KOTA KINABALU: Teck Guan Group (Teck Guan), a major Sabah palm oil producer, has proposed the Federal government to consider abolishing the windfall levy imposed on palm oil producers in Sabah and Sarawak.
Sabah and Sarawak are the largest palm oil producing states in the country.
Teck Guan Executive Chairman, Datuk Hong Ngit Ming especially opined that the imposition of windfall levy on palm oil was, to a large extent, inappropriate and unwise, as it gives the entire world a wrong impression that Malaysian palm oil prices are excessively high, when in actual fact they are ridiculously low, when compared to other cash crops.
“For instance, if palm oil is priced at RM3,600 per ton, to laymen it sounds very high in price. But to specialists like farmers, they know that you need 5 tons of Fresh fruit bunches to produce one ton of palm oil, as such on the fresh fruit basis, the FFB price would be RM720 per ton or RM0.72 per kilogram. When viewed in this context, these prices appear remarkably low when compared to RM13 per kilogram of fresh Mangosteen, RM60 per kilogram of fresh Musang King Durian, or RM1.6 per kilogram of fresh cocoa pods. Please note that we are actually comparing “apple with apple” by converting all units to fresh fruit basis, because the Sun is giving the same amount of organic matter through photosynthesis per square meter per day to oil palm and cocoa or any plant.
“Hence, it’s time for the government to permanently abolish it to relieve the burden on farmers, given the genuinely low palm oil prices they are struggling to cope with,” he said.
He said this in a statement issued today, while responding to Malaysia Plantations and Commodities Ministry’s proposal to reduce windfall levy for palm oil producers in the states of Sabah and Sarawak to 1.5 per cent from 3 per cent.
According to the Bernama news report on Tuesday (Oct 3), citing its Minister Dato’ Fadillah Yusof, the said proposal has been made to the finance ministry as part of Malaysia’s 2024 budget announcement due next week.
Planters in Malaysia, the world’s second-largest producer of palm oil, have for years asked the government to reassess the tax rate and the threshold for the windfall profit tax.
Malaysia imposes a windfall levy of 3 per cent on palm oil prices above RM3,000 (S$871.8) per ton in Peninsular Malaysia and above RM3,500 per ton in Sabah and Sarawak.
Meanwhile, Hong also supported some of the views expressed by Datuk Daud Amatzin, Chairman of the Incorporated Society of Planters in a recent commentary piece, in regards to the effects of windfall profit levy on the palm oil industry, which was published in a prominent national English tabloid.
He agreed with Daud for pointing out that the Windfall Profit Levy Act (validation) 2023 (Act A1683) and the Windfall Profit Levy (oil palm fruit) Order 2023 which was gazetted on Jan 31, 2023, to impose and collect levies on the production of palm fruit effective from Feb 1, 2023, were unfair to the planters, especially when they were not consulted before the bills were passed.
Daud also expressed disappointment on the members of Parliament (MPs), for failing to argue the matter bravely and gave weak representation of this important issue of grave concern.
“The idea of “windfall profit” and what it really means are, at best, vague,” he contended.
Besides this, he also raised questions on how and where the money collected from the windfall profit were spent, all these years.-pr/BNN
