KUALA LUMPUR (April 27): The Malaysian Palm Oil Association (MPOA) said there is an urgent need to accelerate replanting to address the issue of ageing oil palm trees, and urges the government to provide replanting tax incentives to support such efforts.
It is calling on the government to include oil palm replanting under the existing reinvestment allowance scheme, and to allow full utilisation of the reinvestment allowance against the plantation company's statutory income to address the financial barrier to replanting.
In a statement issued after the MPOA organised a seminar in Sandakan, Sabah, to highlight the imperatives of oil palm replanting, its chief executive Joseph Tek Choon Yee said replanting is "not merely an expense but a prudent investment in industry productivity, GDP (gross domestic product) growth, and future tax revenue for the government's coffers".
Tek also highlighted the paradoxical nature of replanting decisions, where immediate financial gains often deter investment in replanting endeavours, despite long-term sustainability concerns.
As such, he proposed a strategic replanting approach aligned with the cultivation cycle to ensure a balanced age profile in plantations, to mitigate risks and foster resilience. "The catch lies in the necessity for sufficient funding to support this well-thought-out replanting programme with financial backing that balances short-term financial gains and the long-term vitality, emphasising the need for foresight and fiscal prudence," he said.
He is also urging for an industry-wide collaboration on the matter. "Replanting is a reinvestment — a calculated move to fortify our industry's future and secure uninterrupted supply chains. It's time for concerted action to ensure the sustainability and prosperity of the Malaysian palm oil sector," he said.
Likewise, Deputy Plantation and Commodities Minister Datuk Chan Foong Hin, who officiated the MPOA event, urged industry players to embrace the challenges that lie ahead with ageing and tall oil palm trees with conviction and the willingness to reinvest in accelerated replanting.
“To bolster domestic production and address the interests of stakeholders, the collaboration and assistance of major palm oil entities are essential in undertaking replanting endeavours. This strategic approach is imperative for ensuring the sustained economic viability of the palm oil industry,” he added.
According to Chan, Sabah made a commendable replanting effort last year by replanting 61,421 hectares (ha) of its palm plantation, signifying a notable 4% replanting rate per year in Sabah, about 1.7 times the 36,218ha it replanted in 2022.
Citing Malaysian Palm Oil Board data, Chan said the replanted area of Sabah represented 47% of total replanting in Malaysia of 131,917ha in 2023, signifying the state's pivotal role in driving industry rejuvenation.
The one-day seminar delved into the multifaceted nature of sustainable replanting practices, according to the MPOA, while speakers and panellists elaborated on innovative approaches to replanting, highlighting the importance of eco-friendly methods. The discussions also revolved around the economic implications of replanting, with experts stressing the potential for increased productivity and revenue generation.