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RM50 millions fund for smallholders is peanuts! January 10, 2009

Posted by wong jimmy in Oil Palm.



I am very disappointed as the State Government seemed to be not sincere in helping palm oil smallholders, knowing very well that the smallholders are still paying the 7.5% Sabah sales tax.


In a way, the RM50 million fund for smallholder announced by the Chief Minister Datuk Seri Hj Musa Aman showed that the state government acknowledged that smallholders need assistance after years of contribution to the state’s coffer.


However, the amount announced is too small compared to almost 10-years of their contribution through taxes and especially the immoral and cruel 7.5% sales tax which they are ‘forced’ to pay.


Knowing very well the smallholders are still paying the Sabah 7.5 percent sales tax, therefore the fund means nothing much but mere peanuts.


The soft loans, if all the 11,018 smallholders were to go for loans, each will get RM4,538 only, which is a very small amount compared to the cost of their production especially fertilizers. And on top of that do the smallholders have to pay any interest?


If the state government is really sincere then set the special committee to work on reducing fertilizer price. As for now, the smallholders, planters and the whole industry are asking what is the special committee doing.


Have they identified the cause of problems?

Have they found the weaknesses?

Have they come up with any concrete measures?

Have they met planters at all levels from small, medium to big plantations?

Have they held any dialogues with fertilizer suppliers, planters and millers at every district to find out their problems?


Even a simple thing I have been pointing out on the wrongfully implemented 7.5% sales tax, the special committee cannot look into and give me a satisfactory answer.

Everyone keep mum on this except to make statement that I am wrong and the 7.5% sales tax is charge on the CPO and not FFB or the smallholders.


My questions are simple, who is suppose to pay? The smallholders? The big plantations? The millers? Tell the planters who, they want to know, they have the right to know.


The planters had shown proof to me through their receipt that they are the one paying. Millers are not denying either that they are passing the buck because I had been informed that they will not be able to make profit if they are to pay. Furthermore the ‘Warta Kerajaan’ did not state clearly who should pay. Are we clear here?


With the high price of CPO early last year, the planters were already complaining. Now with the uncertainty of CPO price, the state government through this special committee must act immediately and not dilly-dally anymore as the future of the whole palm oil industry is in the State government hands.


The wises decision is to scrap the 7.5% sales tax, get back on the table and discuss with all the millers for a win-win situation. After all, the sales tax only came into existence because the state government needed money to organize the SUKMA that was held in Kota Kinabalu.


Here is how the immoral, cruel Sabah sales tax or at first know as Sabah CPO sales cess that came about due to anger and vengeance as the industry players failed to response to the state government call in helping to donate or sponsor for the SUKMA.


Because the response was bad, the Sabah CPO sales cess (as it was called then) was introduced on April 1, 1999. A RM50 per metric ton was imposed on CPO above RM1,000 per metric ton which was a fixed scale.


After the SUKMA, in 2003 the cess was no more, but the State government introduced 5% sales tax for CPO above RM1,000/mt in January 1, 2003.


And due to the encouraging market, the scale was raised to 7.5% in January 1, 2005 and this add more miseries among planters when the Federal Government CPO cess for Cooking Oil Stabilization Scheme (COSS) was introduced on June 1, 2007 which was very unfair to Sabah after having to pay so much including corporate tax, workers permits, high cost of fertilizers and having to put up with bad roads and so on without getting any in returns except being milked all the way and more blood sucked when the CPO price shot up.


Sad to say, now that the price had shot down, every one, the Federal government and the State government is merely giving lip service and throw a few candies here and there, maybe buying some time until the CPO price strengthened.


I say, MPOB and the State government only know how to dig into the palm oil industry players’ pockets when the going was good, but now that the going gets tough and uncertain, both are toothless.


It is like punching a person and giving a little medicine for their injury but at the same time still keep punching the person. Why kill the golden goose when it can keep on laying golden eggs.


All these sales tax and cess must stop, this is the only industry in the world where people have to pay tax before they calculate their profit and loss.


The State government should hold a meeting with all the palm oil industry players, be it small or big. I call for a fairer policy by the State government to formulate a similar policy that of the Federal government such as not to impose cess or sales tax on smallholders who own less that 100 acres. Don’t forget Sabah has the highest hard-core poor in the country. Where is the fairness when even small scale farmers too have to pay like the ‘big boys’. When will they ever come out of poverty then, where is the rational, the logic of helping the poor then?


The state government think-tanks, special committee and the executives must be reasonable in this aspect so that we could create a more conducive middle class at the same time elevate the hard-core poor standard of living without having to give them much aid through subsidy.


You want them to stand on their own two feet, you tell them to work hard to improve their living and not to expect too much from you. You want them to fish and not to expect you to give them fish, but what is happening you had taken their fishing rods.


Sorry I had got carried away there, back to the RM50 million special fund for smallholders.


I say, yes the RM50 million will be a big help, only if the 7.5% sales tax is abolished or waive or not charged to planters having less than 100 acres. And the sales tax only imposed on millers when the CPO price reach above RM2,000 per ton and with their production cost or overheads deducted out first.


Planters cost of production in Sabah is between RM1,500 to RM1,600 compared to Peninsular which is RM1,200 to RM1,300 due to the difference of fertilizer cost. The fund is best to be used specially for the subsidizing of fertilizer for smallholders.


The state government should also ensure that the daily CPO price fixed by MPOB should not be much difference between palm oil producing districts and states and weighing scales to be checked and calibrated as I have also received complaints from planters about weights.


If  the above is a tall order, then  I call for a new sales tax enactment stating who is to pay and showing clear calculations (similar to the Federal government cess calculation) to be passed by the Legislative Assembly would be a good start provided meetings are held between State government representatives with all sectors of palm oil players before the final draft.


For the record, my challenge to the Chief Minister to prove me wrong still stands. However, I will forgive the State government if the policy is changed and a new policy implemented which is fair to all.


By the way, I heard according from reliable sources some ministers have hundreds to thousand of acres planted with elaeis guineesis. If true, they should check their sales receipt whether they are being charged the 7.5% sales tax.







1. Ajajal - January 11, 2009

Jimmy you have done your part . Keep it up will meet you
when I return to Tawau to support you again. Take care and serve the raykat and you will be remembered.

2. tax payer - January 14, 2009

Bravo YB Jimmy!
In addition to all rhe comprehensive points aptly made, please ask the decision makers to consider the following:

Even assuming if CPO prices hover around RM1800, and the cost of production remains at RM1500 for very hard working and efficient planters, plantation owners in Sabah will pay 45% of their gross profit to the state coffers as sales tax. In addition they will pay about 26% income tax to the federal government. The investors must be nuts to pay a effective tax rate of 58% and stay in this business if they have a choice.

gross profit is RM1800 (revenue)-RM1500 (cost)= RM300
7.5% immoral sales tax X RM1800 is RM135
RM135 is 45% of gross profit (45/100×300=135)

3. palm oil smallholder - January 19, 2009

We do not want handouts. Just dont take from us by way of cruel and immoral taxes

4. Talker - February 3, 2009

Those people think that we citizen are stupid…i hate that musa or something…the most hated man of sabah 😦

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