PETALING JAYA: The plantation industry is expected to pay an estimated RM12bil in total taxes this year due to the record-high crude palm oil (CPO) prices.

       This amount is almost double compared with the total taxes of about RM5bil-RM6bil paid last year, said Malaysian Palm Oil Association (MPOA) chief executive officer Datuk Nageeb Wahab.

       The estimated RM12bil taxes by planters to the government in 2021 consist of the windfall profit tax, Malaysian Palm Oil Board (MPOB) cess, sales tax in Sabah and Sarawak and corporate tax, excluding the CPO export tax.

       For every RM500 increase in CPO prices, Nageeb told StarBiz that industry players will end up paying about RM2bil more in taxes.

       In 2021, the plantation industry is targeting for a higher revenue at RM100bil, based on the average CPO price of RM4,000 per tonne.

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       This is compared with RM73bil revenue recorded in 2020 based on the average CPO price of RM2,665 per tonne, he added.

       “In fact, planters could have generated an additional revenue of RM20bil this year if the acute worker shortage in the estates nationwide was sorted out properly and address effectively,” explained Nageeb.

       Despite the bullish CPO prices, he pointed out that most planters are paying higher taxes on the back of lower production due to the severe shortage of palm fruit harvesters in the estates.

       The domestic CPO production is also expected to drop to 18 million tonnes in 2021, compared with 19 million tonnes in 2020.

       Nageeb said: “The shortage of workers in the plantation sector will result in a much lower palm oil output this year.”

       In fact, the lower CPO output can be considered as an opportunity loss for the government to earn an additional RM2.5bil in taxes this year, he added.

       On another note, MPOA fully welcomed the government’s move to bring in 32,000 foreign workers for the plantation sector.

       “We expect these workers to start coming in only by the end of December,” he added.

       In total, the local plantation industry is short of 75,000 palm fruit harvesters, said Nageeb.

       Meanwhile, industry expert M.R. Chandran said the shortage of harvesters in Malaysia is estimated to result in crop losses of nearly 15% this year or equivalent to about three million tonnes palm oil.

       He concurred that local CPO production is estimated to be lower at about 18 million tonnes this year compared with 19 million to 19.9 million tonnes realised annually in the past five years.

       “What is of concern is the drastic shortfall in productivity in our local estates.

       “For 2021, it will only be a miserable 3.5 tonnes per hectare of oil per mature area.

       “However, production is expected to pick up in 2022 but only by one million to about 19 million tonnes,” added Chandran.

       The CPO production by Indonesia, the world’s largest palm oil producer, is estimated at 45.5 million tonnes this year, he said, adding that “There are indications it could be much lower.”

       With the opening up of the economies in major consuming countries such as the European Union, India, Indonesia, China, Pakistan and Bangladesh, Chandran envisaged that the demand for edible oils and fats will likely to sustain, going forward.

       He noted that the fundamental rule is that commodity prices will rise with increasing demand. Prices will also rise when there is a fall in the overall supply or inventory of a commodity.

       “This year, we have witnessed the tension of supply-demand relationship driving up edible oil prices across the board,” he said.

       In October, CPO prices touched an all-time record high of RM5,000 per tonne because the market factored in the shortage of supply, going forward.

       Having said that, although CPO prices are currently high, it is still traded at a substantial discount to other competing vegetable oils.

       “Therefore, I reckon prices will remain at around RM4,500 per tonne-mark in the near term.

       “The average price for 2021 is likely to be around RM4,000 per tonne and no doubt this is a windfall for the plantation and smallholder sectors,” he noted.

       The highest MPOB price realised in the past was 10 years ago in 2011, when it averaged at RM3,219 per tonne.

       Hence, it is timely for the industry to invest appropriately to address the long-term viability of Malaysia’s golden crop, said Chandran.