economy

MPOB: RM150 windfall profit levy increase modest but a step forward

KUALA LUMPUR: The increase in the threshold for the windfall profit levy (WPL) by RM150 for palm oil producers is modest but a step forward to alleviate pressure from rising production costs of palm oil, the Malaysian Palm Oil Board (MPOB).

Under the 2025 Budget (Belanjawan 2025) the government announced an increase in the levy threshold to RM3,150 per tonne for Peninsular Malaysia and RM3,650 per tonne for Sabah and Sarawak from Jan 1, 2025. The rate of levy remains at 3 per cent.

MPOB director general Datuk Dr Ahmad Parveez Ghulam Kadir in a statement today said the adjustment allows plantation companies to operate more efficiently, especially in the face of a competitive global vegetable oil market.

With the raised levy threshold, companies can plan investments focusing on long-term initiatives, including strategic investments in the replanting of aging palm trees, thereby increasing farm productivity.

He also said that the RM65 million allocation to address misconceptions about palm oil at the international level, particularly from the European Union, is a strategic move to strengthen the Malaysian palm oil market.

"This initiative not only combats anti-palm oil campaigns but also corrects misunderstandings about palm oil. It also includes efforts to enhance the sustainability of the palm oil sector through the Malaysian Sustainable Palm Oil (MSPO) certification," Ahmad Parveez said.

He added that the MSPO certification is crucial for improving the reputation of Malaysian palm oil both locally and internationally.

It demonstrates the country's commitment to ensuring that the palm oil industry adheres to sustainable practices in line with international standards.

In this context, the MPOB sees the need for these funds to empower smallholders through the Sustainable Palm Oil Cluster (SPOC).

Through the SPOC approach, smallholders receive advisory support from MPOB on sustainable practices aligned with sustainability principles.

Smallholders play a significant role in the Malaysian palm oil supply chain.

Ahmad Parveez said a budget allocation of RM100 million under the 2025 Budget is also expected to benefit over 1,500 smallholders across an area of 5,900 hectares.

The implementation of the replanting incentive encourages smallholders to replace unproductive aging palm trees, thereby enhancing palm oil yields and increasing their income.

Parveez also said that the government's initiative to provide tax incentives for automation and raise the minimum wage to RM1,700 per month is expected to attract local workers to careers in the plantation sector.

The tax incentives for automation will encourage palm oil plantation companies to adopt modern technologies such as drones and artificial intelligence (AI), which can enhance farm productivity and reduce reliance on foreign workers.

"The increase in the minimum wage is a positive step that will boost the income of workers involved in the palm oil industry chain," he said.

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