KUALA LUMPUR – Budget 2024 failed to meet the aspirations of the palm oil industry, with several key elements from the Malaysian Palm Oil Association’s (MPOA) wish list omitted in the budget proposal.
MPOA chief executive Joseph Tek Choon Yee expressed disappointment that the carefully outlined wish list, containing a set of crucial priorities for the 2024 supply bill, did not find a place in the budget.
Specifically, the association’s call to reevaluate the windfall profit levy and accelerate replanting in the commodity sector was left unaddressed.
“MPOA noted that there was no review of the windfall profit levy (WPL), a burden on the palm oil sector, which operates as a ‘price taker’ and not a ‘price maker’, specifically aimed at alleviating the disproportionate burden on oil palm growers in Sabah and Sarawak,” he said in a statement.
MPOA had previously hoped that Budget 2024 would revert the WPL rate for the East Malaysian states of Sabah and Sarawak back to its original 1.5% from the current 3.0%.
Furthermore, considering the increased cost of production, MPOA called for a revision of the WPL price threshold from RM3,000 to RM3,500 per tonne of CPO for Peninsular Malaysia growers and from RM3,500 to RM4,000 per tonne of CPO for Sabah and Sarawak growers.
However, the budget presented by Prime Minister Datuk Seri Anwar Ibrahim did not address these concerns, Tek said.
“The unanswered budget pleas underscored growing concerns that the industry’s substantial contributions to Malaysia’s economy and its role in addressing contemporary challenges may not have received the requisite attention and support for next year,” he said.
The association had also stressed the urgent need for substantial acceleration or intensified replanting of ageing oil palm trees and advocated for tax incentives to support this initiative.
However, the association did express appreciation for the allocation of RM70 million for efforts to enhance the sustainability of the oil palm industry and is awaiting details on tax incentives for mechanisation and automation.
Additionally, MPOA acknowledged the RM1 billion biodiversity sukuk initiative aimed at exploring carbon credits and tax deductions for conservation and rehabilitation.
While the 2024 budget earmarked RM100 million for smallholders’ replanting assistance in the form of grants and loans, it is anticipated that this will only address a small fraction of the nation’s critical replanting needs, Tek noted.
He said the allocation of RM100 million, specifically for 7,000 independent oil palm smallholders, would only cover the replanting of between 5,000 to 6,000ha of oil palm acreage.
As announced, there will be over 560,000ha of oil palm trees aged over 25 years by 2027. Consequently, the allocation will only meet a meagre 0.9% of the imperative need for replanting old trees, he said.
Tek emphasised that despite these unanswered pleas, MPOA will continue to engage with stakeholders and the government to advocate for the interests of the oil palm sector and seek alignment with broader national priorities.
“MPOA remains undeterred, hopeful that future engagements will yield more favourable outcomes for both the industry and the nation,” he said. – October 13, 2023