Govt expects RM500 mil palm oil windfall profit levy in 2021

BANGI – The government is expected to earn a palm oil windfall profit levy of about RM500 million in 2021 if the price of crude palm oil (CPO) records between RM3,000-RM3,500 per tonne compared with the expectation of RM348 million this year.

Malaysian Palm Oil Board (MPOB) chairman Datuk Ahmad Jazlan Yaakub said the revenue collection was not impossible if the CPO price remained above RM3,000 per tonne level.

“The expected revenue of RM348 million for this year is an estimate based on increased CPO prices since June,” Ahmad Jazlan told a press conference here today.

“We hope that with production and demand, as well as good weather conditions, it is not impossible that it (windfall profit levy) can reach about RM500 million next year while the country faces economic challenges.”

In 2019, the windfall profit levy revenue amounted to RM256,000.

Ahmad Jazlan said India is projected to continue importing crude palm oil from Malaysia next year with a double-digit growth.

This is driven by India’s reduction of customs duty on crude palm oil to 27.5% from 37.5% on November 27, 2020.

For the period of January-October 2020, palm oil exports to India amounted to 1.97 million tonnes valued at RM5.15 billion.

Since June 2020, demand from India began to increase due to activities to increased stocks in the country and demand is beginning to recover following the relaxation of lockdown measures and gradual economic recovery.

On the MPOB Cess Order 2020, scheduled to take effect on January 1, 2021, he said the matter was still at the study and discussion stage.

“We decided to impose the cess order at the appropriate time, for example when palm oil is at its highest level over the past eight years.

“The cess collected (RM5.00 one-off) will be returned for the sustainability of the palm oil industry and for the commodity to remain competitive, not for MPOB savings,” he said.

Ahmad Jazlan said the revenue collected from the cess is actually not enough for MPOB’s operations as a whole, as it needs to be distributed to the Malaysian Palm Oil Council, a separate entity that conducts palm-related activities and campaigns.

The MPOB Cess Order 2020 set an additional payment of RM5.00 cess per tonne of CPO and crude palm kernel oil produced compared with the current total amount of RM14.00 cess per tonne of CPO produced. – Bernama, November 30, 2020