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LIST OF ARTICLES

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Article Info

Vol 15 No.2 (2015) p11-20
Impact of Tax Imposition on Cost Competitiveness of the Malaysian Palm Oil Industry
Honey Irmawati Hamzah*; Azman Ismail*; Ramli Abdullah*; Kamaruddin Idris*; Kamalrudin Mohd Saleh*; Embong Abd Ghani**; Zaiton Muhammad**; Hartini Mohamed**; Francis Dungkit‡ and Mohd Hazlan Hamzah‡

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Abstract


Impact of Tax Imposition on Cost Competitiveness of the Malaysian Palm Oil Industry

The study aims at examining the impact of tax imposition on the cost competitiveness of the Malaysian palm oil industry, using gross profit margin analysis. Secondary data were used in this study and gross margin analysis was undertaken to identify the relationship between cost and revenue for each commodity, namely, oil palm, rubber and cocoa. Gross profit (GP) is the difference between total revenue (TR) and total operating cost (total cost of production). To calculate gross profit margin (GPM), GP is multiplied by 100 and divided by TR (GP/
TR x 100). GPM with and without tax were calculated and compared for each commodity. In the calculation of GPM, the average price in 2013 and the average price over seven years (2007-2013) for the three commodities were used. Based on the average price in 2013, it was found that GPM with tax for rubber was the highest at 48.93% compared with oil palm (45.91%) and cocoa (7.79%). For oil palm, if the crude palm oil (CPO) price were less than or equal to RM 2500/t, an increase in CPO price will increase GPM, and the difference between GPM with and without tax becomes lower. However, if CPO price were greater than RM 2500/t (when the windfall profit levy will be imposed on oil palm plantations), an increase in CPO price will increase GPM, but the difference between GPM with and without tax becomes higher. This means that the windfall profit levy gives a higher impact to the oil palm plantation than cess and sales tax.

Keyword(s): cost competitiveness, gross profit margin analysis, oil palm plantation, tax

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Article Info

Vol 15 No.2 (2015) p1-10
Labour Productivity in the Malaysian Oil Palm Plantation Sector
Azman Ismail*; Siti Mashani Ahmad* and Zuraihan Sharudin*

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Abstract


Labour Productivity in the Malaysian Oil Palm Plantation Sector

This study attempts to measure oil palm labour productivity based on land-labour ratio by job category, region and estate size; and based on output-labour ratio by job category and region. It culminates by suggesting action plans for improving labour productivity and reducing labour requirement. Primary data collected through an online survey were used in the study, while the calculation of labour productivity was done using Microsoft Office Excel and SPSS. From the study, it was found that the ideal land-labour ratio for oil palm plantations in Malaysia is 10:1. Currently, the ratio set by the government for oil palm estates hiring foreign workers is 8:1 (i.e. 8 ha to one worker). To reduce the number of foreign workers in oil palm plantations, the current ratio needs to be increased from 8:1 to 10:1. To increase labour productivity, it is suggested that estate owners practise mechanisation, especially for harvesting (when palm height is less than 8 m) and in-field collection of fresh fruit bunches (FFB). By using a motorised cutter for harvesting, productivity per worker can be increased from 0.99 t per day to 2.24 t per day. For in-field collection, a mechanised FFB transport system (MFTS) can reduce the required number of workers and lower the cost of transportation as well as cost of production.

Keyword(s): labour, productivity, land-labour ratio, output-labour ratio, mechanisation.

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Article Info

Vol 15 No.1 (2015) p18-29
Competitiveness of the Oil Palm Industry in Colombia
N Balu*; Nazlin Ismail* and Kamar Nor Aini Kamarulzaman*

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Abstract


Competitiveness of the Oil Palm Industry in Colombia

This article is aimed at discussing the competitiveness of the oil palm industry in Colombia in comparison with Malaysia’s own industry in terms of production, trade, consumption and infrastructure. Prospects of investment in the industry in Colombia are also discussed. For the purpose of analysing the information gathered, a SWOT analysis was used to evaluate the strengths, weaknesses, opportunities and threats of the Colombia’s oil palm industry. Colombia was chosen for this article based on the fact that there is currently a lack of information and of a database on this country with regard to her oil palm industry. The information in this article was collected primarily from various secondary sources. Not all of this information was of the latest year because of the difficulty in sourcing the most up-to-date information. It is hoped that this article will assist Malaysian oil palm industry players in having a better understanding of the developments pertaining to the oil palm industry in Colombia as well as gauging the challenges, if any, posed by this country and the prospect for investments.

