KUALA LUMPUR: With crude palm oil (CPO) price currently trading around RM3,000 per tonne, Sabah stands to potentially lose RM900 million per month in revenue following the enforcement of new SOPs to curb the Covid-19 pandemic.
The Sabah state government recently announced that new SOPs for the oil palm sector in the state would include the restriction to only 50% of its workforce capacity in attendance, and shorter working hours daily from 6am to 6pm for its processing supply chain.
The Malaysian Estate Owners’ Association (MEOA) estimates that if the entire oil palm supply chain in Sabah is constrained in accordance with the new regulations, the state could see CPO production falling by as much as 300,000 tonnes a month, set against the present high crop season.
“At prevailing favourable CPO prices close to RM3,000 per tonne, the estimated loss in revenue can be a staggering RM900 million a month or RM30 million a day and this loss has not factored in palm kernel losses,” it said in a statement.
It noted that since 2005, the state government had been collecting a 7.5% sales tax on CPO from the oil palm stakeholders and in recent years, average total sales tax collectable from CPO for state coffers could amount to between RM800 million and RM1 billion.
“The new SOPs now in place will henceforth also impact the state’s sales tax revenue. The above potential loss in revenue of RM900 million per month from CPO will also translate to a RM68 million loss per month in the collection of Sabah sales tax,” the association said.
It said the potential loss in tax revenue could have gone a long way to help in mitigating the present Covid-19 pandemic in Sabah.
“The oil palm sector is already committed to continue adhering strictly to the present SOPs.
It said there was no need for the plantation sector to adhere to the rule of only having 50% of the workforce to be in attendance because the employment ratio is one worker to 7ha and the distance between oil palm trees is nine metres in plantations.
MEOA said social-distancing is already the nature of work and the norm in plantations.
“We are appealing to the Sabah state government to review and immediately lift the restrictions brought by the new SOPs for oil palm plantations.
“If this is not done, there may be no control over the 220,000 plantation workers, and the social, economic and political implications may be devastating.
“The new SOPs would see both the smallholders and mid-sized players in the state’s oil palm sector bearing most of the losses during this period,” it added.
Malaysian Palm Oil Board 2019 statistics revealed that Sabah’s palm oil mill sector processed 24 million tonnes of fresh fruit bunches derived from smallholders and planters. They produced 5.04 million tonnes of CPO and 1.15 million tonnes of palm kernel.