October 20, 2001 (The Star ) - WEST Malaysian Oil Palm Growers’Association president Tan Sri Dr Jesse J.C. Chang has been taken bysurprise by the generous incentives proposed in the Budget 2002 foragriculture companies, especially those in the plantation sector.“We have never been treated this way before. This is wonderful. The waythe government is beefing up the agriculture sector is better than what iscurrently taking place in the US,’’ he said.Chang said that he described the proposed 5-year income tax exemptioncould act as a “buffer” for agriculture players to improve theirproductivity, which would enable them to compete with producers from othercountries in the region.He said the oil palm sector had been experiencing rising costs offertilisers as well as machinery. In the past 10 years, machinery cost hadrisen by 100% and agriculture firms did not receive subsidy, as companiesin the US did, Chang said.He added the tax exemption would help players replace old machinery andbuy more fertilisers.On the RM10mil aid for promoting training of modern agriculture workers,Chang said this would help promote cost-efficiency in plantationoperations.On the 70% tax exemption for companies reinvesting on product-basedresources, Chang said the incentive would encourage players to put theirmoney back into their core operations and support their move to ventureinto downstream activities and the production of value-added foodproducts.

Tan Sri B. Bek-Nielsen“In the case of the oil palm industry, an excellent example is theproduction of vitamin E-rich carotene oil, which is currently awell-accepted product in Malaysia, Singapore and Britain and which isgetting popular for its cancer-fighting properties,’’ he said.UPAM senior executive director Tan Sri B. Bek-Nielsen said the proposedincentives were generous, and would tremendously benefit a broad sectionof the highly diversified agriculture sector.The Budget 2002 has proposed an income tax exemption of 70% or investmenttax allowances of 60% for five years for companies which reinvest in theproduction of resource-based products such as rubber, oil palm and timber.Bek-Nielsen said he expected that some agriculture companies would startexploiting and diversifying into the areas for which the specialincentives and tax allowances were proposed.“This can help to boost the export of new value-added agriculture-basedproducts,’’ Bek-Nielsen said.He said that for example, companies such as UPAM would likely venture intothe production of resource-based products, particularly those that wereoil palm related.In addition, he said, the company would also want to take advantage of theproposed 100% income tax exemption on reinvestment by agriculturecompanies against statutory income for 5 years.Commenting on the proposed RM10mil for training of workers in modernagricultural skills, Bek-Nielsen said this was a good move but the mainproblem of plantation companies was those related to workers.