SANDAKAN: Sabah is the biggest recipient of federal funds for oil palm replanting this year, receiving RM61mil under a scheme to help smallholders replace ageing trees, says Deputy Plantation and Commodities Minister Chan Foong Hin.
The allocation, channelled through the Smallholders Oil Palm Replanting Financing Incentive Scheme (TSBKS 2.0), is nearly double the RM41mil disbursed last year.
Chan said the scheme, which allocates RM100mil for planters nationwide, supports independent smallholders whose oil palm trees are more than 25 years old and no longer productive.
“Smallholders in Sabah remain a key focus. Under this matching-grant concept, half of the RM18,000 per hectare financing is borne by the Federal Government,” he said during a smallholder engagement programme here on Wednesday (Nov 5).
He said smallholders repay only RM9,000 over five years with a 2% interest rate, while the government covers the remaining RM9,000 to encourage responsible replanting.
“This approach supports smallholders while ensuring responsibility and sustainability in replanting efforts,” he said.
Meanwhile, Chan said Sabah continues to lead in sustainable palm oil practices, with more than 30,000 smallholders – or about 96% of independent growers – now certified under the Malaysian Sustainable Palm Oil (MSPO) scheme.
He said the near-complete compliance rate demonstrates a strong commitment from smallholders towards responsible cultivation and meeting national sustainability standards despite resource and logistical challenges on the ground.
“This shows our smallholders are serious about proper management and meeting certification requirements. It is not always easy for independent planters, but they have put in the effort,” he said.
On a separate matter, Chan acknowledged concerns raised by palm oil industry players in Sabah who say the state imposes the highest crude palm oil (CPO) sales tax in the country, but said the rate is a state matter and can only be reviewed by the Sabah government.
He noted that Sabah currently charges a 7.5% sales tax on CPO once prices exceed RM1,500 per tonne, a rate higher than Sarawak’s 5%.
The tax is collected entirely by the state government as part of Sabah’s fiscal autonomy.
“I share their concerns, but we must acknowledge the state’s powers and revenue rights. This is state revenue, not federal,” he said.
“Any decision to reduce or adjust the rate is up to the new state government.”
He estimated that Sabah earns between RM800mil and RM1bil annually from the CPO sales tax.
The palm oil sector in Sabah faces several tax layers, including RM16-per-tonne MPOB cess on CPO/CPKO, a 3% Windfall Profit Levy triggered when CPO prices in Sabah and Sarawak exceed RM3,500 per tonne (levied on fresh fruit bunches), on top of the state’s 7.5% sales tax on CPO.
