The plantation sector is one of the important pillars of the Malaysian economy, be that during good times or bad times. Apart from providing employment, either upstream or downstream activities, the plantation sector also contributed RM60 billion nett export earnings in 2008 and RM58 billion in 2009. Therefore, the Government should protect and not heavily tax and burden this strategic industry. As an example, soya bean and rapeseed oil producers are and, at the same time, they are given special treatment.

2.  Labour is very critical for sustainable growth of palm oil and dynamism of Malaysian economy. The plantation industry is still labour intensive in spite of adopting labour-saving techniques.

3.  The Government should recognise that employment of foreign workers is a necessity rather than a matter of choice as local workers shun manual work in plantations due to improved level of education, growing employment opportunities in all sectors of the economy and full employment, thus foreign workers complement local workers in the plantations. Increasing levy, therefore, would not solve the problem faced by the industry.

4.  The Government must realise that any additional burden, either by way of legislation, levy, security bond or compulsory minimum wages, would further erode the competitiveness of the plantation industries in the globalised environment. These billion ringgit investments by local companies, including GLC, such as Felda Plantations, Sime Darby Plantation, Tabung Haji Plantations, Felcra, Risda, State Corporations, etc. need protection so that the industry could continue to prosper and generate export earnings. The recent proposal to increase the levy would cost the industry approximately RM138,446,280.00 (256,382 foreign workers x 540) currently to RM1,169,101,920.00 (256,382 foreign workers x 4560) in the year 2015.

5. The proposal to increase the existing security bond of RM250/worker to RM4,000/worker would cost the industry approximately RM64,095,500.00 currently to RM1,025,528,000.00.

6. Employing foreign workers has economic advantages to the Country and contributes significantly to the development and expansion of the plantations. For one oil palm harvester, his contribution is as follows :-
 

7.  Based on the approximate figure of 230,000 foreign oil palm harvesters, the total contribution per annum is approximately RM45,011,000,000.00 per year.

8.  Compared to other plantation crop producers in the region, Malaysia is by far the highest cost producer. Labour costs continue to escalate and form the single biggest component of the production costs. As it is now, the average cost of production is between RM1,000 and RM1,500.00 per tonne of crude palm oil. With the proposed increase in levy payment and security bond, cost of production would further escalate and this could not be passed on to the consumers as plantation companies are price takers and not price setters. The Government, therefore, should further facilitate and not frustrate the industry. Please let our golden goose continue to lay golden eggs peacefully. All the relevant stakeholders and the Government must think globally, assess regionally and act locally.

By:

Haji Shamsuddin Bardan

Executive Director

MALAYSIAN EMPLOYERS FEDERATION (MEF), and

Encik Mohamad bin Audong

Executive Director

THE MALAYAN AGRICULTURAL PRODUCERS’ ASSOCIATION (MAPA)