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Open Letter to Sabah Chief Minister December 12, 2008

Posted by wong jimmy in Uncategorized.

Sabah 7.5% Sales Tax – I will step down if CM can prove I am wrong

As I have said I will step down as Sri Tanjung Assemblyman if your honourable Chief Minister Datuk Sri Musa Aman can prove that the smallholders are not being taxed the Sabah 7.5% Sales Tax.


I had already highlighted the ‘error’ many times including at the State Legislative Assembly and even shown proves to the Chief Minister, Ministers and Assemblymen during the recent assembly.


It is the state government duty to correct what is wrong, I have come out with proves and many had also highlighted the matter in the news, but nothing is being done.


Therefore I put up this challenge and I will step down if CM can prove that I am wrong, and I hope CM too will do the same if he is wrong.


This is very important as it means the survival of the small and medium size planters and the whole oil palm industry. Even big companies in West Malaysia have already made statements that they are heading towards troubled waters. Planters in Sabah are even worst off with high fertilizer cost and the most taxes and the State Government cannot keep ignoring this and should act now before it is too late.


With the 7.5% Sabah sales tax still being erronously charged on planters and the government is not admitting the mistake I see another black history in the making of the agriculture industry. The first was cocoa where planters were left on their own by the government and one-by-one died and the cocoa industry was history for Sabah. I do not want to see the same thing happen to the oil palm industry and I will do my part to help.

On the price issue, I call the State Government to act immediately to help the oil palm sectors in the state that are now feeling the pressure and hard pressed due to the falling price of the commodity.


Without any concrete action from the government the situation will worsen and Sabah as the largest oil palm producers will become history.


I had many times urged the state government to review the 7.5% Sabah Sales tax imposed on the industry and had shown prove that the tax  has been passed to the smallholders no matter how small their plantation are.


If the situation is allowed to go on, it not only burden the planters especially smallholders but also make the state unattractive to investors.


I hope this issue will receive the government attention and drastic action as I had showed prove to the Chief Minister at the recent State Legislative Assembly that the planters including small and medium size oil palm planters are the one paying the 7.5% Sales Tax, though in the first assembly CM had told me that the government never taxed the small holders and only the big companies and I had proven to him that he got the wrong information.


With the Sabah Sales Tax matter coming to light and more people understanding the real situation, I hoped the state government would direct millers not to impose the 7.5% sales tax to planters and the tax be reviewed due to the drastic fall of the CPO (Crude Palm Oil) price.


Apart from that, the government should come out with a statement and explanation on what steps is being done, already done and will be done in connection with the fallen price of oil palm to help the industry.


The people in the oil palm sector and me would like to know whether the special committee to tackle the issue had been set up. If already set up, what had been done to address the situation?


I voice out on behalf of the oil palm industry and it should not be taken lightly as the price had gone down by about 70 percent compared to three months ago and cause loses not only to small holders but also big companies, millers, producers and fertilizer companies.


In fact, I am surprised to hear that a big listed company had to cut 20 percent of its employee’s salary following losses caused by the fallen price of oil palm. That was a few days ago, now many companies are either cutting cost by slashing employee’s salary or retrenchment. If no action is taken, I am sure the government plan to develop the Palm Oil Industry Cluster (POIC) will not bear fruit.


Massive Unemployment

The global economic crisis is real, every seconds count and immediate action must be taken to address and counter the drastic fall in CPO prices. Massive unemployment will happen in Sabah if the State government failed to listen and act positively and immediately.


In Singapore and other develop countries retrenchment in other sectors of their industry has already started as condition gets tough. This is because there is no remedy in the sector they are in.


Our oil palm industry could be helped, however without aid, our oil palm industry too will head the same direction, starting from cutting cost, slashing salaries then retrenchment, resulting in many unemployment.


This could be remedied, but steps must be taken such as:-

-reviewing policies

-reviewing CPO taxes and cess (Federal and State government)

-reduction of fertilizer high price 

-review the plantation workers’ levy

-review of the RM40 per tonne discount on CPO price for east Malaysia


The state government has the voice and platform and should request for a review on the CPO taxes and cess such as discount on MPOB oil cess and subsidy for fertilizers.


To set a good leadership example the state government should take the lead by reviewing its 7.5% Sabah sales tax which is the highest in the country.


We cannot afford to wait and see for the impact to happen, our oil palm industry could be help, don’t wait until there are massive retrenchment of workers, acting at that time would be too late as the damage had been done and the government will have to fork out more to help those affected by the economic crisis.


Without the help from the Sabah State Government the oil palm industry that has been paying numerous taxes and cess to Federal and state government will collapse and I for one do not want to see them die-standing without being heard and getting help from Federal and State government so that they could survive the global economic crisis.

Yours sincerely

Jimmy Wong 





1. KT - December 14, 2008

CM is as sleepy as the PM , in dreamland ??? or he simply refused to admit that smallholders been slapped with 7.5% sales tax ????

Why should there be a discount ?
-review of the RM40 per tonne discount on CPO price for east Malaysia

if there’s no discount for West Malaysia compnies , there shouldn’t be any discount for EM too , y the disparities ?

2. well informed small holder - December 16, 2008

You were labelled “very unfortunate and mischievous” in press reports, but I say you are doing a great job. CM and his permanent sec is more misguided than even the most uninformed, or maybe they are more interested in their own pockets, milking the ol palm growers especially the small holders.
To make it simple:
Take an example of a well managed smallholder with 15 acres producing 160 tonnes ffb a year at average price of RM250 per tonne. With annual ffb sales of RM40,000 , he pays the state coffers RM3000 in CPO sales tax ,whether or not state BN leaders want to admit or not. The same smallholder pays no income tax because he does not make enough money to qualify .RM1280 for shipping charges for CPO to West Malaysia was deducted athough the oil is refined in Sabah or shipped direct to overseas countries.
He also pays RM420 levy for his foreign worker,

A poorly managed oil palm area of the same size yield sales of say RM20,000 resulting in no profit income at all. Yet RM1500 in sales tax RM640 in shipping charges RM420 levy and other minor taxes had to be paid.

3. observer - March 27, 2009

i will appreciate if you guys can redo your computation and not to be overly narrow in presenting your views. That will paint a better picture of the situation and result in a more cooperative environment for everyone to resolve any differences.

This is much better than issuing explicit threats which will only make matter worse.

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