Current Affairs, National

Scrap windfall profit tax on palm oil producers too

Press Statement by DAP Sabah Secretary and MP for Kota Kinabalu, Chan Foong Hin in Kuala Lumpur on 30 November 2020

Scrap windfall profit tax on palm oil producers too, if proposals to impose windfall profit tax on glove makers scrapped under Budget 2021

 

Recently, Finance Minister Tengku Zafrul Abdul Aziz was saying that the implementation of a windfall tax on glove companies that have benefitted from the Covid-19 pandemic is a non-consistent policy which will a send a wrong signal to investors and shoo them away from investing in the country. 

Hereby, I would like to question the Minister’s difference in treatment between rubber glove manufacturers and oil palm planters in Malaysia with regards to windfall profit tax. If the former is exempted entirely from such tax, then why palm oil planters are still imposed the same?

Currently, oil palm planters are subjected to a 3% levy when crude palm oil (CPO) prices hit RM2,500 a tonne in Peninsular Malaysia, and 1.5% levy when CPO prices surpass RM3,000 in Sabah and Sarawak.

It is wrong to assume that all planters make money when palm oil prices in the physical market surpasses RM2,500 per tonne here, or RM3,000 per tonne in Sabah and Sarawak. The industry as a whole is just about to recover from the prolonged low palm oil prices and has suffered in terms of low profits and even losses over a period of time.The PN Government, sadly, do not seem to have the best interest of oil palm planters in their minds. 
The government should have lifted any and all forms of windfall profit tax on the oil palm industry, at least temporarily during the Covid-19 season, when many oil palm planters, especially small estate planters, are being greatly affected. 

 
A The Edge article screenshot on Tengku Zafrul’s statement on windfall tax.
 

Contrary to popular belief, oil palm planters are no longer earning as much as they did previously as the overheads during the Covid-19 season has been much greater, especially after needing to adhere to the Standard Operating Procedures imposed by the Health Ministry. 

Not only these oil palm estate owners are required to ensure that their workers are healthy and Covid-19 free or risk a lockdown of their estates, it is now also harder to recruit new healthy foreign workers from overseas to work at these oil palm estates. As a result, more money are spent, mostly for preventive and precautionary measures which brings no additional yield or profit whatsoever.

 
For illustrative purposes only
 

During the Covid-19 season, most businesses, including that of the oil palm small estate planters, have ended up digging into their cash reserves to stay afloat. As such, to maintain a windfall profit tax on them isn’t going to do any good whatsoever.

Such windfall profit tax should be suspended entirely during the Covid-19 season. If the Finance Ministry can grant such an indulgence – to the extent of exempting windfall profit tax entirely – for the rubber glove industry, then there is no reason why the same cannot be done for the palm oil industry.

Chan Foong Hin,
DAP Sabah Secretary,
MP for Kota Kinabalu.

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