15 Groups Request a Review of Malaysia’s Windfall Profit Levy on Palm Oil

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The government of Malaysia is being urged to reassess the windfall profit levy (WPL) on palm oil immediately by fifteen associations connected to the palm oil supply chain.

The groups urged the government to reconsider the WPL imposed on palm oil, increase the WPL’s effective price threshold for palm oil, and restore the WPL levy rate for planters in Sabah and Sarawak, according to a statement released today.

“The associations request an equitable increase in the WPL price threshold from the current thresholds of RM3,000 per tonne in Peninsular Malaysia and RM3,500 per tonne in Sabah and Sarawak in line with the true sense of today’s production cost and correct profitability if WPL is to be continued and to be aligned with the correct definition of windfall profits.”

“We request that the three percent WPL levy rates be promptly changed back to one and a half percent, taking into account sales and service tax for the oil palm planters in Sabah and Sarawak,” they stated.

They claimed that the WPL, which is only imposed on Malaysian oil palm producers and has no effect on any other economic sectors, will negatively affect the long-term competitiveness and sustainability of the industry as a whole and have unfavorable knock-on implications throughout the oil palm supply chain.

According to the associations, the government has received a considerable RM5.2 billion from oil palm planters over the last five years, with over RM3 billion coming in through the WPL just last year.

“Commercial palm oil holds a unique position in the market. It’s a price taker rather than a price maker. “The palm oil industry remains under the heavy weight of labor shortages leading to palpable losses in the fields and the continued national low yields that have led to today’s uppermost cost of production,” they said, adding that “the current year holds promise with relatively favourable crude palm oil prices.”

They continued by saying that it is depressing to learn that while there is a substantial amount of money to be made from the crop on oil palm trees, a large amount of unharvested crop is wasted and eventually rots away without having any commercial worth.

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