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NEWS UPDATES 4 March 2010

Malaysian palm oil industry suffers labour shortage

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Malaysia, the world’s No. 2 palm oil producer, will miss its output target of 18.1 million tonnes because of a shortage of foreign labour even as yields recover, Reuters reported, quoting a top industry official.

Industry regulator Malaysian Palm Oil Board (MPOB) chairman Sabri Ahmad said yesterday Indonesian plantation workers made better pay at home as more palm oil estates started up there while employers in Malaysia had trouble hiring because of a stricter work-permit process.

Sabri added that while concerns about hot weather caused by the El Nino weather phenomenon weighed on the industry, labour was the main issue now.

“The hot weather from El Nino is not the problem now because its effect can be seen 12-18 months later.

“The bigger issue is the labour shortage and if that is resolved, then 18.1 million tonnes is possible,” Sabri Ahmad told Reuters ahead of the Bursa Malaysia Palm Oil Conference next week.

“Historically, Malaysian palm oil output should not be weak for two straight years. Sarawak should contribute to production. We just don’t have enough labour,” he said.

Malaysia’s commodities minister has pegged 2010 palm oil production at 18.1 million tonnes, up 2.8 percent from 17.6 million tonnes last year. In 2008, crude palm oil production stood at 17.3 million tonnes, government data showed.

Sabri said the industry was in talks with the Government to get more “flexible work permits” for foreign labourers who make up about two-thirds of the half a million estate workers in Malaysia.

“We need longer work permits for them. After all that training they get in Malaysia, they get returned back to Indonesia. We lose out,” Sabri said.

Malaysia issues a five-year work permit to foreign estate workers, mostly Indonesians, and after their tenure ends, they are not allowed to work in the country for a fixed period of time.

Many of the returned Indonesian labourers subsequently get jobs in plantations in Indonesia’s Kalimantan province that borders the Malaysian states of Sabah and Sarawak on Borneo island.


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