State Sales Tax, Logistics Costs The Main Factors In FFB Purchase Price Differences Between Sabah And Peninsula
KUALA LUMPUR, Oct 29 (Bernama) — The imposition of State Sales Tax (SST) as well as logistics and transportation costs are the main factors behind the difference in the purchase price of fresh fruit bunches (FFB) between Sabah and the peninsula, said Deputy Plantation and Commodities Minister Datuk Seri Huang Tiong Sii.
He said the Sabah government imposes a 7.5 per cent SST on the price of crude palm oil (CPO), while no such tax is imposed in the peninsula.
He added that the transportation distance from plantations to factories in Sabah and Sarawak is longer than in the peninsula, resulting in higher logistics costs in Sabah and Sarawak than in the peninsula.
“The Ministry of Plantation and Commodities (KPK) through the Malaysian Palm Oil Board (MPOB) is always concerned and committed to addressing the issue of the difference in the price of FFB in Sabah compared to Peninsular Malaysia.
"The government is committed to addressing this issue through continuous monitoring and enforcement," he said during a question and answer session at the Dewan Rakyat today in reply to a question from Datuk Andi Muhammad Suryady Bandy (BN-Kalabakan) regarding the government's steps to address the imbalance in the price of FFB in Sabah, which is purchased at a lower rate than the peninsula, even though Sabah's oil extraction rate (OER) is around 22 to 25 per cent, including a monitoring mechanism to ensure that smallholders receive a fairer and more transparent price.
Huang said the initiatives implemented include the MPOB FFB reference price formula; enforcement of displaying daily purchase prices; and a controlled weighing system.
He said MPOB issued a daily price benchmark based on the official formula (at an extraction rate of one per cent OER at the mill gate) through the MPOB mobile application and official portal as a guide and industry reference option to align fair pricing according to quality and actual OER rates.
“Meanwhile, under the Malaysian Palm Oil Board (Licensing) Regulations 2005, MPOB requires fruit dealers and manufacturers to clearly display the daily purchase price based on one per cent OER at their respective premises to increase transparency and prevent any price manipulation at the smallholder level.
“In addition, MPOB is working closely with the Ministry of Domestic Trade and Cost of Living (KPDN) to ensure that all weighing equipment at factories and purchasing centres is certified in accordance with the Weights and Measures Act 1972,” he said.
Meanwhile, in reply to a supplementary question from Andi Muhammad Suryady on the shortage of labour in the oil palm industry which affects the cost and duration of replanting, as well as the ministry’s measures to ensure the sustainability of the industry, Huang said the shortage of labour was evident in harvesting activities, collecting FFB, and plantation care and maintenance.
“The main challenge in replanting is financial constraints, especially among smallholders who have to bear the cost of replanting estimated at RM14,000 to RM16,000 per hectare.
“Apart from the loss of income during the non-productive period, these constraints could lead to the postponement of replanting by maintaining less productive oil palm trees, thus affecting the productivity of the industry in the long term,” he said.
To address these challenges, Huang said the government through Budget 2027 is providing hybrid financing totalling RM100 million targeted to assist about 4,500 smallholders.
Apart from that, he said the government has also introduced the Oil Palm Replanting Financing Programme (PTSS) amounting to RM200 million to finance oil palm replanting in areas of up to 40.46 hectares, with a four-year repayment deferral.
“With an interest rate of four per cent borne by smallholders and the remaining interest rate borne by the government. This initiative (PTSS) aims to ease the financial burden of smallholders, accelerate the implementation of replanting and ensure the sustainability of the productivity of the country's oil palm industry, he said.
— BERNAMA