Palm oil association says 2024 Budget left out two critical requests
15/10/2023 (New Straits Times), Kuala Lumpur - The Malaysian Palm Oil Association (MPOA) is disappointed that the 2024 Budget has ommitted two critical requests which would have acted as key enablers for the industry's growth.
One request was for a comprehensive review of the windfall profit levy on the palm oil industry, and another for tax incentives for intensified replanting of aging oil palm trees.
MPOA represents over 40 per cent of the total planted area of Malaysia. Its membership includes major plantation companies such as Sime Darby Plantation Bhd, FGV Holdings Bhd and Sarawak Oil Palm Bhd.
"(The current windfall profit levy) is a burden on the palm oil sector which operates as a "price taker and not a price maker," Its chief executive Joseph Tek Choon said in a statement on Friday.
The association had asked for the government to revert the levy rate for Sabah and Sarawak to 1.5 per cent from the present 3.0 per cent, as well as raise the threshold for which the levy will be imposed, by RM500-a-tonne.
Such a revision would have raised the threshold to RM3,500 per tonne for growers in Peninsular Malaysia, and RM4,000 per tonne for Sabah and Sarawak.
The review of the rate and threshold on which the levy is imposed, would have been especially helpful to address the disproportinate burden on oil palm growers in Sabah and Sarawak.
On replanting tax support, MPOA said the tax incentive it had requested for would have gone a long way towards the replanting of 560,000 hectares of oil palm trees that will be more than 25 years old by 2027.
"While the 2024 budget had allocated RM100 million for smallholders' replanting assistance in the form of grants and loans, it is anticipated that this will only address a minuscule fraction of the critical replanting needs of the nation," Tek Choon said.
The allocation of RM100 million assistance specifically for 7,000 independent oil palm smallholders would only translate to replanting of between 5,000 to 6,000 hectares of the oil palm hectarage, or 0.9 per cent of old trees.
Tek said the tax support mechanism it suggested included the replanting of oil palms under the present reinvestment allowance which will encourage greater investment by the private sector.
"The funding for replanting would have been sourced from the private sector, although it would result in reduced tax revenue in the short term," he added.-ends-