25/03/2008 (The Star Online), Petaling Jaya - The oil palm industry is pushing hard to abolish the special cess on oil palm plantation estate owners to subsidise the price of cooking oil imposed in June 2007 and also the cess on crude palm oil (CPO) price stabilisation fund imposed in 2001.

A closed-door meeting is believed to have taken place yesterday between the Malaysian Estate Owners' Association and Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui to discuss the cess issues at length.

The cooking oil price stabilisation scheme, introduced in May 2007, is due for revision by the end of May this year.

Industry consultant and former Malaysian Palm Oil Association chief executive officer M.R. Chandran said: “Industry players must do away with the subsidy mentality and learn to fully adopt the free market.”

On the special cess, he said it was not fair for oil palm players to continue subsidising cooking oil refiners and packers for a longer period, given the high CPO prices.

“Many plantation companies with low CPO yield are feeling the pinch paying the special cess. In addition to the two existing cess, they need to pay to the Malaysian Palm Oil Board (MPOB),” he told StarBiz.

The Government imposed a special cess on owners of palm oil estates covering more than 40.46ha in June 2007 to help subsidise the price of cooking oil due to the high CPO price, which was then trading at RM2,750 a tonne.

The MPOB collects a special cess of RM2 per tonne of fresh fruit bunches for every RM100 per tonne increase in the CPO price – as long as the price stays above RM1,500 a tonne.

From June 1, 2007 till May 31, 2008, palm oil estate owners are expected to contribute some RM661.2mil in taxes to compensate for the losses of refiners and packers.

About 55% of the palm oil industry fraternity, or 4,100 oil palm estates nationwide, were involved in funding 90% of the subsidy promised to the cooking oil refining industry from the imposition of the special cess.

Chandran believes that Malaysia should no longer have a controlled price of about RM2.50 per kilo for cooking oil when it is sold for much higher at about RM4 to RM5 per kilo in Thailand and about RM8 per kilo in Singapore.

Apart from the special cess, oil palm planters are required to pay cess of about RM4 per tonne of CPO to MPOB for the CPO price stabilisation fund imposed in 2001 when the commodity fell below RM600 per tonne.

“There is no justification for paying this cess (CPO price stabilisation fund) especially when the CPO price is trading above RM3,300 per tonne,” he said.

For the past 20 years, oil palm industry players have been paying cess of about RM11 per tonne of CPO to MPOB for its research works.