Keyword(s): oil palm, competitiveness, trade, Colombia

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Article Info

Vol 15 No.1 (2015) p8-17
Measuring Impact of Exports of Palm Oil Biodiesel on Direct and Indirect Land Use Changes in Malaysia
Chakrin Utit; Mohd Yusof Saari and Azman Hassan

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Abstract


Measuring Impact of Exports of Palm Oil Biodiesel on Direct and Indirect Land Use Changes in Malaysia

Palm oil biodiesel is often regarded as a renewable energy source with the potential to lower emissions of carbon dioxide (CO2). However, exports of this product may face non-tariff trade barriers that are directed towards its role in bringing undesirable impacts to the environment. This article examines the impact of exports of palm oil biodiesel for the period 2010-2012 on direct and indirect land use changes in Malaysia. Data from a national economic survey alongside export data of palm oil biodiesel, crude palm oil production and land use for oil palm, rubber, cocoa, paddy and forests are utilised to calculate the extent of direct and indirect land use changes. In 2010, the effect of direct land use changes is recorded to be equal to -0.000156%, increasing to -0.000008% in 2012. For indirect land use changes, the highest effect recorded is for land planted with cocoa which is equal to 0.000292% in 2010, decreasing to 0.000016% in 2012. These results indicate that exports only contribute in a small way towards direct and indirect land use changes.

Keyword(s): palm oil biodiesel, land use changes, input-output, exports

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Article Info

Vol 15 No.1 (2015) p1-7
The Effects of Establishing Sustainable Oil Palm Growers’ Cooperatives on the Incomes of Oil Palm Smallholders
Azman, I and Nazirah, C J

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Abstract


The Effects of Establishing Sustainable Oil Palm Growers’ Cooperatives on the Incomes of Oil Palm Smallholders

This article attempts to study the impact of establishing Sustainable Oil Palm Growers Cooperatives (KPSM) on the incomes of oil palm smallholders in Malaysia. In the study, data on income were collected from members as well as non-members of KPSM in Saratok, Sarawak. The study found that the nett average fresh fruit bunch (FFB) price (after deducting transportation cost) obtained by KPSM Saratok members was higher than for non-members. For example, in July 2012, the average nett price obtained by KPSM members was RM 524.80/t compared with RM 414.60/t obtained by non-members. The price difference was RM 110.20. During this period, from July 2012 until April 2014, the average nett price obtained by members of KPSM Saratok was RM 410.80/t while non-members received a price of RM 345.50/t. The average price difference in that period was RM 65.30/t. Greater efforts have to be made to attract more independent smallholders to join the cooperatives as the cooperative is an institution that can help increase productivity and income of smallholders.

Keyword(s): cooperatives, oil palm smallholders, income, quality

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Article Info

Vol 14 No.2 (2014) p27-38
Impacts of the New CPO Export Tax Structure on the Malaysian Refining Industry
Khomeini Ab Rahman Ayatollah; Ramli Abdullah; N Balu; Norihan Husin; Nik Abdullah Nik Idris; Siti Mashani Ahmad and Norfadilah Hashim

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Abstract


Impacts of the New CPO Export Tax Structure on the Malaysian Refining Industry

The performance of the Malaysian palm oil refining industry had been greatly affected since Indonesia revised her palm oil export tax structure in 2012, which made her palm products more competitive in the world market. To improve the performance of the Malaysian refining industry, the government also revised its long-standing crude palm oil (CPO) export tax (operative since the 1970s) and implemented a new export tax structure, effective 1 January 2013. This is a proactive approach by the Malaysian government to increase competitiveness. As a result, the performance of the industry has been much better after the implementation, with exports of oil palm products increasing, stocks of palm oil declining, the price of CPO showing an upward trend and volatility reduced, refinery capacity utilisation rate increasing, purchases of CPO by refineries rising, processing of CPO growing, and production of finished products also expanding. Average capacity utilisation recorded a higher rate at 56.9%, or an increase by 10% after implementation of the new export tax structure as compared with the rate in 2012. The total volume of CPO purchased by refineries also increased to 12.62 million tonnes in 2013 from 11.49 million tonnes in 2012. Meanwhile, the total volume of CPO processed by refineries in 2013 had increased to 15.89 million tonnes compared with 14.07 million tonnes in 2012, or an increase of 12.9%. Production of finished products also recorded positive performance at 0.30 million tonnes in 2013 compared with 0.29 million tonnes in 2012. A survey carried out on refineries showed that the majority of them (71%) felt that the government should continue with the new CPO export tax structure.

