Johari suggests reinvesting windfall tax in oil palm replanting
02/07/2024 (Free Malaysia Today), Kuala Lumpur - Plantation and commodities minister Johari Ghani has proposed that the windfall tax derived from the country’s palm oil industry be channelled back to oil palm growers for replanting.
Johari told the Dewan Rakyat today that the formula used to calculate windfall tax in the palm oil industry was no longer relevant due to the high costs incurred for each metric tonne of palm oil produced.
“Previously, the cost of producing one metric tonne of palm oil was RM1,800; today, it ranges from RM2,800 to RM3,200 depending on size,” he said.
“The windfall tax formula when costs were RM1,800 might have been appropriate, but now with costs ranging from RM2,800 to RM3,200, it may no longer be suitable.
“We will work with the Malaysian Palm Oil Board to review the tax to ensure that every ringgit we collect is returned to the planters for replanting,” he said, adding that he would also raise the matter with the finance ministry.
He was responding to a question by Bakri Jamaluddin (PN-Tangga Batu) about whether the ministry was willing to return windfall tax collections to palm oil industry players.
In the budget for 2022, the government revised the windfall tax for local palm oil producers to a standard 3% levy when crude palm oil (CPO) prices exceeded RM3,000 per tonne in Peninsular Malaysia and surpassed RM3,500 per tonne in Sabah and Sarawak – the largest palm oil producing states in the country.
This was a revision from the previous rates of 3% once CPO prices hit RM2,500 per tonne and above for peninsula-based planters and 1.5% for planters in Sabah and Sarawak when CPO prices hit RM3,000 per tonne and above.
Industry players previously expressed concern about the windfall tax as their costs had increased to nearly RM3,000 per metric tonne.