SST expansion will boost local avocado industry, say farmers
Beginning July 1, the SST will extend to imported goods, including avocados, which are predominantly consumed by high-income earners. (Freepik pic)
PETALING JAYA : Farmers are anticipating a sharp rise in domestic demand for locally-grown avocados as the expanded sales and service tax (SST), set to take effect on July 1, extends to cover imported varieties.
Jamawi Jaafar, an adviser to a Sabah avocado farmers' association, said the move could help stabilise local avocado prices, which remain significantly lower than the imported fruit despite their comparable quality.
'If prices improve in the local market, more local farmers are likely to venture into avocado farming,' the former Kemabong assemblyman told FMT.
Jamawi Jaafar.
Jamawi said imported avocados currently make up 85% of the produce in the local market.
'We can still compete thanks to our lower prices,' he said, adding that there were about 5,000 acres of avocado farmland in Sabah.
Currently, he said, locally-grown avocados can be purchased for between RM8 and RM10 per kg if bought directly from farms, but is likely to reach RM20 per kg in the local market.
Jamawi said stable prices, coupled with ongoing government support, would boost farmers' confidence and motivate them to expand their farms, ultimately enhancing domestic production.
He proposed that Putrajaya establish a board to regulate high-potential produce like avocados and durian, while providing clear direction for other crops, such as pineapples, black pepper, and oil palm.
Last Sunday, Prime Minister Anwar Ibrahim said that the SST expansion on imported goods was targeted mainly at higher-income earners.
Anwar, who also holds the finance portfolio, said the government's intention was to levy the tax on goods typically consumed by wealthier individuals—such as avocados and cod—so as not to add to the financial strain felt by members of the lower-income groups.
On June 9, the Treasury said a 5% sales tax would be imposed on certain food items, including king crabs, salmon, cod, truffles and imported fruits beginning next month.
It reiterated that local produce would continue to be exempted from sales tax.
In an interview with FMT, Treasury secretary-general Johan Mahmood Merican said this was strategically aimed at bolstering local agricultural demand and strengthening food security.
Separately, Joni Muhamat Yahya, an avocado farmer in Pagoh, Johor, said the 5% sales tax on imported avocados could be a boon for local farmers.
Joni Muhamat Yahya.
Joni, who has an eight-acre farm, suggested that the government provide specific incentives for local avocado farmers to spur the industry's growth.
'This is a good opportunity for me and other avocado farmers to expand our farms on a large scale.
'What I foresee in the future is that there will be greater demand for locally-grown avocados for use in food and beverage. The government should help us increase our production (to meet the expected increase in demand).'
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