Friday, December 19, 2008

Sarawak Oil Palm Planters Seek Respite from Government

If yesterday, we heard about problems faced by seafood exporters (see yesterday blog), today in the StarBiz (Friday, 19 December 08)I read about Sarawak oil palm planters problem. They are badly hit by the fall in crude palm oil (CPO) prices, and want the Government to give them some breathing space by waiving the windfall profit tax, lowering the cess and sales taxes, and regulating high fertiliser prices.

Sarawak oil palm planters also proposed that the unused portion of the cess collected for the Cooking Oil Subsidy Scheme by the Malaysian Palm Oil Board (MPOB) be refunded directly to Sarawak plantation companies.

A waiver is also proposed for Sarawak plantation companies which are still paying their outstanding cess instalments. It is understood that Sarawak Oil Palm Plantation Owners Association has got an assurance from the Minister of Primary Industries and Commodities that the proposals would be studied by the ministry concern.

The association said that the minister had given an indication that Sarawak planters would be allowed to export their CPO tax-free, given the high national CPO stockpile.

Sarawak Oil Palm Plantation Owners will form a consortium to jointly set up own refineries if the existing four refiners in Sarawak refuse to abolish the RM40 per tonne discount on the association CPO price.

Sarawak Plantation managing director suggested that the government should use the MPOB cess on R & D to assist Sarawak planters in sustainable management of peat areas as well as cultivating more efficient agriculture practices.

For information, the Sarawak oil palm industry is still at an infancy stage with about 20% of matured oil palm areas and low yields.

It is understood that with the CPO price currently at RM1,500 per tonne, many Sarawak planters were incurring losses and cash flow squeeze, given the high cost of production at RM1,800 to RM2,000 per tonne. Planters in the Semenanjung have a cost of production of about RM1,100 to RM1,200 per tonne.

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Thursday, December 18, 2008

Malaysia Seafood Export Industry Collapse

One interesting topic on theSun today (18 Dec o8): "Malaysia's RM2.5 billion seafood export industry near collapse". According to the paper, the collapse was because of the ban on Malaysian seafood by the European Union (UE) in June 2008.

For information, the Malaysian seafood industry is the country's second largest food export earner, with Europe as its main market. But, the EU has found environmental and hygiene standards in the Malaysian industry to be wanting.

The Malaysian Frozen Foods Processors Association (MFFPA) has raised an alarm that the industry has a lifeline of only three months left, as millions of ringgit in stocks languish in cold rooms, unable to be exported.

According to theSun, the situation is worsened because the product cannot be sold to other countries due to different packing and logistical requirements. MFFPA said the seafood exporters have reported an estimated loss in sales and production of more than RM1.5 billion to date. Further more, the players can no longer withstand the losses and pressure from commercial banks; and some 10,000 workers from the MFFPA's 25 member operators stand to lose jobs, alongside 50,000 indirect workers in related services. It is understood that many factories have started to retrench workers.

To add insult to injury, the Malaysian government has increased the electricity rate by 30%. Three months ago, the cabinet approved a RM500 million rescue package through soft loans to help industry players, with priority given to MFFPA members, however, the money has yet to be given out.

The Malaysian government has been given the Guidelines for export to the EU in 2005, but these were not implemented when EU inspectors came to Malaysia in April and May 2008. The inspection team's main concerns were fishing vessels, landing ports and agriculture farms. The processing factories were not the concern as most of the processing plants were audited by the EU Health Authority on an ad hoc basis.

According to MFFPA, the industry can be saved if the government acts fast.