MARKET DEVELOPMENT
Sarawak Government Ready To Listen To Planters, Says Jabu
Sarawak Government Ready To Listen To Planters, Says Jabu
16/08/2013 (Bernama) - The Sarawak government is prepared to listen to the views of the local palm oil industry following a recent call by the Sarawak Oil Palm Plantation Owners Association (SOPPOA) for a review of the sales tax structure, said Deputy Chief Minister Tan Sri Alfred Jabu.
He said there was probably legitimate grounds for the industry to make the request as it contributed over RM425 million in sales tax last year.
"We want to encourage healthy development of industries and not stifle their growth," said Jabu who is also Minister of Modernisation and Agriculture.
The minister was speaking to reporters after opening the Sarawak Land Consolidation and Rehabilitation Authority Plantation Development Committee Members' conference here today.
He said the state government was aware that production costs, labour and machinery in the running of these plantations were now higher and was prepared to sit down with industry representatives to consider a possible review.
In calling for a structural review of the sales tax, SOPPOA had said the proposed revision would allow many companies to bridge the difficult financial situation they were currently facing and would result in a win-win situation for the state and nation.
The planters are requesting that no sales tax be imposed when crude palm oil (CPO) prices are below RM2,400 per tonne to offset losses incurred due to the current high production cost.
While the crop was often cited as the golden crop for Malaysia for its contribution to the economy, job creation and food for the people, it also did not foresee any price recovery from the current soft CPO prices in the next six months.
The planter also claimed that out of the 1.1 million hectares of oil palm plantation in the state, over 50 per cent were young growing palms and rising production cost and logistics issues faced in Sarawak further affected the industry as a whole, the planters claimed.
When the Sarawak sales tax was implemented in 1998, the direct cost of production was RM2,170 per hectare compared with the current cost of RM6,220 per hectare, an increase by 187 per cent over the same period, which was brought about mostly by inflation, spiraling fertiliser, wages and diesel costs.
With the current price of CPO dipping below RM2,400 per metric tonne, many plantation companies in Sarawak are paying taxes despite incurring losses.
Many are also paying sales tax out of borrowing from banks, thereby increasing their financial burden and cost of production.
He said there was probably legitimate grounds for the industry to make the request as it contributed over RM425 million in sales tax last year.
"We want to encourage healthy development of industries and not stifle their growth," said Jabu who is also Minister of Modernisation and Agriculture.
The minister was speaking to reporters after opening the Sarawak Land Consolidation and Rehabilitation Authority Plantation Development Committee Members' conference here today.
He said the state government was aware that production costs, labour and machinery in the running of these plantations were now higher and was prepared to sit down with industry representatives to consider a possible review.
In calling for a structural review of the sales tax, SOPPOA had said the proposed revision would allow many companies to bridge the difficult financial situation they were currently facing and would result in a win-win situation for the state and nation.
The planters are requesting that no sales tax be imposed when crude palm oil (CPO) prices are below RM2,400 per tonne to offset losses incurred due to the current high production cost.
While the crop was often cited as the golden crop for Malaysia for its contribution to the economy, job creation and food for the people, it also did not foresee any price recovery from the current soft CPO prices in the next six months.
The planter also claimed that out of the 1.1 million hectares of oil palm plantation in the state, over 50 per cent were young growing palms and rising production cost and logistics issues faced in Sarawak further affected the industry as a whole, the planters claimed.
When the Sarawak sales tax was implemented in 1998, the direct cost of production was RM2,170 per hectare compared with the current cost of RM6,220 per hectare, an increase by 187 per cent over the same period, which was brought about mostly by inflation, spiraling fertiliser, wages and diesel costs.
With the current price of CPO dipping below RM2,400 per metric tonne, many plantation companies in Sarawak are paying taxes despite incurring losses.
Many are also paying sales tax out of borrowing from banks, thereby increasing their financial burden and cost of production.