Hitting the palm oil industry with an additional cess of RM2 per ton of crude palm oil and palm kernel oil is damaging the economic recovery of the country, especially oil palm producing states like Sabah, said Sabah Progressive Party (SAPP) president Datuk Yong Teck Lee.
The new RM2 cess, effective on February 15, is on top of the RM14 (per ton of palm oil) that has been enforced ever since January 2020.
“The current spike in CPO prices is caused by a combination of lower production and global economic recovery. The current good prices of CPO is not as rosy as it seems on the surface. It is common knowledge that many plantations are not able to fully harvest their fruits (fresh fruit bunches) due to problems of foreign labour,” said Yong in a statement yesterday.
“As such, even though the rise in CPO prices is a welcome break for the palm oil industry, the current prices is not as profitable as what a tax collector might assume. After all, the palm oil industry is still at the early stages of recovering from the economic gloom caused by the Covid-19 pandemic.
“I notice that each time that the oil palm sector is beginning to recover, the government will impose new taxes. Other than windfall tax, the palm oil industry had been hit with a new cooking oil subsidy that the oil palm industry is forced to bear on behalf of the whole nation in 2008,” said the nominated assemblyman.
“How about the pharmaceutical sector benefitting from Covid-19?
It is also common knowledge that some big pharmaceutical companies are making good profits and laughing all the way to the bank, every day of the last one year.”
Yong said if the government is looking for new revenues by way of windfall taxes, then one sector that has been raking in billions is the pharmaceutical industry and the Covid-19 tests companies, including the companies that handle the Covid-19 vaccines.
Oil palm growers in the country were taken by surprise by the move of the Malaysian government to increase yet again the tax burden on the palm oil sector.
In a recent joint statement, the stakeholders of the industry pointed out that the Malaysian palm oil sector has been saddled over the years by corporate tax, windfall profit levy, cesses and State sales tax imposed by the respective state governments of Sabah and Sarawak.
Some taxation is based on revenue rather than profits. The reality today is that the plantation sector as a whole is just recovering from the prolonged low CPO prices of previous years, and has earlier suffered in terms of prolonged low profitability or even losses over a period of time against unabated cost increases, they said.
CPO prices set against costs, including taxes will translate to realised margins, said the statement jointly issued by the Malaysian Palm Oil Association (MPOA), Malaysian Estate Owners’ Association (MEOA), National Association of Smallholders (NASH), Palm Oil Millers Association (POMA), Sarawak Oil Palm Plantation Owners Association (SOPPOA), Palm Oil Refiners Association of Malaysia (PORAM), Malaysian Oleochemical Manufacturers (MOMG), Malayan Agricultural Producers Association (MAPA) and Incorporated Society of Planters (ISP).
“Rubbing salt into the wound, the plantation sector continues to incur crop losses on the trees and in the fields due to an increasingly acute shortage of workers. It is a lose-lose situation for the growers and the country as a whole, including loss of substantial revenue to the government’s coffers, comprising income taxes, levies and cesses.
“The oil palm industry is a longhaul business and the growers are today just recouping their investments while needing to reinvest in order to remain competitive and sustainable,” they stressed.