05.10.2021 (www.theedgemarkets.com) - KUALA LUMPUR (Oct 5): There should be more allocations for the palm oil industry to further ramp up research and development (R&D) for the commodity and for the production of more downstream products, said the Malaysian Palm Oil Council (MPOC).
The organisation’s science, environment and sustainability division director Ruslan Abdullah said Malaysia produces about 20 million tonnes of palm oil every year, which brings in about RM70 billion in revenue for the country, but sadly the allocation for the industry had been very small.
“It is not even 1%. It does not bring justice to what we are doing. Let’s not talk about investing in other crops yet like durian or bamboo, for example. We can never get an industry as lucrative as palm oil.
“However, we are just dealing with the commodity right now when we should be looking into downstreaming, where the real money is,” he told Bernama.
Ruslan said when looking at Fortune 500 companies in the world, a lot of them are actually dependent on the commodity. For Malaysia to be able to do that, it will require more funding.
He also stressed that the country had the best research and development (R&D) institute in the world when it comes to palm oil requirements.
Echoing his views, Malaysian Palm Oil Board (MPOB) director-general Ahmad Parveez Ghulam Kadir said the palm oil industry is one of the main contributors to growth of the Malaysian economy. The industry provides input to various high value-added downstream products and contributes to the country’s export earnings.
“However, as we are still facing a labour shortage, we hope the government can address the issue and we hope there will be initiatives or programmes that assist the acceleration of mechanisation and automation of the oil palm sector to reduce the dependency of the plantation sector on labour and help to boost productivity,” he said.
The MPOB has over the years conducted R&D, including innovative ways to harvest and process oil palm fruits and enhancing mechanisation, precision agriculture and automation.
The board has developed more than 40 types of machinery and mechanised equipment for the use of plantation operations, including oil palm harvesting tools. It also looked into ways to improve the yield performance.
“As for our sustainability efforts in the industry, we expect the government to allocate a certain amount to fund the smallholders in getting Malaysian Sustainable Palm Oil (MSPO) certification and other MSPO-related expenses such as certification fees, MSPO-related training and personal protective equipment (PPE),” he said.
On raising demand for palm oil, Ahmad Parveez said the government should also give an allocation to enhance the implementation of the biodiesel programme for the transportation and industrial sectors.
Last year, the plantation industries and commodities sector contributed about 12% or almost RM100 billion to the country’s revenue, with RM70 billion coming from the oil palm industry.
During the tabling of Budget 2021, the ministry only received an allocation of RM729.39 million for all commodities — including palm oil, rubber, pepper, cocoa and kenaf.
The Malaysian Palm Oil Association (MPOA), meanwhile, has highlighted the need for the government to allow the industry to take in 32,000 foreign workers that it is currently lacking.
Many foreign workers left Malaysia to return home around the time of the movement control order 1.0, which took place in March 2020.
Many of these workers either do not want to return to Malaysia or have had trouble getting the necessary approval to return to Malaysia, and this has resulted in even more acute worker shortages in the manufacturing, construction and plantation sectors.
The output of palm oil has been negatively impacted by the worker shortage, leading to a fall in gross domestic product (GDP) output of the agriculture sector in 2020 even as the price of crude palm oil increased.
“The easing of the labour shortage situation will also translate into higher tax revenue for the government by virtue of higher production,” MPOA chief executive officer (CEO) Datuk Nageeb Wahab said previously.
He also proposed a higher threshold price of RM3,500 per tonne for the crude palm oil (CPO) windfall profit tax (WPT) from the current RM2,500 per tonne imposed on planters.
Currently, companies in Peninsular Malaysia are imposed a 15% WPT once the CPO price reaches the RM2,500 per tonne or above, while companies based in Sabah and Sarawak are imposed a 7.5% WPT when the CPO price hits the RM3,000-per-tonne level or above.
Budget 2022 will be tabled in Parliament on Oct 29, 2021.