14/07/2008 (Bernama), Putrajaya -- The Ministry of Finance is expected to collect RM2.3 billion in windfall profit levy from oil palm estate owners in the next 12 months.

Minister of Plantation Industries and Commodities Datuk Peter Chin Fah Kui Monday said the figure was based on the production of 17 million tonnes of crude palm oil (CPO) at an average price of RM3,500 per tonne.

Out of the total collection, Chin said RM1.5 billion is expected to be collected from production in Semenanjung Malaysia and RM0.8 billion from Sabah and Sarawak.

He said RM1.9 billion of the collection is expected to be paid out by the Finance Ministry to the Malaysian Palm Oil Board as subsidy for cooking oil for the period.

Chin said the estimated subsidy was based on the assumption that Malaysians will be using 70,000 tonnes of cooking oil per month at the average refined bleached deodorized palm olein price of RM2,300 a tonne for the next 12 months.

"The ceiling price for cooking oil has been fixed since 1997 for household use at RM2.50 per packet or bottle of one kg.

"This ceiling price is so much lower than the retail prices in neighbouring countries. For example, the retail price in Indonesia is RM3.60 per kg, RM4.27 in the Philippines, RM4.76 in Thailand and RM6.80 in Singapore," Chin pointed out.

He was speaking at a press conference to explain the windfall profit levy. There have been uncertainties among smallholders who were not clear with the announcement made by the Finance Ministry on the levy recently.

Last Friday, Second Finance Minister Tan Sri Nor Mohamed Yakcop announced that effective July 15, oil palm smallholders with plantations of 100 acres and below are exempted from paying windfall profit levy.

Chin said the balance of RM400 million from the windfall profit levy collection is likely to be used for other food subsidy by the government.

The windfall profit levy on CPO and crude palm kernel oil (CPKO) was to replace the cess collected under the Cooking Oil Stabilisation Scheme (COSS).

Under the COSS, Chin said the government had collected RM1.37 billion in the form of the special cess from oil palm planters between June 2007 and April 2008.

Starting Tuesday, some 126,423 independent smallholders and 50,000 smallholders under the Federal Land Development Authority (Felda), Federal Land Consolidation and Rehabilitation Authority (Felcra) and Rubber Industry Smallholders Development Authority (Risda) schemes will be exempted from paying the windfall profit levy.

"With this decision, the ministry hopes that the smallholders will work at increasing their productivity so that the government's aspiration to eradicate rural poverty can be realised," Chin said.

Chin also warned palm oil millers to stop deducting windfall profit levy as the Royal Customs and Excise Department, under the Ministry of Finance, will directly collect it at the plantation level based on the output of fresh fruit bunches.

He said if they continued to collect the levy from smallholders they will be investigated and brought to the court.

"We will also take action on their license. We will monitor the situation so that there is no misappropriation at the mill level."

Whether a refund is possible for smallholders that have paid windfall profit levy in the last two weeks, Chin said it will be up to the Finance Ministry, adding some smallholders have submitted their appeals.

Chin also said a rational attitude and behaviour among traders and users was important to avoid a repeat of the cooking oil supply crisis.

Both hoarding and excessive purchase of cooking oil could result in a supply crisis for subsidised cooking oil, he said.