Date 16/07/2007
News Provider Mahamad Rodzi Abdul Ghani
News Source The Edge News
Headlines MPOB explains the palm oil cess
14/7/07 (The Edge News)  -  Kota Kinabalu: The palm oil cess imposed by the Federal Government on palm oil plantations nationwide is meant to subsidise the cost of producing 60,000 tonnes of cooking oil (palm olein) a month.

Malaysian Palm Oil Board (MPOB) Licensing and Enforcement Division Director, Adzmi Hassan, said the cess was decided following the Government's decision to implement the 2007 Cooking Oil Stabilisation Scheme (COSS).

COSS scheme was introduced to absorb the losses incurred by the cooking oil factory producers and packagers.

The increase in the price of Crude Palm Oil (CPO), he said, has caused cooking oil factory producers and packagers to operate at a loss after the price of cooking oil was set at ceiling price at RM1,700 per tonne.

"We will start collecting the cess effective July 31 from the 1,230 plantations statewide," he said at the MPOB briefing on cess, KWSP building, Friday.

There are three main reasons for the COSS to be implemented, namely:

- To overcome the impact of CPO price increase on cooking oil price

- To stabilise retail price of cooking oil for local household use

- To ensure the supply of cooking oil in local market is adequate and priced according to the price controls of the Ministry of Domestic Trade and Consumer Affairs

The Federal palm oil cess has irked oil palm planters in the State since the State Government is charging 7.5 per cent cess on CPO they produced, which if converted to oil palm fruit (FFB) terms is about RM37 per metric tonne of FFB.

On top of that, owing to Sabah's geographical position, the planters are also absorbing the additional export freight chargers of CPO imposed by oil millers of about RM20 per metric tonne of FFB.

In other words, Tawau MP Shim Paw Fatt said for every metric tonne of FFB produced by Sabah planters, they lose RM77 and compared to their West Malaysian counterparts, they get RM57 less per metric tonne.

"The planters in Sabah are crying foul over this double taxation by the government which is being seen as opportunistic in attempting to strip them of their hard-earned profit during good times," he said.

He said planters were made to pay cess from the moment the first bunch is harvested before the deduction of any expenses.

Apart from that, he said Sabah oil palm planters incurred a higher production cost than their West Malaysian counterparts due to its insufficient infrastructure.

Besides, he said planters in Sabah pay more on account of foreign workers' levies, medical fees, fertiliser, chemical and other equipment by reason of higher cost of importation.

He urged the State government and Federal Government to work out a formula so that Sabah planters are given a fair deal.

Meanwhile, MPOB Sabah Regional Chief, Muslim Imam Amat Samsudin, said the COSS, enforced since June 1, would be continued until a date determined by the Government.

Cess is imposed on planters who own oil palm plantations of more than 40.46 hectares. From the MPOB's records, there are 3,639 estates throughout Malaysia that are cess-eligible.

"Cess is imposed on production of a monthly CPO average of more than RM1,500 which is based on the quantity of FFB produced by the estate every month," he said.

He said the rate of cess is RM2 for every increase of RM100 of the CPO price increase starting from the basic CPO price level of RM1,500.

Which means if the plantation produces 902.90 metric tonnes of FFB a month and the CPO average price is RM2,750 per tonne while the cess imposed is RM26, the amount the planters have to pay is (902.90 x RM26) RM23,475.40.

MUSLIM said 541 plantation estates in Sabah exempted from the cess. The estates are namely Felcra (160 estates), Felda (262), Risda (67), Kesedar (5), LKPPP (14), Salcra (18), LKTNS (12), Sg Manila Co-operative (1), Beliawanis Co-operative (2).

The cess must be paid and on time, the penalty for failure to remit payment to MPOB being 10 times the amount of unpaid cess and amount of unpaid cess or two years jail or both, he said.

"In this case, there would be no compound that would be issued to the offender but they would be brought straight to court," he said.

However, he said there is a "cooling period" of two months for those who fail to pay the cess where they will be given warning and counselling service.

"Firm action will only commence starting September this year for failure to pay the COSS cess," he said.

He said the MPOB target in July is 70 per cent collection while in August, 90 per cent and September, 100 per cent.