HIGHER PRODUCTION COSTS: Oil palm industry has legitimate grounds to make request, says deputy CM
THE Sarawak government is prepared to listen to views of the local oil palm industry following Sarawak Oil Palm Plantation Owners Association (Soppoa)'s recent call for a sales tax structure review, said Deputy Chief Minister Tan Sri Alfred Jabu.
He said there is legitimate grounds for the industry to make the request as the industry contributed over RM425 million in sales tax last year.
"We want to encourage healthy development of industries and not stifle their growth," said Jabu, who is also Modernisation and Agriculture Minister.
He was speaking after opening the Sarawak Land Consolidation and Rehabilitation Authority's Plantation Development Committee Members conference, here, yesterday.
Jabu said the state government is aware that production costs are now higher and is prepared to sit down with industry representatives to consider a review.
Soppoa had said the proposed revision will allow many companies to bridge the difficult situation that they are facing and will result in a win-win situation for Sarawak and country.
The planters are requesting a sales tax exemption when crude palm oil (CPO) prices are below RM2,400 per tonne to offset losses due to the current high production cost.
While oil palm is often cited as the golden crop of Malaysia due to its contribution to the local economy, job creation and food for the people, Soppoa does not foresee any price recovery in the next six months.
The planters have also claimed that out of the 1.1 million hectares of oil palm plantation in the state, more than 50 per cent are young growing palms and that rising production cost and logistics issues are affecting the industry.
When the Sarawak sales tax was implemented in 1998, the direct cost of production was RM2,170 per hectare compared with the current cost of RM6,220 per hectare, a 187 per cent rise over the same period that is contributed by inflation and spiralling fertiliser, wages and diesel costs.
With the current CPO prices dipping below RM2,400 per tonne, many plantation companies in Sarawak are paying taxes through bank borrowings and, thereby, increasing their financial burden and cost of production. Bernama