Oil palm planters face rising cost

OIL PALM plantation owners in Sabah face increasing cost of doing business due to the slow trunk road upgrade between major towns and labour shortage. They said they have suffered from slow transport of oil to the ports for shipment and shortage of labour to harvest fruit bunches for almost a decade.

"The government should speed up upgrading of trunk roads here to handle heavy loads of produce. We now face congestion problems," said Kam Cheong Plantations Sdn Bhd director Cheong Sung Yan. He is also the Incorporated Society of Planters (ISP) Sabah's northeast branch chairman.


"Don't forget that Sabah produces about a third of Malaysia's palm oil exports. The trunk roads linking Kota Kinabalu, Sandakan, Lahad Datu and Tawau are congested. The road system is bad, it needs to be upgraded," he told Business Times on the sidelines of a workshop organised by the Malaysian Palm Oil Council and ISP in Sandakan yesterday.

Oil palm plantation owners in Sabah pay cess to the Malaysian Palm Oil Board, income and corporate tax to the Finance Ministry, workers' levy to the Home Ministry and 7.5 per cent sales tax to Sabah government.

"We pay so much tax to the government, (but) what do we get in return? We hear announcements that hundreds of million ringgit had been allocated to build and upgrade roads here but ... until today, implementation remains to be seen," Cheong said.

Two months ago, the Rural and Regional Development Ministry had said that it will spend about RM2.1 billion to provide rural basic infrastructures in Sabah and Sarawak under the National Key Result Areas (NKRA) this year. Its minister Datuk Seri Mohd Shafie Apdal had said the allocation also involved the completion of last year's projects to build new roads and provide water and electricity supply. Of the total, about RM928 million would be allocated to Sabah.

For NKRA's rural road projects, Sabah was allocated RM134.9 million to complete 40 of last year's projects and another RM56.8 million to implement 36 new roads.

On labour shortage, Cheong said the government's frequent change in the method of foreign labour application is burdening oil palm planters. "(Of course) if we can help it, we want to be on the safe side of the law. But to legalise foreign labour, we need to approach five or six government agencies and it costs us RM2,000 per worker. That works out to RM2 million to legalise 1,000 workers," he said.

While oil palm planters support the government policy to employ more locals and enhance mechanised harvesting on the estates, the reality is far from expectations. Cheong said that young locals entering the labour market are just not interested in menial jobs like harvesting of oil palm fruits.

"This has been a long recurring problem that oil palm planters here face. We want to see the government eliminate red tape in the application for foreign labour because it is adding unnecessary cost to doing business," he said.

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