The Malaysian Palm Oil Association (MPOA) said these and other proposals on its wishlist were to support competitiveness and sustainability of the palm oil industry as it transitions towards into recovery mode during the Covid-19 endemic phase.
MPOA chief executive Joseph Tek Choon Yee urged the government to have the windfall levy for Sabah and Sarawak reverted to the original rate of 1.5% under Budget 2023. The rate currently stands at 3%.
He said the government should also offer direct tax relief or incentives to reduce the cost of initiating recruitment programmes and awareness campaigns in source countries to speed up the process of employing migrant workers.
Tek added that the plantation companies would then have the option to individually embark on this initiative, or in joint efforts with other players in conducting recruitment campaigns at source countries.
He said the association would also like to see a cap on the fees that agents charged employers.
“Some recruitment agencies now charge high fees for their services, yet no agency or ministry has developed guidelines or regulations pertaining to these charges,” he said.
Tek said the MPOA also wants the government to make sure that plantation companies complied with International Labour Organization standards on the recruitment of migrant workers, and to help them meet those requirements.
Recently, the MPOA forecasted that Malaysia will likely continue a three-year trend of no growth with a crude palm oil (CPO) production of only 18 million tonnes this year amid headwinds of a lack in labour and other factors.
The MPOA also proposed that the government granted a waiver or reduction of import duties as well as tax relief on selected heavy machinery and equipment used in the plantation sector for a specified period.
“Grants via financial institutions can also be made available to eligible plantation companies to enable them to acquire critical types of machinery for their operations in the absence of sufficient workers,” he said.
The MPOA has also proposed that the government allow plantation companies to carry forward unabsorbed business losses beyond the seven-year limit, as well as to revise and extend the reinvestment allowance for the plantation sector for up to 12 years after declaring maturity.
Lastly, it wants the government to initiate a green revolving fund as a form of sustainability-green financing initiative by channelling a portion of the windfall profit levy from the oil palm plantation sector.
“A startup green revolving fund for the plantation sector of RM500 million is proposed, whereby the capital pool will provide very low-interest funding to plantation companies, especially small and medium size players and will be replenished, thus allowing for reinvestment in future projects,” Tek added.
The MPOA represents about 70% of privately-owned oil palm-planted areas, which account for about 40% of the total planted areas 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.