KUALA LUMPUR (May 12): Sabah planters are "delighted" that a proposed property assessment tax (PAT) on palm oil mills and its labour quarters will not be implemented.

This, according to the Malaysian Estate Owners Association, was announced by Sabah Chief Minister Datuk Seri Mohd Shafie Apdal at a dialogue with business entrepreneurs in Sandakan.

At the dialogue, MEOA's council member Joseph Tek had highlighted that one of the new tax that was about to be rolled out in Sabah by a number of local district councils is the PAT on the palm oil mills and its labour quarters. 

"This is related to the Sabah Local Government Ordinance 1961. The yearly financial implication is very high and the add-on costs will be passed down to all crop suppliers which inevitably will include smallholders and estate owners selling their fresh fruit bunches (FFB) to the affected mills. There could also be potential non-compliance relating to the ongoing MSPO (Malaysia Sustainable Palm Oil) certification," MEOA said in a statement.

In response, Shafie had shared that he recognises and is appreciative of the current low crude palm oil prices affecting oil palm growers, and prevailing taxes, the statement read.

"However, the state government needs the sales tax -- but it will not add on new taxes. The cancellation of the intended implementation of the PAT was both well received and much appreciated by the industry," said MEOA.

"Any new taxes will further erode the competitiveness and sustainability of the oil palm industry in Sabah, which is still recovering from the El Nino weather impacts, low CPO prices and labour shortage," it added, after noting that the cost of production has continued to climb amid a multitude of taxes, levies, and mandatory compliance requirements -- including the recent nearly 20% revision in minimum wages imposed on oil palm growers in the state.