KUALA LUMPUR: The US has banned palm oil imports from Malaysian production giant FGV Holdings after a probe revealed forced labor practices at its facilities.
Human rights groups said the abuse of agricultural workers had been rife across the whole sector for years.
The American ban came into effect after a year-long investigation by the US Customs and Border Protection (CBP) into FGV, which revealed indicators of forced and child labor, as well as physical and sexual violence, said Brenda Smith, executive assistant commissioner of the CBP’s Office of Trade.
FGV is a Malaysian government-linked company and one of the world’s largest palm oil producers.
In a statement, the company said it was “disappointed” with the decision by the US which had come at a time when it had been taking “concrete steps over the past several years in demonstrating its commitment to respect human rights and to uphold labor standards.”
The company said the issues raised by the US agency had “been the subject of public discourse since 2015 and FGV has taken several steps to correct the situation.”
It added: “FGV became a participating company of the Fair Labor Association (FLA) and is currently implementing a long-term and comprehensive action plan under its affiliation to the FLA that comprises a number of initiatives to further strengthen various aspects of our labor practices such as our recruitment process, human rights training programs, working and living conditions, as well as grievance mechanisms.”
The allegations of abuse related especially to migrant laborers who make up the company’s main plantation workforce. According to FGV data from August, it had 11,286 Indonesian and 4,683 Indian workers.
Malaysia’s Minister of Human Resources M. Saravanan said on Thursday that he was unclear about the details of the ban and had only found out about plans to impose it several days ago from the US ambassador to Malaysia, Kamala Shirin Lakhdhir. However, he had not expected the ban to be implemented “so soon.”
“As mentioned by the ambassador, these issues are mainly in Sabah and Sarawak (two states on Borneo island), especially in the plantation sector. Action will be taken,” said Saravanan, adding that the ban was “not a good sign” for the country which was heavily reliant on exports.
He said that the Ministry of Human Resources would work closely with the Ministry of Home Affairs which had much of the jurisdiction over foreign labor.
The timing of the ban is particularly unfortunate for Malaysia’s economy, which has been affected by the coronavirus disease (COVID-19) outbreak. Palm oil exports from Malaysia — which constitute over a third of the world’s exports of the commodity — are one of the country’s key revenue sources.
“FGV would need to step up efforts to increase exports to other countries while addressing the US government’s concerns on the forced labor issues,” Prof. Yeah Kim Leng, economic studies director at Malaysia’s Sunway University, told Arab News.
He said that other palm oil companies would also need to take heed of the causes leading to the ban and address those concerns if they wished to avoid the US’ big stick.
Malaysian rights activists pointed out that they had been highlighting the issue of forced labor in palm oil supply chains for years.
In a statement, Glorene Das, director of Malaysian migrant rights group Tenaganita, said: “We demand all palm oil producers, including FGV Holdings, to take proactive steps to ensure human and labor rights of workers in plantations are respected and upheld at all time.
“Malaysia, as one of the main producers of palm oil in the world, must be an example of fair labor practices rather than be known and cited for exploitative practices.”