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Major blow if Indonesian workers return home
Published on: Monday, December 26, 2016

By Mary Chin and James Sarda
TAN Sri Harris Mohd Salleh says the changes taking place in Kalimantan – more so the splitting of East Kalimantan into North Kalimantan and East Kalimantan since 2012 – should be cause for worry to Malaysians, particularly in Sabah.

“Malaysians must be rid of the mindset that Indonesians are poor. Just because they come to earn money in Sabah we think they must be poor,” said the former Chief Minister.

“They say there is poverty in Sabah. But if you travel across Kalimantan you do not see any poverty.

“They may lead simple lives but it is not poverty. We think Indonesians are poor, not realising that they are actually progressing through proper planning and by doing the right thing,” he said.

Referring to the contributions of Indonesian workers to the State’s and national economy, he said it is certain that these workers would leave for home if certain things that are not in their favour like the levy and education for their children while in Sabah.

In this regard, he said, it may be necessary to allow their children to attend public schools if we do not want to see billions of ringgit worth of oil palm fruits rotting away on the ground for lack of workers.

He said the 200-odd Indonesian schools in Sabah are already full to the brink. “This is a very serious matter which requires urgent attention.

“Unless this is sorted out, thousands of Indonesian plantation workers will leave Sabah because their children are not allowed to attend government schools.”

Harris warned that once they do that, it is unlikely that they would ever return as working conditions and wages in Kalimantan are already comparable to those in Sabah now.

“Without the Indonesian labour, what is going to happen to the more than three million acres of oil palm and economy of Sabah?” he asked.

“And all the knowledge and experience they gained while in Sabah will also be gone.” He said a solution could be for the Government to accommodate these children in government schools as “their parents are contributing to the creation of wealth in Sabah”.

“Besides, there are many government schools that are either empty or grossly underused,” he said, citing Sekolah Rendah Merotai in Tawau that has only 44 students but 22 teachers. “There are many half-empty schools. In Kudat, some schools built in early 2000 are still empty until today.”

In view of these mounting challenges, exacerbated by the depreciating Ringgit, some oil-palm planters in Sabah are said to be in a dilemma – continue operating or call it a day.

The Indonesian labour shortage has reached a critical point, according to them. They note that the opening of vast lands in Kalimantan for oil-palm cultivation has lured back Indonesian workers.

The problem is compounded by a higher cost of production which makes Crude Palm Oil (CPO) less competitive.

Besides, it is incumbent upon employers to provide free transport, free housing, free facilities and amenities as well as full medical cost for their workers, besides the foreign worker’s levy of RM590 imposed on each worker.

In addition, a planter in Sabah is required to pay FFB (Fresh Fruit Bunch) cess for the price stabilisation of palm cooking oil, and this has been in force since June 1, 2007.

The latest CPO price was cited as MYR3,170.50 per metric tonne, reportedly the lowest between the different edible vegetable oils like rapeseed oil.

On top of it, there is a smear campaign against CPO by non-governmental organisations (NGOs), lobby groups and producers of other vegetable oils.

“We are in a ‘do’ or ‘die’ mission vis-à-vis the oil-palm industry. As producers, we have no control over the selling-price.

We have no choice but to absorb increased costs of doing business,” bemoaned affected industry players.

A veteran planter, who wished anonymity, said the estimated loss on average in Malaysia is RM4 billion over 12 months in view of the difficulty in getting foreign workers to work on the plantations.

“Labour shortage is causing hardship to the industry. We cannot embrace good agricultural practices to enhance production. The situation is even worse in the peninsula…they are not allowed to recruit Bangladeshis, Cambodians and now Myanmars.

“We are not making money because we are paying by US currency, and our Ringgit is weak.

The value is down by 25pc. So when our profit margin plummets, any investment for replanting is impossible although we have earlier made plans to do so.”

According to the planter, the palm price has gone up but, unfortunately, the crop is in the doldrums due to multiple problems. “There are not enough harvesters in the field. Not enough labour so they don’t put enough fertilisers, resulting in less production, and things like that.”

From his observation, Indonesia is very aggressive in that it is progressing well and creating job opportunities for her people. “The wage is more or less the same. Why should the Indonesian workers want to come to Sabah now?”

Likening the scenario to “Killing the Goose that Lays the Golden Egg”, the planter said the Government simply has no choice but make it more attractive for them to come. “No doubt, the industry is workable but please make it easy to employ workers.”

Another East Coast planter described the shortage of labour as a serious problem. “Of course, they will return to their homeland even though we in Sabah pay the workers a little bit higher.

“After all, it’s their own country, their families and relatives are there. There are education facilities for their children,” he noted. “While in Sabah, if their stay is not sponsored by employers, then they risk being arrested by the authorities concerned. A lot of social problems as well.”

Some planters are contemplating disposing of their oil-palm land if they can’t get it converted into residential land because they can’t find enough manpower to stay afloat. In one particular case, there was a plantation (below 1,000 acres) which required at least 100 workers but the planter managed to get only 20 workers. Such land can be sold at a price of RM30,000 up to RM50,000 per acre but he eventually sold it for RM60,000 per acre.

There are instances too where plantation owners hire contractors to run the show, who in turn employ illegal workers.

Cross-border migration of illegal workers is still happening because of the porosity of our borders.

“We have good laws in place to stem this trend but enforcement is grossly lacking. At the end of the day, the plantation owner, who is the employer, is dragged to court for hiring illegals. “The employer, and not the contractor, is liable to be arrested and prosecuted for flouting the law,” said an industry player.

Over the last 10 years, more and more experienced planters, who have oil-palm plantations in Sabah, have ventured into Indonesia because there is limited room for expansion here.

For example, TSH Resources, which has a market capitalisation of RM2.53 billion, has about 50,000 hectares of planted oil-palm estates in Sabah, as well as in Kalimantan and Sumatra, Indonesia.

Agriculture is the mainstay of the Malaysian economy, forming the backbone of social and economic development, and ensuring food security for the country. Planted hectarage for oil-palm cultivation nationwide is in the region of 5,229,739.

Sabah produces about a third of the total crop.

On record, Sabah is the producer of 12pc of the global palm oil supply. “We really need foreign workers – there are no two ways about it. It is not as a matter of choice. Far from it. This is because locals are simply not interested to work on the plantations,” industry players said matter-of-factly.

Attempts to get locals to work in the oil-palm industry in Sabah have not been successful because it is not attractive enough, they said.

Apart from the perceived stigma of doing manual work, the other contributory factors are availability of greater employment opportunities in other economic sectors (examples, tourism and manufacturing), improved level of education, thus enhancing one’s employability, and improved socio-economic status with a better standard of living.

Against this backdrop, the players stressed that recruitment must be on a government to government (G to G) basis without involvement of agents.

Still, approvals for employment of foreign workers, including quota, are usually very slow, according to them.

“The prolonged wait could act as a deterrent to would-be industrialists.”

Clearly, there are more opportunities in Indonesia having overtaken Malaysia as the Number One producer of oil-palm in the region. “Needless to say, there is more land for development over there, and also a surplus of labour comparatively speaking,” they said.

They also lamented that bad publicity was generated due to harassment by the relevant authorities, yet another minus-point.

Therefore, unsurprisingly, all these unfavourable factors have contributed to making Malaysia no longer a preferred choice for investment in the oil-palm industry.

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