USA to block palm oil imports from Sime Darby Plantation

The US Customs and Border Protection (CBP) office has issued a detention order on palm oil produced by Malaysia’s Sime Darby Plantation Berhad, based on information indicating the use of forced labour.

The order, effective 30 December, is the second one focused on Malaysian palm oil. On 30 September, the CBP issued a similar order against Malaysia’s FGV Holdings.

“The issuance of a Withhold Release Order (WRO) against Sime Darby Plantation palm oil is based on information that reasonably indicates the presence of all 11 of the International Labour Organization’s forced labour indicators in Sime Darby Plantation’s production process,” the CBP said in a statement on 30 December.

“This order will require the detention at all US ports of entry of raw palm oil and processed products containing palm oil produced by Sime Darby Plantation.”

Ana Hinojosa, executive director of the CBP's trade remedy law enforcement directorate, told CNN that its latest months-long investigation had found evidence of debt bondage, poor living and work conditions, lack of sanitation, manipulated wages and excessive overtime at Sime Darby Plantation (SDP).

However, the plantation giant said the CBP’s news release did not provide sufficient information for it to meaningfully address the allegations.

“Nevertheless, we look forward to receiving pertinent information and working with CBP in order to address their concerns and quickly resolve this matter,” the company said in a press release on 31 December.

“SDP is committed to combatting forced labour and has implemented robust policies to protect worker’s rights. These efforts include the appointment of PricewaterhouseCoopers Consulting Associates on 19 October 2020 to assist us in our continuous improvement commitment.”

Malaysia’s plantation industries and commodities industry minister Mohd Khairuddin Aman Razali was reported by Free Malaysia Today (FMT) as saying he disagreed with the action being taken without allowing SDP to prove if the claim was baseless.

Khairuddin acknowledged there had been an incident of forced and child labour in the country’s palm oil sector in the past but it was an isolated case, based on a survey done in 2018, the 31 December FMT report said.

“If the allegations are true, the Malaysian government will take appropriate and firm action against any company involved in forced labour,” Khairuddin added.

SDP is the world’s largest palm oil plantation company by planted area, according to its website. The company produces approximately 2.496M tonnes/year or 4% of the world’s crude palm oil (CPO) output. Its oil palm cultivated area is spread across more than 600,000ha in Malaysia, Indonesia, Papua New Guinea and Solomon Islands.

The USA imported around US$410M of CPO from Malaysia in fiscal year 2020, representing around 31% of total US CPO imports, not including products that include palm oil, CNN reported on 30 December.