Next Chapter Media’s Post

“It now costs around RM2,800 to RM3,000 to produce a tonne of palm oil, while the windfall tax starts at RM3,500. With costs already nearing this threshold, the windfall margin is practically non-existent,” he said after the Malaysian Palm Industry Awards ceremony yesterday. Currently, a WPL rate of 3% is applied to palm oil prices exceeding RM3,000 per tonne in Peninsular Malaysia and RM3,500 per tonne in Sabah and Sarawak. A windfall tax is a levy imposed on a company or industry when economic conditions result in large and unexpected profits.

Raise palm oil levy threshold or abolish it KEY TAKEAWAYS: 1) Windfall Profit Levy Concerns: The Plantation and Commodities Ministry, led by Minister Datuk Seri Johari Abdul Ghani, has proposed either abolishing the windfall profit levy (WPL) on palm oil or raising its threshold to keep the industry competitive, as current costs are nearing the levy activation point. 2) Industry Growth: In the first half of 2024, crude palm oil production increased to 8.9 million metric tonnes, and exports of palm oil and palm-based products rose by 32%. 3) Call for Tax Reform: Datuk Seri Johari urged the Finance Ministry to reconsider the current tax framework on palm oil, emphasising the need for changes to maintain the industry’s competitiveness amid rising production costs. Read full news report here: https://buff.ly/4eg9Oje Help your network stay informed, share this #MPOC post!

The windfall tax review is long overdue. Introduced since 1998, it might be considered windfall then but it definitely is not a windfall now. Malaysia imposes a windfall levy of 3% on palm oil prices above RM3,000 per tonne in Peninsular Malaysia and above RM3,500 per tonne in Sabah and Sarawak. The cost to produce one tonne of palm oil has gone up to RM2,800-RM3,200.

Malaysian Budget 2025: Proposal impacting Palm Oil Industry* - Windfall Profit levy based revised up to RM3150 for Pennisula Malaysia and RM3650 for Sabah and Sarawak effective 1 Nov 2024 - The structure of the market price range and the export duty rate for crude palm oil will be revised effective from 1 November 2024. - The current treatment for the export of crude palm oil from Sabah and Sarawak will also be maintained. - Petronas to work with SDG and FGV to used palm waste for SAF - Smallholder replanting incentive RM100m - Tax incentives for automation in the manufacturing, services, agriculture, and commodity sectors in the form of Accelerated Capital Allowance for a period of 1 year, as well as income tax exemptions on the same capital expenditure. - Commitment to defending the palm oil industry has been intensified to counter European misconceptions and enhance the sustainability of palm oil, with an allocation of 65 million ringgit.

Malaysia Diversifies Revenue as Petroleum Income Declines I read an article that was recently published on Fulcrum. It discusses Malaysia's financial plans for 2025, focusing on how the country is shifting away from relying on petroleum income and diversifying its revenue sources and it also discusses the current tension between Sarawak, Petron and Petronas. Over the years, petroleum-related revenue has been decreasing steadily. In 2025, it is expected to account for only 18.3% of the government's total revenue, a significant drop from 41.3% in 2009. The main reasons for this decline are falling crude oil prices and a reduction in taxes collected from petroleum companies. The government estimates earning RM62 billion from petroleum next year, which will make up just 3% of the country's GDP. A large portion of this, over half, will come from dividends paid by Petronas, Malaysia’s state-owned oil and gas company. On the other hand, income from non-petroleum sources is growing. The government has been focusing on other types of revenue, and this is paying off. In 2025, non-petroleum revenue is expected to rise by 7.2% to RM277.7 billion. This includes money collected from direct taxes, such as corporate and individual income taxes, which are growing thanks to economic improvements, better tax systems like e-invoicing, and higher salaries for workers. Indirect taxes, like sales taxes and excise duties, are also increasing, showing a healthy improvement in these areas. Although the government will make slightly less money from investments, annual dividends from big institutions like Petronas, Bank Negara Malaysia, and Khazanah Nasional will still provide a stable income. Licenses and permits, such as those for foreign workers and motor vehicles, are also expected to bring in a bit more revenue. Overall, the government's total revenue is forecast to grow by 5.5% in 2025, reaching RM339.7 billion. This growth reflects Malaysia’s efforts to strengthen its economy and improve how it collects taxes, moving away from its heavy dependence on petroleum. This diversification is an important step for long-term financial stability. These shifts in Malaysia’s revenue structure highlight a critical turning point for the country’s economy. By reducing its reliance on volatile petroleum income and focusing on sustainable, diverse revenue streams, Malaysia is building a more resilient financial foundation. The projected growth in non-petroleum revenues, fueled by reforms and economic progress, shows a promising path forward. As the nation continues to invest in stronger tax systems and economic stability, it positions itself to better navigate global challenges and create a more balanced, prosperous future for its people. The link to the article is listed below: https://lnkd.in/gdSZ-zEn

