A few companies were slapped with the withhold release order (WRO) by the US Customs and Border Protection (CBP) agency on claims of forced labor.
The affected companies have submitted evidence to clear their names to secure the entry of their goods into the US market.
The industry is also seeking more lasting solutions. About 100 people joined the recent online discussion on the issue hosted by the Law School of Universiti Malaya.
The webinar proved very informative. Constructive solutions were proposed.
Apparently, as explained by the Malaysian Palm Oil Board (MPOB) officer based in Washington, the US law on forced labor is not new. It has been around for many decades.
But, in the original act, only imported products that competed with locally produced US products were subjected to such a ban. Other products were spared from the ruling.
This changed in 2016, during the President Barack Obama administration when the law was made to apply to all imported products. Since then, many imported products were affected.
Palm oil is not the first. According to information shared during the webinar, we have been aware of this all along.
The government has in fact created laws to get businesses to conform to the International Labour Organisation standards on forced labor. But we have been weak on enforcement and implementation.
Some of the criteria relate to poor living conditions of workers, the withholding of workers' passports, and very low pay.
Under the requirements for the import of migrant labor, the amount that workers have to pay to secure jobs here can hold them in bondage for years, therefore forcing them to work to be relieved from such bondage.
All the panelists agreed that the issue of forced labor is here to stay. There is a good chance that the ruling may be adopted by other countries. This is in line with the new ESG demand on businesses globally.
Some say those businesses which fail to embrace ESG (good practices in environment, social, and governance), will face obstacles in their business dealings.
In Malaysia, sectors that mostly use migrant labor include construction, plantation, manufacturing, and food and beverage (F&B). The pressure is less on the construction and F&B sectors since they are not exporting.
Apart from the US import ban, the palm oil industry also faces labor shortages.
With the current historic palm oil price touching RM7,000 per tonne, the shortage of migrant labor causes the industry to lose billions of ringgit in unharvested oil palm fruits. It appears that this issue of labor shortage won't go away anytime soon.
Unless the problems of an import ban and labor shortage are addressed, the palm oil industry will face hard times in the coming years.
A planned phasing out of the industry's addiction to cheap migrant labor should receive serious consideration.
The industry must not discount a more concerted investment in technology to wean away from being over-reliant on cheap labor.
Over the years, the industry has implemented many mechanization approaches to ease its dependence on labor. But the mechanization of the harvesting operation remains unresolved.
The industry may need to relook at the bottlenecks in the adoption of technologies. There are now labor-saving technologies available as a result of years of investment in research and development.
They include robotics or drones, artificial intelligence (AI), and digitalization. We need to not only boost our investment in R&D but also tap into the best research brains locally and internationally to develop such technologies.
Using MPOB as the anchor R&D center, a new research alliance on mechanization and automation should be established to deliver this.
The research alliance should bring in R&D initiatives at universities and other research centers, such as MIMOS and SIRIM. The alliance should also explore links with international R&D centers which specialize in the relevant automation technologies.
Otherwise, such labor concerns will continue to haunt the industry in years to come.
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