30-day lockdown in plantation sector


KOTA KINABALU: The State government and the oil palm plantation industry have reached an agreement and will roll out a joint approach in mitigating the spread of Covid-19 by implementing a voluntary 30-day lockdown in the plantation sector to facilitate the mass Covid-19 screening of oil palm plantation workers in Sabah, with the aim of containing the spread of the virus.

However, daily plantation operations will continue amid strict compliance with the Covid-19 SOP. It was also highlighted that, upon detecting positive cases, plantations must immediately cease operations to mitigate disease spread. Reopening may be allowed depending on the Health Ministry’s risk assessments.

This was disclosed by the Malaysian Palm Oil Association (MPOA) and the Malaysian Estate Owners Association (MEOA) in a joint statement on Tuesday in reference to the statement by Chief Minister Datuk Seri Hajiji Noor on Monday pertaining to the Covid-19 situation in the plantation sector in Sabah.

Malaysia’s largest palm oil producing state Sabah will not impose a shutdown of plantation operations, the statement said.

“The Sabah State government was wisely able to comprehend that any shutdowns or drastic changes in policies can adversely affect the Sabah palm oil industry, impacting the State’s economy.

“The oil palm planted area in Sabah covers over 1.544 million hectares, involving thousands of planters and tens of thousands of smallholders. The palm oil sector’s mid-stream involves 132 palm oil mills and 12 palm kernel plants, and its downstream 11 refineries – all of which have a considerable multiplier effect on the State’s economy,” it pointed out.

MPOA and MEOA added that if a complete shut-down of the oil palm plantation sector were to be rolled out, Sabah and its people will face significant losses which will have negative social economic consequences.

Crude palm oil (CPO) prices are now hovering favourably at around RM3,500 per tonne and planters will lose the opportunity to recoup their investments from earlier years of depressed prices.

The State itself will also lose out on sales tax collection for its treasury, they said and pointing out that Sabah can potentially produce about 5,000,000 tonnes CPO per year.

“With the prevailing Sabah Sales Tax of 7.5 per cent set against the CPO average price at RM3,500 per tonne for year 2021, the total sales tax collectable for the State coffers can amount to over RM1.3 billion.

“The State can do a great deal for its people, including mitigating the Covid-19 pandemic, particularly in light of the recent hike in positive cases. Correspondingly, planters will forego about RM1.7 billion in CPO and palm kernel revenue in a single month in the event of a complete shutdown; this excludes other spinoffs throughout the supply chain,” MPOA and MEOA stressed.

Both MPOA and MEOA said they welcome the State of Sabah’s recent engagement with the plantation sector for an effective stakeholders’ consultation in addressing the Covid-19 situation.