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Government Aid, Incentives and Loans That Can Help Palm Oil Plantation Owners

Being a palm oil plantation owner is not all smooth-sailing. There are many challenges that require careful consideration and planning to solve. There are certain circumstances where you might need a helping hand.

The Malaysian authorities have been offering various programs to assist plantation owners. Most of these programs are for limited periods only. However, they are continuously offered in order to help palm oil growers to expand and maintain their business. These are some of the current programs that can help you:

  1. The incentive for MSPO Certification

Since the decision by the European Union to gradually phase out palm oil-derived biodiesel, efforts have been made to get Malaysian planters to certify their plantations with MSPO certification.

The Malaysian Sustainable Palm Oil or MSPO certification will help make your palm oil more trusted and more easily marketed worldwide. The Malaysian government has allocated RM100million to help plantation smallholders obtain the MSPO certification.

Each oil palm smallholder can claim RM135 per hectare for certification cost, making the MSPO certification free of charge. However, this incentive program will only run until December 2019. After that, any cost in obtaining the MSPO will be borne by the planters themselves. Contact MPOCC for information on how to obtain the MSPO and claim the cost incentive.

Credit: MPOCC Website

  1. Replanting soft loan

In early 2019, the government announced that they were allocating RM550 million as a loan to help independent oil palm smallholders offset the cost of replanting. This loan is given via two programs, known as the Soft Loan Replanting Scheme (TSKPS) and Soft Loan Input Scheme for Smallholders (IPPKS).

Both loans have very low-interest rates of only 2% per annum. The repayment period is about 12 years or less.

The TSKPS scheme is specifically for replanting costs and offers up to RM10,000 per hectare of land. TSKPS is for smallholders with 6.5 hectares of land or less.

IPPKS offers a maximum loan of RM2500 per hectare and is meant to help planters buy seedlings, fertilizers, herbicides, and insecticides.

Details about both loans can be found on the MPOB website.

  1. Tax incentives for investing in oil palm biomass

When all the fruits have been harvested from an oil palm fruit bunch, the empty bunch is left over. In the past, it was just left to rot. However, this posed a serious wastage problem.

Therefore, the government has offered tax relief on companies investing in industries that use oil palm biomass ( including empty fruit bunches, logs from old palm trees, etc) to produce value-added products. The tax relief takes on several forms depending on the size and status of the company and can go up to 100% of the statutory income. For more information, visit this corporate tax incentives page.

Remember that you are not alone in your efforts to keep up the production rates of your plantation. Consultation and communication are key when facing a problem, and bodies like the Malaysian Palm Oil Board are always there to help you in various aspects.