MEOA president Jeffery Ong said oil palm growers in Sabah were delighted when Chief Minister Shafie Apdal announced during a dialogue with business entrepreneurs that the proposed tax will not be implemented.

“The chief minister shared that he recognises and is appreciative of the current low crude palm oil (CPO) prices affecting the oil palm growers.

“The cancellation of the intended implementation of PAT is well received and much appreciated by the industry,” he said in a statement.

Ong said CPO producers are “price takers” and not “price makers” and the prevailing low CPO prices affected the entire upstream supply chain involving producers of fresh fruit bunches (FFB).

He said any new taxes would further erode the competitiveness and sustainability of the industry in Sabah which is still recovering from the El Nino weather impact, low CPO prices and labour shortage.

“This is of immediate livelihood concerns for the smallholders, profitability of plantation companies as well as the supporting millers,” he said.

Ong said the cost of production of CPO has continued to increase with taxes, levies and mandatory compliance requirements, including the recent nearly 20% revision in minimum wages imposed on oil palm growers.