Nothing can be further from the truth. It is a rural industry offering steady employment to both Malaysians and foreigners.
Plantation work can be dirty, dangerous and difficult. Some even describe it as demeaning to which I take strong exception.
It is this same work that lifted three generations of Malaysians of all races out of abject poverty. How can that ever be demeaning?
And to those calling for an increase in the windfall tax from 3% to 6% from the RM2,500 and RM3000 per tonne CPO threshold respectively for Peninsular Malaysia and Sabah and Sarawak, they must be reminded the oil palm industry as a whole is the “windfall”!
Let us not kill the proverbial goose that lays the golden eggs without first knowing what ails it now.
Make no mistake; the oil palm industry is at a critical juncture.
Strong headwinds
Three strong headwinds are buffeting it and these are getting stronger by the day. The first is the acute shortage of workers now more keenly felt following the government’s freeze on foreign workers. (GO FOR THOSE PALM OIL STOCKS WITH OPERATIONS IN INDONESIA LIKE TSH, IJMPLANT, SIMEDARBY PLANT, WTK & THPLANT)
Crop loss estimates run into billions of ringgit. A top-level strategy is desperately needed. Skilled guest workers – in particular crop harvesters – now stuck in their respective countries, must be allowed to return to Malaysia. In addition, the freeze must be lifted. Strict standard operating procedures (SOPs) can and will be complied with.
The next headwind is the issue of taxation. It is estimated that oil palm growers contributed some RM5bil plus in taxes, levies and cess payments to the government treasury in 2020, excluding CPO export duties. The government must engage with the industry so as to arrive at an equitable solution.
(IT IS VERY OK. IN MALAYSIA THE TAX IS ONLY 8%. IN INDONESIA THE EXPORT TAX IS VERY HIGH AT 33% AND YET ALL PALM OIL SHARES OF INDONESIA ARE IN BULL RUN TIME NOW)
One must also take note that the cost of land obtained in the colonial era is vastly different from that opened up recently.
Moreover, the variability of crop yields has increased as a consequence of extreme climatic conditions; besides factors such as geology, topography, nutrient depletion of soils and shortage of workers.
A one-size-fits-all increase in the windfall tax will be disastrous for some players.
The third headwind is market access. The industry is on record appealing to the government to expedite and invest more resources on ensuring a robust government-to- government (G2G) engagement programme is in place to counter both anti-palm oil campaigns and discriminatory trade barriers.
(RISE OF USA BIODISEL USE WILL SUPPPORT PALM OIL FROM NOW)
Let us not go the way of natural rubber. As a crop it is hanging on but when we look at its downstream activities in this country, rubber is an undoubted success story.
In 2020, some 4.2% of our exports were rubber-based products valued at a whopping RM41bil.
The Malaysian oil palm industry is the product of a century and more of unremitting efforts and toil by generations of Malaysians first at the worker level and after independence at the investment and expansion level.
We remain a driving force in the global edible oils industry. But sustaining it through challenging times requires both the government and the industry to work together to resolve issues and put the glow back in palm oil. We can never tell when we need this gem of an industry to bail us out next! (PALM OIL IS THE MOST EFFICIENT VEGE OIL ON EARTH AND WILL SURVIVE AS LONG AS HUMAN BEINGS EXIST)
M.R. Chandran is a 60-year veteran of the agri-commodity industry. He is the adviser of the RSPO, director of The Incorporated Society of Planters and chairman of IRGA Sdn Bhd. The views expressed here are his own.
