MPOA lauds move to review windfall profit levy on palm oil

The Malaysian Palm Oil Association (MPOA) supports the government’s initiative to review the oil palm levy collection mechanism, and to adjust the windfall profit price threshold in line with the cost of production for palm oil.

As it looks forward to engaging with the government on the review process, MPOA reminded the government to also review the levy rate for Sabah and Sarawak palm oil.

“We urge the government to take into consideration the rising cost of production when determining the revised price threshold,” said MPOA chief executive Joseph Tek in a statement on Tuesday (April 4).

“Furthermore, we request that the government also reviews the doubling of the levy rate calculation from 1.5% to 3% for Sabah and Sarawak, which was imposed in 2022, considering the state sales taxes (SST) of 5% and 7.5% on crude palm oil (CPO) for Sarawak and Sabah respectively.”

Notably, he said the calculation for the windfall profit levy of 3% is based on the tonnage of fresh fruit bunches production levied against the price threshold of CPO when it is above RM3,000 per metric tonne in Peninsular Malaysia and RM3,500 per metric tonne in East Malaysian states.

In contrast, the Sabah and Sarawak SST are based on CPO prices on sales volume, Tek said.

MPOA represents over 40% of the total planted oil palm area in Malaysia. Its members include major plantation companies such as Sime Darby Plantation Bhd, FGV Holdings Bhd, Kuala Lumpur Kepong Bhd and IOI Corporation Bhd.

On Monday, Dewan Rakyat debated and approved the Windfall Profit Levy (Validation) Bill 2023.

The Bill was to validate the imposition, levy and collection of the windfall profit levy and to indemnify the government of Malaysia and certain officers thereof in respect of the windfall profit levy imposed, levied and collected throughout Malaysia during the period from Jan 1, 1999 to Jan 31, 2023.

This was because the windfall profit levy orders mentioned in Clause 2 of this Bill were not laid on the table of the Dewan Rakyat in accordance with subsection 7(1) of the Windfall Profit Levy Act 1998 (Act 592) which should have been done, Tek said.

Further, no resolution was passed by the Dewan Rakyat under subsection 7(2) of Act 592 to confirm the windfall profit levy orders, he added.

On Monday, Deputy Finance Minister I Datuk Seri Ahmad Maslan said that the total collection of the windfall profit levy since 1999 amounted to RM7.6 billion.

Tags: price, Crude palm oil, Production, Malaysia, palm oil, oil palm, levy, CPO, MPOA, Malaysian Palm Oil Association