Tax incentives for forest plantation devt sought

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Dompok (right) shaking hands with Ngu after the meeting yesterday.

KOTA KINABALU: The Plantation Industries and Commodities Ministry will study seriously whether those forest plantation companies which started planting before 2003 can qualify for the tax incentives under the two Gazette Orders, namely Income Tax (Deduction for Investment in an Approved Forest Plantation Project) Rules 2009 and Income Tax (Exemption) (No.10) Order 2009.

Its minister, Tan Sri Bernard Dompok said the ministry would take an urgent note to bring the issue to the Cabinet as soon as possible because the government gazetted these two Gazette Orders in September 2009 although they were deemed to have come into operation on May 21, 2003.

Dompok said his ministry held a meeting with Malaysian Timber Industry, Malaysian Timber Industry Board, Timber Association of Sabah, Sarawak Timber Association, Sabah Timber Industries Association and Forest Management Unit License Holders at Pacific Sutera Harbour yesterday.

“The meeting discussed about the development of tree plantation in Sabah and Sarawak and also about the two Gazette Orders, namely Income Tax (Deduction for Investment in an Approved Forest Plantation Project) Rules 2009 and Income Tax (Exemption) (No.10) Order 2009.

“We want to encourage our tree plantation developers to plant more trees so that our timber industry will be sustainable. During the meeting they wanted the government to reconsider providing the tax incentives for  companies who started planting before 2003 and 2009 under the Gazatte Orders,” he said.

Meanwhile, Sabah Timber Industries Association (STIA) president Datuk James Hwong, in his welcoming speech before the meeting yesterday, said the continuous supply of adequate timber as raw material for furniture and other value-added timber products has been identified as one of the main stumbling blocks to achieving the target export value of RM53 billion under the National Timber Industry Policy (NATIP) by year 2020.

He added that the supply of timber from forest plantation is expected to address the issue of shortage of raw material for the downstream timber industries.

However, he pointed out, this can be fully achieved only if the plantation development is in line with the target set.

“The forest plantation industry in Sabah started way back in 1994, and in Sarawak in 1997. Many forest plantation companies started work upon getting the licences as encouraged by the two State governments but the planning progress had been slow for many reasons, financial burden being the major one.

“Huge funds to set up the infrastructure for the forest plantation development as as well as for operational activities are needed during the planting period and this is exacerbated by the fact that there is no interim income at all during this period as the trees planted can only be harvested after 10 to 15 years, depending on the species of trees planted,” he said.

Hwong added that the tax incentives provided under the Gazatte Orders are exactly the assistance needed by the industry to help boost the development of forest plantations in Sabah and Sarawak although it has come somewhat 10 years late.

He said the timber industry players were appealing to Dompok’s ministry to look into their request for tax incentives for forest plantation development.

“We are putting forward our joint proposals and request to Tan Sri. In this regard, we appeal to Tan Sri to look into our proposals and request pertaining to tax incentives for forest plantation development and to recommend these proposals and request to the Ministers of Finance for implementation,” he said.

Also present at the event yesterday were  chairman of Malaysian Timber Industry Board (MTIB) Datuk Wilfred Madius Tangau, MTIB director general Dr Jalaluddin Harun, Timber Association of Sabah head of delegation Ho Khoy Lim, Sarawak Timber Association chairman Datuk Wong Kie Yik and KTS Trading Area general operations manager Ngu Ngiong Hieng.