MPOA proposes five budget wishes for industry’s competitiveness

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Joseph Tek

KUALA LUMPUR (Sept 13): The Malaysian Palm Oil Association (MPOA) has proposed five items as its Budget 2023 wishlist to support the competitiveness and sustainability of the Malaysian oil palm industry as it transits to recovery mode in the Covid-19 endemic phase.

Its chief executive Joseph Tek Choon Yee said the wishlist addresses the budgetary operational enablers in terms of labour and mechanisation imperatives, a review of the windfall profit levy and reinvestment allowance, as well as a proposed sustainability financing initiative with a green revolving fund specifically for the plantation sector.

“We would like the government to help facilitate and ascertain the plantation companies to comply with the International Labour Organisation standards on migrants’ workers’ recruitment.

“We wish to propose that the government avails direct tax relief or incentives to cover the expenditures incurred by industry players in initiating recruitment programmes and awareness campaigns at the approved source countries to expedite the recruitment process of foreign workers,” he said in a statement yesterday.

He said the plantation companies would have the option to individually embark on this initiative, or in joint efforts with other players in conducting the recruitment campaigns at the source countries.

Tek said the association has also implored the government to regulate and impose a fair cap and limit the total charges by agents to employers.

At present, some recruitment agents are charging high fees for their services, he said, adding that to date, no agency or ministry has developed guidelines or regulations pertaining to these charges.

Recently, MPOA forecast that Malaysia may likely end this year with lower total crude palm oil (CPO) production at 18 million tonnes amid its current labour crunch and other downside factors.

This will mean three consecutive years of no growth in CPO production in Malaysia.

The MPOA also proposed that the government grants a waiver/reduction of import duties/tax relief on selected heavy machinery and equipment that are used in the plantation sector for a specified period.

“Grants via financial institutions can also be made available to eligible plantation companies to enable them to acquire the critical types of machinery for their operations in the absence of sufficient workers,” he said.

For the third proposal, the association proposed the government revert the rate of the windfall profit levy (WPL) for Sabah and Sarawak from 3.0 per cent back to the original 1.5 per cent under Budget 2023.

The MPOA’s fourth proposal suggests the government waives the seven years limit on carried forward of unabsorbed business losses, and revise and extend the reinvestment allowance for the plantation sector for up to 12 years after declaring maturity.

As for the last wish, the association proposed that the government initiates a green revolving fund as a form of sustainability-green financing by channelling a portion of the windfall profit levy taxed from the oil palm plantation sector.

“A start-up green revolving fund (GRF) for plantation sector of RM500 million is proposed, whereby the capital pool will provide very low-interest funding to plantation companies especially small-medium sized players and will be replenished thus allowing for reinvestment in other future projects,” Tek said.

The MPOA represents about 70 per cent of the privately-owned oil palm-planted areas, which makes up about 40 per cent of the total planted oil palm area in Malaysia.

Its members include major plantation companies such as Sime Darby Plantation Bhd, FGV Holdings Bhd., Kuala Lumpur Kepong Bhd and IOI Corporation Bhd. — Bernama