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13 April 2008

sabah sales tax & Cooking Oil Price Stabilisation Scheme


oil-palm millers in Sandakan are not happy because they have to pay cess and tax.

"A cess of RM15 for every metric tonne of Crude Palm Oil (CPO) produced by the mill is paid to the Malaysia Palm-Oil Board (MPOB) for its research and development (R&D).

"In addition, there is a Sabah sales tax of 7.5 per cent based on Sabah's monthly average CPO price for that particular month. For example, if the Sabah CPO price is RM3,201.00 per metric tonne, then the sales tax is RM240 per metric tonne," she said.

"On top of it, planters need to pay Fresh Fruit Bunch (FFB) cess for the price stabilisation of palm cooking oil with effect from June 1, 2007."

Shanty said the planters are also unhappy with cess exemption given to any government land scheme (Felda, Tabung Haji Tabung Tentera & Sawit Kinabalu).

Oil palm estate owners are expected to pay government cess to compensate cooking oil manufacturers for 12 months, at the most. The tax, called Supply and Cooking Oil Price Stabilisation cess was set up as a stop-gap measure to help refiners cope with high crude palm oil (CPO) prices.

Kenanga Investment Bank has said in a recent report that the scheme will hit companies that extract the least oil from their oil palm fruits.

"For the same amount of CPO produced, more fresh fruit bunches (FFB) has to be produced and therefore, more cess has to be paid," Yin Shao Yang, an analyst with Kenanga Investment said.

Tradewinds would be the most hit, he added.

The cess is not levied on the Indonesian estates owned by Malaysian plantation companies.

However, if crude palm oil (CPO) prices were to dip below RM1,500 per tonne anytime between June 1, 2007 and May 31, 2008, this Supply and Cooking Oil Price Stabilisation Scheme will cease to operate.

"If the CPO price were to go up, the planters will pay more and if it comes down, they will pay less," Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said.If CPO prices were to drop below RM1,500 per tonne within the next 12 months, the scheme will be scrapped.

"With that pricing, refiners can make and sell cooking oil at a profit," he said.

The Supply and Cooking Oil Price Stabilisation Scheme is not new. It was implemented in 1999 and 2004 when CPO prices soared above RM1,500 per tonne.

The move was to ensure a stable supply of cooking oil in the domestic market at the controlled prices and to reduce losses suffered by cooking oil suppliers. THE END.


Tuesday March 25, 2008

Push to abolish palm oil cess

PETALING JAYA: The oil palm industry is pushing hard to abolish the special cess on oil palm plantation estate owners to subsidise the price of cooking oil imposed in June 2007 and also the cess on crude palm oil (CPO) price stabilisation fund imposed in 2001.

A closed-door meeting is believed to have taken place yesterday between the Malaysian Estate Owners' Association and Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui to discuss the cess issues at length.

The cooking oil price stabilisation scheme, introduced in May 2007, is due for revision by the end of May this year.

Industry consultant and former Malaysian Palm Oil Association chief executive officer M.R. Chandran said: “Industry players must do away with the subsidy mentality and learn to fully adopt the free market.”

On the special cess, he said it was not fair for oil palm players to continue subsidising cooking oil refiners and packers for a longer period, given the high CPO prices.

“Many plantation companies with low CPO yield are feeling the pinch paying the special cess. In addition to the two existing cess, they need to pay to the Malaysian Palm Oil Board (MPOB),” he told StarBiz.

The Government imposed a special cess on owners of palm oil estates covering more than 40.46ha in June 2007 to help subsidise the price of cooking oil due to the high CPO price, which was then trading at RM2,750 a tonne.

The MPOB collects a special cess of RM2 per tonne of fresh fruit bunches for every RM100 per tonne increase in the CPO price – as long as the price stays above RM1,500 a tonne.

From June 1, 2007 till May 31, 2008, palm oil estate owners are expected to contribute some RM661.2mil in taxes to compensate for the losses of refiners and packers.

About 55% of the palm oil industry fraternity, or 4,100 oil palm estates nationwide, were involved in funding 90% of the subsidy promised to the cooking oil refining industry from the imposition of the special cess.

Chandran believes that Malaysia should no longer have a controlled price of about RM2.50 per kilo for cooking oil when it is sold for much higher at about RM4 to RM5 per kilo in Thailand and about RM8 per kilo in Singapore.

Apart from the special cess, oil palm planters are required to pay cess of about RM4 per tonne of CPO to MPOB for the CPO price stabilisation fund imposed in 2001 when the commodity fell below RM600 per tonne.

“There is no justification for paying this cess (CPO price stabilisation fund) especially when the CPO price is trading above RM3,300 per tonne,” he said.

For the past 20 years, oil palm industry players have been paying cess of about RM11 per tonne of CPO to MPOB for its research works.

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