Oil palm folk glad proposed property tax cancelled

OIL palm planters in Sabah are delighted with Chief Minister Datuk Seri Mohd Shafie Apdal’s announcement at a dialogue with business entrepreneurs in Sandakan that a proposed property assessment tax (PAT) on palm oil mills and labour quarters will not be implemented.

Representing the Malaysian Estate Owners Association, council member Joseph Tek said at the dialogue that a new tax about to be rolled out in Sabah by a number of local district councils was the PAT on palm oil mills and labour quarters.

This is related to the Sabah Local Government Ordinance 1961. The appointed valuer is already carrying out valuation surveys on palm oil mills. The yearly financial implication is very high and the add-on costs will be passed down to crop suppliers, which will inevitably include smallholders and estate owners selling their fresh fruit bunches to affected mills.

There could also be potential non-compliance relating to the ongoing Malaysian Sustainable Palm Oil certification.

The chief minister said he recognised and was appreciative of the current low crude palm oil prices affecting oil palm growers and the prevailing taxes. However, he said, the state government needs the sales tax, but it will not introduce new taxes.

Hence, the cancellation of the intended implementation of PAT is much appreciated by the industry. Being a commodity, crude palm oil producers are price takers and not price makers.

The impact of prevailing low crude palm oil prices cascades across the entire upstream supply chain involving producers of fresh fruit bunches to crude palm oil. This is of immediate livelihood concern for smallholders, profitability of plantation companies as well as supporting millers.

In recent times, amid low crude palm oil prices, the cost of production has continued to increase with the multitude of taxes, levies and mandatory compliance requirements, including the recent nearly 20 per cent revision in minimum wages being imposed on oil palm growers in Sabah.

Any new taxes will further erode the competitiveness and sustainability of the oil palm industry in Sabah, which is still recovering from the El Nino weather impact, low crude palm oil prices and labour shortage.

Source: NST