BANGI, Selangor: Malaysia will likely collect an estimated RM500 million in windfall tax from the palm oil sector in 2021 from just RM256,000 for 2019, thanks to the increase in prices and production of fresh fruit bunches, said the Malaysian Palm Oil Board (MPOB).
MPOB chairman Datuk Ahmad Jazlan Yaakub said the government was expected to collect RM348 million from the windfall tax by the end of this year.
Ahmad Jazlan said the significant increase in the revenue this year should continue throughout next year if crude palm oil (CPO) continued to trade between RM3,000 and RM3,500 per tonne.
"The expected revenue of RM348 million for this year is an estimate based on the increase in CPO prices since June. We hope that with production and demand, as well as good weather conditions, it is not impossible that the government can collect about RM500 million next year," he told a press conference here yesterday.
The levy is imposed at a rate of three per cent for palm oil prices exceeding RM2,500 per tonne in the peninsula and 1.5 per cent for palm oil prices exceeding RM3,000 per tonne in Sabah and Sarawak.
Ahmad Jazlan said the opening of more economic sectors and relaxation of movement restrictions had led to an increase in palm oil demand and rising palm oil prices this year.
He said higher exports were also supported by the government's initiative to completely exempt the export duty of CPO, crude palm kernel oil (CPKO) and RBD palm kernel oil under the Penjana initiative.
"The increase in the price of CPKO and FFB contributes to the income of plantation operators and smallholders as well as the country's export income.
"The increase in CPO price is due to the low palm oil stocks, high exports of palm oil and low palm oil production due to the reduced FFB as a result of lower fertiliser consumption in 2018/2019 following the low palm oil prices," he explained.
According to MPOB, the price of CPO had increased significantly to RM3,581.50 per tonne on November 19 this year.
The price has increased by RM1,560 or 77 per cent since hitting a low of RM2,021.50 per tonne on May 12 this year. This led to an increase in FFB price to RM760 per tonne compared to RM408.00 per tonne last May.
Ahmad Jazlan said Malaysia's palm oil exports had increased 3.8 per cent to 1.67 million tonnes in October from 1.61 million tonnes in September.
This was a result of increased demand from India, Nigeria, Ghana, Iran, Pakistan and Japan.
Meanwhile, he said India's cut in CPO import duty from 37.5 per cent to 27.5 per cent would make CPO more attractive.
Demand from India is expected to increase by double digits next year.
"Beginning in June 2020, Malaysia's CPO exports to India began to rise due to activities to increase stock in the country and recovery in demand due to the relaxation of the movement order and the gradual normalisation in the country.
"It is projected to see double-digit growth of our CPO exports to India next year. This move is driven by the reduction of customs duty on crude palm oil by India on November 27, 2020 which is a factor in attracting importers in India. Increased demand from India will support palm oil prices moving into 2021," he said.