The Malaysian government’s decision to lift the foreign labour ban on oil palm plantations has the potential to ease pressure on the sector, The Edge reported on 6 October.

However, there was still some way to go before the industry saw any meaningful impact from the move, according to the report.

The city of Putrajaya’s special grant to bring in 32,000 foreign workers for the plantation sector was the only exemption given to any sector with regard to foreign labour, the report said, with other industries such as manufacturing having to wait until at least 31 December.

While the government’s green light for foreign labour would help to restore productivity and allow for better cost efficiency, plantation companies needed at least one to two months to recruit foreign workers, according to Ivy Ng Lee Fang, head of Malaysia Research and regional head of Agribusiness Research at CGS-CIMB Securities Sdn Bhd.

“Bear in mind that the recruitment process must follow environmental, social and governance criteria — some companies are facing issues in this area — followed by a quarantine period,” Ng told The Edge.

Following a meeting with Malaysian Palm Oil Association (MPOA) CEO Datuk Nageeb Wahab, Kenanga Research analyst Adrian Kok noted on 20 September that since the implementation of the foreign labour freeze last March, the situation in plantations had deteriorated to a labour shortage of about 75,000 harvesters, from 40,000 previously, and a yield loss of 20%, The Edge reported.

“We estimate additional worker shortage of an average of 2,000 with each passing month. Efforts to recruit locals are ongoing, but the attrition rate is high, with about 60% leaving within a year,” Kok was reported as saying.

In an e-mailed response, Sime Darby Plantation told The Edge that its ongoing efforts to recruit local workers had been met with varying degrees of success, depending on the type of work involved and the location of the estates.

The company added that its intensified recruitment drive from May 2020 until August this year brought in more than 4,300 local workers across its upstream operations in Malaysia.

However, Sime Darby Plantation said 1,500 local workers – or 35% of this group – had left during the same period for various reasons.

“Partly as a result of the labour shortage, we have seen a decline in fresh fruit bunch (FFB) production from our Malaysian operations in the last two years. Total full-year FFB production in Malaysia for FY2020 saw a 3% decline from FY2019,” the company said in its e-mailed response.