'Malaysia palm oil issues'
Based on the article that I have chosed,
which is the “Malaysia’s oil palm land fast depleting “link http://thestar.com.my/news/story.asp?file=/2012/5/24/business/11346082&sec=,
Malaysian oil palm producers think’s that they will run out of oil palm in 3 to
4 years’ time when compared with Indonesia which will have oil palm plantation for
another 10 to 12 years. This is because Malaysia is facing land scarcity,
demand and supply, price and tax, and aging plantation problem. Scarcity occurs
when people are forces to make choices, as not everyone can have
everything as they wish. On the other hand, Malaysia also known as one of the
world top largest palm oil producers .MR pawan replied to a star biz saying
that “Malaysia’s palm oil industry had reached a more mature phase of
industrial development before Indonesia have even started with its high growth phase”,
meanwhile “Sarawak, which has about 900,000 ha of land planted with oil palm,
is said that they are trying to match with the Sabah’s oil palm hectares which
is 1.5million ha in the coming years. Furthermore, in the following 8 years, Malaysia
will only manage to have 5.5 million ha planted with oil palm compared to the 5
million hectare currently”. (thestar.com). the article also conclude that they
assuming Malaysia will soon reach their palm oil production limit and rabobank
is the focus on regional expansion on Malaysia and Indonesia will drag longer
for another five to ten years. Last but not least, Pawan mention that, outside
of Asia the industries have already started exploring the possibilities of
future palm oil supply from South Africa and Africa.
Malaysia is one of the largest palm
oil producer and recently the global demand for palm oil increase gradually due
to the rise in price of its substitute good which is Soya oil .but yet recently
Indonesia went beyond Malaysia in the world largest palm oil producer .why this
happen? What is really happening in Malaysia? Where is the producer and why the
palm oil land is depleting? When the
demand for palm oil increases, it supposed to be benefit for palm oil producer
but why it went up as a burden on the producer’s top? After I read this article,
all this question was crossing in my mind.so I decided to do a minor research
and analysis based on the palm oil issues .Now I manage to get the answer for
those question. The very first reason why Indonesia goes beyond Malaysia is because
recently most of the Malaysian producers when to Indonesia to invest and
produce palm oil. For example SIME DARBY, KLK, WISMA and so on .now only few producer
left in Malaysia such as TAIKO OIO and so on to produce palm oil. This is due
to the increase in price of land in Malaysia cause burden to the palm oil
producer when you compared with Indonesia, all their land and other resources
are cheaper. For instance when a palm oil producer decided to invest on Indonesia
compared to Malaysia, a palm oil producer can buy a mountain at Indonesia which
will only cost him half of the cost of Malaysia mountain price. Other than that,
not only price of land increase cause
burden to Malaysia producer but even the
,wages, cost of production , tax
and even barriers of entry imposed by
government to palm oil producers increases .
Based
on the graph when there is no tax imposed by government, Q0 quantity is being produced
at po price. But when there is tax imposed by government the buyer price
increase to pc and the seller price fall to pp for the every quantity of palm
oil producing and selling .this leads to the decrease in quantity from Qo to Q1. Moreover, this indications the
producer surplus and consumer surplus to get shrink and part of the loss
incurred by both parties will change as tax revenue and goes to the government.
This is only one part of the burden the producers are facing. But what about
the land purchase price, tax on purchasing the land and labour salaries and so
on? As a result, the producers are unable to bear with this heavy burden.
that’s why they found a substitute place for them to invest which is Indonesia .Secondly,
the palm oil land depleting not only because we have insufficient of land but there is another major reason cause the
land to get depletes are as follow,insuffient labours ,lack of producers and new development.Basicly Malaysia is one of the
famous sector for agriculture and now
they are working toward becoming one the development countries in the world .That’s
is why recently they concentrate more on
developing industries than pay lack attention on palm oil plantation. This
leads to aging plantation problem, because a palm oil tree can only produce oil
up to ten years but in Malaysia the plants are staying more than 10 years.
This is one of the major reasons for us to stay behind Indonesia which
consistent on their plantation work.
In conclusion,
Malaysia is one of most well-known palm oil producer, when we go to different country
and ask them Malaysia is famous for what, immediately we can hear that saying,
Malaysia is the largest palm oil producer and they have very good quality in
making palm oil because they are well skilled in this particular field.so in
order to sustain this good name. The government should implement few tasks Such
as, they have to do a major replantation, hire skilled and efficient labours
when planting and harvesting the palm oil trees, be consistent with their
development while protect palm oil land, provide useful subsidies to the
producer so that they don’t increase the price to high and give effect to the ordinary
consumers. Other than that, government also should reduce the tax and price on land,
rent and more. Because recently the tax and price is being a burden for the rich,
middle and poor level in Malaysia. This is because the tax imposed according to
their earning and the increase in price gives equal pain to the level of that
individual. In Malaysia not everyone is capable on purchasing any factors with
such an expensive amount.in order to be fair to other Malaysian citizen;
government should impose something that can benefit everyone equally. Hence by doing this there is chances for us to get
back to the position of world largest
palm oil producer again.
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