12
ORGANIZATION NEWS
MPOA Urges Govt to Lift Freeze on Foreign Worker Recruitment for Palm Oil Industry at ‘Breaking Point’ P
alm oil planters have urged the government to unfreeze the recruitment of foreign workers as an acute shortage has and would continue to result in loss of revenue for planters and income to the government due to loss in palm oil yield, according to Malaysian Palm Oil Association (MPOA) chief executive officer (CEO) Datuk Mohd Nageeb Wahab. “Our single biggest problem today is the acute shortage of workers, namely harvesters ... I would dare say the shortage since the [foreign labor] intake freeze took effect in March 2020 has increased to more than 75,000 workers. This shortage translates into an alarming 20% to 30% shortfall in our potential production. In 2020, as a result of this shortfall, the industry’s loss of revenue is estimated at about RM10 billion to RM12 billion on the back of an average crude palm oil (CPO) price of around RM2,685 per metric ton (MT). “That big reduction in revenue resulted in the reduced contribution of about RM1 billion to the government. And in spite of that, total taxes paid out by the industry amounted to about RM5.2 billion last year,” Mohd Nageeb said during the virtually-held National Recovery Summit. According to him, the palm oil sector is at the “breaking point’’, and he warned that the loss of production will quickly escalate too much higher numbers.
If the situation continues to be left unchecked, he stressed, the palm oil industry may not be able to compete with that of Malaysia’s neighbors by virtue of our higher cost of sales and wastage. “The industry is enjoying a long bullish run, with CPO prices averaging at more than RM4, 000 per MT in the first half of 2021 (1H21). This is unprecedented and the highest-ever rate mainly due to the short supply of edible oil worldwide due to weather factors. And we expect this trend to prevail through 2022. “And as a result, you can see plantation companies reporting very good returns despite lower yields and higher costs, brou ght about by the continued shortage of workers. We could have actually done much better if only we could actually optimize our production numbers. “But even with much lower production and returns, the expected total effective tax, levy and cess paid to the government will be in the range of RM9 billion to RM12 billion for 2022. That 20 to 30% drop in production (estimation) will cause the government a [likely] opportunity loss to collect additional taxes of between RM1.5 billion and RM2 billion at current [CPO] prices,” he stressed.
ASIA PALM OIL MAGAZINE | Oct-Dec 2021
