Latest news with #HarmonisedSystemCodes
The Sun
2 days ago
- Business
- The Sun
Ministry initiates urgent discussions with palm oil industry over upcoming 5% SST on oleochemical sector
BANGI: The Ministry of Plantation and Commodities has instructed for an immediate engagement session with palm oil industry players following concerns over the implementation of a five per cent Sales and Service Tax (SST) on the oleochemical sector starting next month. Its Minister, Datuk Seri Johari Abdul Ghani, said that the ministry needs to obtain direct feedback from companies that are genuinely involved in the palm oil industry chain, particularly in the milling, refining, and oleochemical sectors, to determine whether the tax implementation affects the industry's competitiveness. 'I have instructed the ministry to engage with industry players. We want to know specifically which parts are affected. SST is a taxation system that has already been implemented in our country. 'When receiving significant negative feedback, I said we should not just react; instead, we need to engage with the industry to understand the impact. If it affects competitiveness, only then will we review it,' he told the media after officiating the Malaysian Palm Oil Board's Technology Transfer Programme 2025 here today. Johari stated that the ministry would only assess feedback from parties actively involved in the industry, rather than from outsiders who may lack a comprehensive understanding of operational realities and cost structures in the commodity sector. 'Sometimes, people who comment are not even involved in the industry. We need to talk to those on the ground ... who understand things from the milling stage, to refining, up to oleochemicals,' he said. The minister clarified that the export of raw materials is not subject to sales tax. 'Raw materials exported are not subject to sales tax. When people claim the burden is increasing, some may not fully understand the situation. That is why we need to go to the ground and hear directly from them,' Johari emphasised. He also said that no companies have formally applied for SST exemptions so far, and the ministry is open to reviewing reasonable cases if they directly affect the competitiveness of the national palm oil sector. CIMB Securities recently reported that Malaysia's oleochemical sector could face increased input costs starting July 1, as palm kernel oil, previously exempted from the SST, will now be subject to a five per cent sales tax. The firm said the revised tax also applies to refined, bleached, and deodorised (RBD) palm kernel oil and palm kernel shell, which have been reclassified under the expanded SST framework, affecting 4,800 Harmonised System Codes (HS). Every product that is bought, sold or shipped across borders is assigned an HS code. These codes are internationally standardised codes to classify traded products. Earlier in his speech, Johari said that the oleochemical sector accounts for approximately 24 per cent of the export value of Malaysia's palm oil products, amounting to RM27.5 billion in 2024.
New Straits Times
2 days ago
- Business
- New Straits Times
Ministry to engage with oleochemical firms over SST imposed on palm kernel oil
BANGI: Plantation and Commodities Ministry will engage directly with industry players to ensure Malaysia's oleochemical sector remain competitive following changes to the sales and service tax (SST). Its minister Datuk Seri Johari Abdul Ghani said the changes had sparked concern among industry players, with some expressing negative feedback over the potential impact on operating costs and Malaysia's competitiveness in the global market. "We want to identify which specific areas are affected. Because SST is a domestic system, I have told the ministry not to react immediately to the complaints. "Instead, we must engage with the industry and understand the real situation," he told reporters at MPOB Palm Oil Technology Transfer Programme (TOT) 2025. Beginning July 1, palm kernel oil - a key input for oleochemical production - will be subjected to a five per cent sales tax. Johari said raw materials meant for export are not subject to SST, but acknowledged the need to assess if certain components of the local value chain are unduly impacted. He said policymaking should be based on insights from those directly involved in the industry, not external voices. "The reality is, no one likes paying tax and that is normal. But we need a functioning tax system to sustain the economy. "At the same time, we must evaluate its impact on national competitiveness, and that is what the ministry will be focusing on," he added. CIMB Securities recently said Malaysia's oleochemical sector could face increased input costs as palm kernel oil will now be subjected to SST. The firm said the revised tax also applies to refined, bleached and deodorised palm kernel oil and palm kernel shell, which have been reclassified under the expanded SST framework, affecting 4,800 Harmonised System Codes. "The five per cent sales tax could erode the competitiveness of Malaysia's oleochemical industry by increasing raw material costs, although some of the additional cost may be passed on to buyers," it said in a note. The oleochemical sector contributed 24 per cent of the export value of Malaysia's palm oil products, amounting to RM27.5 billion in 2024.
