THE government under Budget 2022 has proposed to increase the threshold price for crude palm oil (CPO) windfall profit tax (WPT) structure for local plantation companies.

       Local palm oil producers next year will be subject to a standardised 3% levy when CPO prices exceed RM3,000 per tonne in Peninsular Malaysia and surpass RM3,500 per tonne in Sabah and Sarawak.

       Currently, Peninsula-based planters are subject to a 3% levy once CPO hits RM2,500 per tonne and above. While planters in Sabah and Sarawak are imposed with a 1.5% levy when CPO prices hit RM3,000 per tonne and above.

       When contacted, Malaysian Palm Oil Board director-general Dr Ahmad Parveez Ghulam Kadir says that increasing the WPT threshold value is timely due to the current increasing cost of production such as fertiliser, chemicals and labour costs.

       “With the current high CPO prices, this will surely help planters to use the additional profit to better manage their estates and increase on mechanisation and automation efforts.”Malaysian Palm Oil Association CEO Datuk Nageeb Wahab describes the increase in the CPO WPT threshold price as a consolation for planters, who have long seek for a revision. The last revision was in 2008.

       While planters welcome the increase, he said “We are hoping for a higher rate i.e. RM3,500 per tonne for Peninsula-based planters and RM4,000 per tonne for Sabah and Sarawak planters in view of the escalating production costs.

       “We also hope the government will reconsider to keep the existing levy at 1.5% for Sabah and Sarawak planters.

       “The new 3% levy will result in the affected planters having to pay higher sales tax.”

       Industry expert MR Chandran concurs saying that the increase in WPT threshold price does not reciprocate with the standardised 3% levy particularly for Sabah and Sarawak planters.

       He expects plantation companies with vast plantation landbank there such as FGV Holdings Bhd, IOI Corp Bhd and Kuala Lumpur Kepong Bhd will likely be most affected.

       On the proposed National Rubber Industry Transformation Programme, Chandran believes that this is aimed at improving the livelihood of smallholders, whereby almost 95% are involved in rubber cultivation.

       Under the programme, the government planned to consolidate smallholders, rubber entrepreneurs and small cooperatives into a big consortium, which is able to process rubber cup lumps into the production of rubber crip.“This is similar to the role of Malaysian Rubber Development Corp (Mardec) prior to the agency being sold off to a private group,” adds Chandran.