08/05/2008 (The Edge Daily), Kuala Lumpur - The government will review the price control mechanism under the cooking oil subsidy scheme (COSS) and the 7.5% sales tax on crude palm oil (CPO) imposed by the Sabah government on oil palm plantation owners in the state.

Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said the ministry would be finalising the COSS review, which would be presented to the Cabinet.

“We have met with the estate owners and we have included their views in our study. Given that the (COSS) scheme is meant to be imposed for one year and would end on May 13, we will take the necessary steps to review this scheme,” he said.

Chin was replying to a question by Chua Soon Bui (Tawau-BN) on the CPO cess and the 7.5% tax imposed by the Sabah state government on oil palm estate owners.

COSS was introduced in May last year where a monthly cess is imposed on palm oil producers with plantations of more than 40ha based on the average price of CPO. CPO was then trading at around RM2,700 per tonne.

The cess is levied on planters when CPO price is traded above RM1,500 per tonne. For every RM100 increase in price, industry players were required to pay RM2 per tonne of fresh fruit bunches (FFB) to the Malaysian Palm Oil Board (MPOB).

The cess is used by the government to subsidise palm oil manufacturers. Apart from the cooking oil cess, planters are also required to pay cess of RM4 per tonne of CPO to MPOB for the CPO price stabilisation fund imposed in 2001.

As for the 7.5% tax levied, Chin said the matter was within the jurisdiction of the Sabah government.

“The tax imposed is spent on infrastructure development for the plantation sector (in Sabah) such as preparing the earth works to provide a better transportation system in exporting palm oil from Sabah. Nonetheless, we have discussed this with the state government which is still under consideration,” he said.

Asked on the usage of biodiesel, also called Envodiesel in Malaysia, Chin said: “This is a question of prices of the raw material (refined, bleached and deodorised palm olein). If the raw material is cheap compared to petroleum, then people would still turn to biodiesel anyway, with or without the Biofuel Act.”

“The concern right now is that the price of the raw material is simply too high,” Chin said.