Possible Carbon Tax for steel and Iron Sectors The government is looking at the possibility of introducing #carbon pricing solely for the iron and #steel sector. Pro vice-chancellor for external engagement at Taylor’s University professor Ong Kian Ming said one of the issues that is of great concern in #Malaysia is the potential introduction of a carbon tax or carbon pricing. “I am a part of an independent committee that was set up by the Investment, Trade and Industry Ministry (Miti) to advise Miti on the future of the iron and steel sector. “One of the robust discussions that we have been having is the possibility of introducing a carbon price just for the iron and steel sector. “This is something that, if let’s say we can do, will set the pathway for the possible introduction of carbon pricing for other sectors of the economy as well. This is also linked to some of the discussions on the Carbon Border Adjustment Mechanism (#CBAM),” he said during Hong Leong Bank’s 11th Sustainability Roundtable. Scheduled to commence on Jan 1, 2026, the European Union’s (EU) CBAM will cover goods from six sectors, namely, cement, electricity, fertilisers, aluminium, iron, steel and hydrogen in the first phase. Subsequently, this scope will be expanded to all sectors subject to EU emissions trading by 2030. Notably, steel remains known as one of the hard-to-abate sectors of the world, responsible for around 8% of global emissions. Institute for Democracy and Economic Affairs associate professor Dr Renato Lima de Oliveira said in terms of average emissions per tonne of steel, Malaysia used to be one of the lower emitters, at 4.5% in 2020. However, he noted that the country is slated to record higher levels than global average emissions for steel production. “There is a process of structural transformation where production with higher emissions has migrated to Malaysia. Hence, the volume and profile of production in Malaysia is changing fast. While the Malaysian government has imposed a moratorium on new steel capacity, it still lacks a comprehensive emissions policy. “Further, carbon pricing is recognised as an effective emissions reduction tool but it has not yet been implemented in Malaysia.” De Oliveira added this means the total amount of emissions in Malaysia is going to be dominated by a single industry and additional emissions opportunities from other industries might be even more constrained. “This raises the question about investment decisions, including rules of investment. In today’s world, these decisions need to take into account the quality of investment, the attraction of foreign direct investment as well as the emissions per capita and per production technology,” he said. He said in the country’s move towards adopting carbon pricing, it could pilot in the steel sector. “However, carbon pricing without a CBAM is an issue, because the CBAM serves to prevent carbon leakage...

📢 June 2024 Monthly Roundup: Key updates and insights from Osadi. ✅ Diesel prices in Peninsular Malaysia increased by RM1.20 per litre as part of the government's subsidy rationalization plan. ✅ Economists maintain a calm outlook on inflation, with minimal direct impact on CPI but potential indirect effects. ✅ The move aims to save approximately RM4 billion annually, enhancing fiscal efficiency. #InsightMonthlyRoundup #Osadi #EthicalRecruitment #ResponsibleBusiness #ManpowerSolutions #ManpowerSupply #ManpowerAgency #ManpowerConsultancy

One of the main concerns about reducing fuel subsidies in stages is that businesses would raise price of goods multiple times, in anticipation of rising input costs and to protect their margins. This is probably due to the fact that Malaysian businesses' abilities to hedge input costs have atrophied due to long-running price controls. Small businesses are particularly exposed to fluctuating input costs. What are some of the possible policy solutions? https://lnkd.in/grgpKw7j

Great to see the introduction of the Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024 into Parliament today. Strong government support is what is needed if the nation is to move further down the value chain in respect of mineral processing. With so many countries offering incentives to attract these industries domestically, Australia must do the same if we are to compete on the global stage and realise the economic potential of these industries. https://lnkd.in/gvUPV6nb

Malaysia’s better-than-expected economic growth and the strengthening of the ringgit may push back the implementation of RON 95 petrol subsidy rationalisation, so it goes. Full story here.