Sabah oil palm players could lose Rm860mil from closure of estates and mills

PETALING JAYA: Sabah will likely suffer a loss of revenue of about Rm860mil from the one-month closure of its oil palm estates and mills due to the Covid-19 lockdown, warn two major oil palm associations.

This will also result in a loss of about 7.5% or Rm57mil in sales tax revenue to the government.

This could actually be used to support the fight to contain the coronavirus outbreak.

The Malaysian Palm Oil Association (MPOA) and the Malaysian Estate Owners Association (MEOA) said this in a joint-statement in response to an announcement by Sabah chief minister, Datuk Seri Mohd Shafie Apdal, on the closure of estate and mill operations in an additional three districts - Kudat, Sandakan and the west coast - in the state.

Last week, oil palm estates in Tawau, Lahad Datu and Kinabatangan were told to temporarily close their operations for seven days.

The mills there, meanwhile, were to be closed for five days after several workers had tested positive for Covid-19.

This brings the total areas affected in Sabah so far to about 65% of the total planted hectarage of 1.2 million ha and 75% of total production in Sabah involving about 100,000 workers.

According to the MPOA and MEOA, the industry fully supports and understands the state government’s concerns on the rising trend of Covid-19 incidents in Sabah, as well as the measures taken to save lives.

However, the industry is most concerned about two aspects primarily.

These are the social impact of the closure decision, as well as the resulting consequential damage to the industry, added the associations.

The closure will result in idle workers being conformed to their homes for long hours without practising social distancing and living in close proximity that can lead to contact with the virus.

There will be difficulty in stopping these workers – who number about 50,000 – from leaving, and the possibility of them wandering around posing a security and crime threat as well as defeating the objective of the movement control order (MCO) will be present.

Further, there is also the risk of losing workers in the estates and mills, as many of them will leave in search of other jobs or return to their home country for good in search of better opportunities in the face of increasingly trying times.

Also, the resumption and normalisation of operations when allowed, will pose a big challenge to the industry without the required workers available.

Extended harvesting rounds, high free fatty acids and default palm oil contracts are some of the examples of the immediate impact to operations.

Furthermore, the industry has given its commitment to support the government in its battle to contain the spread by introducing and adhering to radical and robust guidelines and SOPS at all their estates and mills.

Also included in the planters’ action is the “voluntary lockdown”. This is where the industry players are agreeable to a temporary closure of their operating units that have employees affected by the Covid-19, and taking the necessary measures to cleanse and disinfect the affected premises.

Therefore, the MEOA and MPOA strongly appeal to the Sabah state government to reconsider its decision and allow planters to resume only for the essential and critical operations such as harvesting and crop evacuation, as well as milling during the MCO.