Keyword(s): new CPO export tax structure, competitiveness, capacity utilisation rate

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Article Info

Vol 14 No.2 (2014) p16-26
Vintage Approach to Forecasting Palm Oil Production in Peninsular Malaysia
Ali Zulhusni Ali Nordin; Siti Mashani Ahmad; Fatimah Mohamed Arshad; Kusairi Mohd Noh; Zainal Abidin Mohamed; Emmy Farha Alias; Ng Keng Yap; Nurjihan Idris and Nur Alina Jabir

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Abstract


Vintage Approach to Forecasting Palm Oil Production in Peninsular Malaysia

Oil palm is an important crop to the Malaysian economy. Due to its strategic significance there is a need to have a reliable estimate of the production of the commodity to facilitate decision-making by policymakers and industry participants. The vintage approach has been shown to be more efficient in taking into account the age of palms and their yield profile when estimating production compared with other methods. The study utilised the vintage approach adapted from Smit (2010). The findings suggest that the vintage model developed is capable of projecting as well as simulating the impact on the palm oil sector if a change or shock is injected into the system.

Keyword(s): vintage approach, CPO forecast, Peninsular Malaysia, agricultural policy, NKEA replanting policy

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Article Info

Vol 14 No.2 (2014) p8-15
Decomposition of Productivity Growth of the Malaysian Palm Oil Mill Sector
Norhidayu, A; Azman Hassan; Ramli Abdullah; Azman, I and Nur Asmani Che Dir

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Abstract


Decomposition of Productivity Growth of the Malaysian Palm Oil Mill Sector

This study investigates total factor productivity (TFP) growth in the Malaysian palm oil mill sector over the period 2005-2010, using a Stochastic Frontier Approach (SFA) model. TFP growth was decomposed into three components, namely, technical efficiency (TE), technical progress (TP) and scale components (SEC). The empirical results show that productivity growth was driven mainly by TE for all palm oil mills, followed by TP. However, a change in the scale components had a negative effect on productivity growth. Overall, the study suggests that there are opportunities to improve productivity growth in the Malaysian palm oil mill sector.

Keyword(s): Malaysian palm oil mill, total factor productivity, technical progress, technical efficiency, scale components

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Article Info

Vol 14 No.2 (2014) p1-7
Workforce in the Malaysian Oil Palm Nursery
Azman, I and Zuraihan, S

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Abstract


Workforce in the Malaysian Oil Palm Nursery

This article attempts to estimate workforce, labour shortage as well as land to labour ratio by job category in oil palm nursery sector in Malaysia since labour is a major concerns in the oil palm industry especially in oil palm nursery and plantation. Survey technique was used for data collection. Questionnaires were designed and distributed to 739 oil palm nurseries in Malaysia which registered with MPOB. Total labour requirement and shortage according to job categories namely manager, assistant manager, clerk, supervisor, operator and general worker were identified. Operator with the job scopes of planting seedlings in polybags, spraying insecticide, fertilising and watering the plant was the highest labour required by oil palm nursery. The second highest number of workers required falls under the general worker such as driver, co-driver and others. In Peninsular Malaysia and Sabah, operators and general worker were dominated by foreign workers, meanwhile in Sarawak only job category as operator is dominated by foreign workers. As in oil palm plantation sector, oil palm nursery also faces labour shortage problem especially for job category such as operator and general worker

Keyword(s): oil palm nursery, labour, shortage, land-labour ratio

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Article Info

Vol 14 No.1 (2014) p34-41
The Impact of Palm Oil Mills’ Capacity on Technical Efficiency of Palm Oil Millers in Malaysia
Azman, I

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Abstract


The Impact of Palm Oil Mills’ Capacity on Technical Efficiency of Palm Oil Millers in Malaysia

The general purpose of this study is to evaluate technical efficiency of palm oil mills in Malaysia. Specifically, the study attempts to examine if large mills are more efficient than small mills as well as to compare technical efficiency between integrated and non-integrated mills. In order to fulfill the objectives, econometric approach was used whereby crude palm oil production function was estimated by using OLS least squared technique. The Cobb-Douglas production model was used and the model is satisfactory in terms of goodness of fit. This is shown by the values of R2 (0.89) as well as F statistic (358.03). From the study, it was found that palm oil mills in Malaysia are technically efficient. In terms of processing capacity, large mills which have processing capacity more than 20 t/hr are more efficient than small mills. Integrated mills are also technically efficient as compare to non-integrated mills.

Keyword(s): palm oil, technical efficiency, FFB, processing, capacity

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No part of this publication may be reproduced, stored in a retrieval system,
in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the publisher.

This online publication is electronically compiled by Palm Information Centre, Malaysian Palm Oil Board (MPOB)
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