22/03/2013 (Bernama) - The oil palm industry in Sarawak, which has emerged as one of the state's most dynamic industries in terms of employment opportunities, revenue earned, transfer of technologies and downstream development of many related industries, should be viewed positively as a nation builder, Sarawak Oil Palm Plantation Owners Association (SOPPOA) vice chairman Paul Wong said Thursday.

In pointing out the dilemma of the industry in Sarawak, he said it is the country's most "governed" industry with 25 laws/regulations for companies to adhere to when planting oil palm in the state at present.

"One common perception of the industry is that it makes such enormous profits but gives little back. But the bottom line is that there is no indiscriminate planting (of oil palm) in the state and activities are being monitored regularly by the authorities concerned," he said in a statement to Bernama here.

The relevant authorities, he said, include the Labour Department, Department of Environment, Department of Occupational Safety and Health, Health Ministry, Ministry of Plantation Industries and Commodities, Ministry of Land Development, Fire and Rescue Department, municipal authorities as well as the Customs and Excise Department for the collection of taxes.

Government policy states that oil palm can only be planted in designated areas approved by state authorities and the Malaysian Palm Oil Board, the main authority for the industry in Malaysia, he said.

"At the moment oil palm is the only agricultural crop which is taxed before profit as millers and exporters of palm oil are taxed whenever the commodity is sold under the windfall tax, stabilisation fund tax and export duty tax while a further 25 per cent corporate profit tax is levied on companies involved in the industry," he said, adding that SOPPOA is, however, grateful that the government has now allowed the foreign worker levy to be paid by the workers and exempted the estates from the health insurance scheme.

The estates have also eased the burden on the workers by giving them incentives to offset the extra burden of the levy charges while providing medical and other healthcare benefits in times of need, he said.

Due to the current shortage of workers, Wong said, the industry needs to recruit foreign workers, which is a major concern for companies as many producers are now emerging from other countries other than Indonesia, such as India, South Africa, South America and other Asia Pacific nations, which would make sourcing for labour even harder.

He said a huge investment capital is also needed for a start-up before any profit is made as land acquisition is a costly feature of any venture even if the land has been converted from other agricultural practices like rubber, cocoa or rice.

"Next is clearing of the land which can be as high as RM10,000-RM15,000 per ha., depending on locality and nature of land, preparation of the plots, and in peat areas, proper water control facilities which can cost around RM14,000 for the infrastructure facilities needed.

"A nursery for the young palm seedlings, maintenance and upkeep as well as fertilisers cost around RM8,000 per ha. apart from the cost of buying these seedlings," he said, adding that these activities could one to three years with massive capital input but no revenue being earned yet.

It can cost up to RM22,000 per ha. to clear, plant and maintain the young palms until maturity, he said.

He said only in the seventh year, with proper maintenance and upkeep, could a yield of around 22 tonnes of A grade fresh fruit bunches (FFBs) be obtained, which at RM380 per tonne against RM273 for maintenance and RM80 for harvesters would result in a net gain of RM27 per tonne, he said.

These calculations are based on average yields, fixed CPO prices and no rise in costs of other expenditures like fertilisers, labour and taxes, he said.

He also lamented the "reality distortions" by non-governmental organisations and others that the industry is destructive and environmentally unfriendly.

"It is most absurd to believe that our local investors would pour in millions of ringgit into the industry to destroy the land and environment for an agricultural crop that has a life span of over 25 years and which can be perpetually replanted," he said, adding that logic dictates that one does not kill the 'goose that lays the golden egg' but to nurture and grow the venture for the foreseeable future.

Last year, oil palm accounted for 57.3 per cent of Malaysia's commodity and commodity products exports of RM73.3 billion