Palm oil industry not in the loop on additional cess

PALM oil industry players were taken aback by the government’s decision to impose additional cess of RM2 per tonne of palm products for both crude palm oil and crude palm kernel oil based on the Federal Government gazette dated Feb 15, 2021.

In a joint statement, nine palm oil associations said the new RM16 cess payment will add about RM44 million per year to the Malaysian Palm Oil Board (MPOB) cess coffer.

“According to the document, the MPOB (Cess) Order 2019 was amended after consulting the finance minister.

“Unfortunately, there were no consultative engagements nor any initiative by the government to pursue inclusive discussions with the growers who are the ultimate cess contributors on the additional cess,” the statement read.

With the amendment in place, the associations said all oil palm growers in the country, which consist of smallholders to public-listed plantation companies, will end up collectively contributing an estimated total cess of about RM344 million per year to MPOB.

The associations also highlighted that there were earlier engagements at the end of last year regarding another additional cess, which was proposed to be implemented on Jan 1.

The funds collected under that cess were intended for mechanisation and automation in the palm oil industry under a proposed consortium platform to be named the Mechanisation and Automation Research Consortium of Oil Palm (MARCOP).

The association said MARCOP will function as a neutral body to manage collaborations that are to be intensified through strategic partnerships with the purpose of addressing oil palm mechanisation, especially in harvesting technology.

It stated that the government had approved a matching grant of RM30 million to the mechanisation initiative in Budget 2021 in line with the aim to promote partnership between the government and private sector.

“In light of the gazetted additional cess of RM2 to be collected as per MPOB (Cess) Order (Amendment) 2021, there must not be another additional and new cess for the purpose of MARCOP,” the statement read.

The associations also seek Plantation Industries and Commodities Minister Datuk Dr Mohd Khairuddin Aman Razali’s assistance to approve their proposal for an equivalent RM30 million from the gazetted MPOB (Cess) Order (Amendment) 2021 to be channelled as seed funding to kick- start MARCOP — to be combined with the already approved RM30 million matching grant from the government as announced in Budget 2021.

“The latter matching grant from the government must not be derived from the same pool of MPOB cess funding,” they said.

They also appealed to the government to channel some of its consolidated pool of the windfall profit levy collected from oil palm growers to sustain MARCOP.

The nine associations in the joint press statement are Malaysian Palm Oil Association, Malaysian Estate Owners’ Association, National Association for Smallholders Malaysia, Federation of Palm Oil Millers’ Associations of Malaysia, Sarawak Oil Palm Plantation Owners Association, Palm Oil Refiners Association of Malaysia, Malaysian Oleochemical Manufacturers Group, Malayan Agricultural Producers Association and Incorporated Society of Planters.

Source : The Edge Markets

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