Malaysia Faces a Trade War with the US Amid Oil Palm Sanctions

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The United States Customs and Border Protection agency (CBP) has officially applied sanctions against one of Malaysia’s largest palm oil companies, FGV Holdings Berhad, that went into effect on 30 September 2020. FGV Holdings Berhad has come under fire with allegations made by CBP that the Malaysian company has violated international human rights laws and labour standards by enforcing criminal practices such as forced and child labour on their plantations.

As well as being one of Malaysia’s largest palm oil distributors, FGV Holdings Berhad is in partnership with American consumer goods giant, Procter & Gamble. CBP Executive Assistant Commissioner, Brenda Smith, has claimed that the agency is investigating disturbing reports of forced labour (slavery), child labour, and a host of human rights abuses like physical and sexual violence. Sanctions were announced a week after surfaced reports that the CBP has been carrying out a year-long investigation assisted by The Associated Press, exposing “major labour abuses” within Malaysia’s palm oil industry.

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It has been brought to light that The Associated Pressss has collected interviews of former and current workers from at least 8 other countries who worked at two dozen palm oil companies. One of said companies is the controversial Federal Land Development Authority (FELDA) that comes rife with financial scandals of their own, owns shares in FGV Holdings Berhad. The Associate Press investigation reports have revealed disturbing allegations that include unpaid salaries, modern day slavery, and even rape, sometimes involving minors.

Investigators also found trafficked Rohingya refugees who have been forced to work on plantations. The CPB reported to have “found indicators” of abuse meted out on plantation workers by ways of isolation, physical restriction of movement, physical and sexual violence, intimidation and threats, retention of identity documents, inhumane working and living conditions, excessive overtime, and child labour.

This isn’t the first time that FGV Holdings have “come under fire for human rights abuses.” Roughly two years ago, similar sanctions were placed on the palm oil company by the global Roundtable on Sustainable Palm Oil certification group.

Image credit: Bloomberg

FGV Holdings has refuted the claims against them and on 1 October 2020 (a day after imposed sanctions) has vowed to clear their name, although citing that all claims brought forward by CBP has been “the subject of public discourse since 2015.” FGV also claims they have since taken concrete steps to correct the situation and demonstrate their commitment “to respect human rights and to uphold labour standards.”

FGV’s rebuttal also include that they did not recruit or employ refugees, or contract workers. Migrant workers within their employment are recruited largely from India and Indonesia through supposed legal channels, and that workers were not forced to pay any such employment fees. FGV has also refuted allegations of retaining employees’ passports, and that they had in fact installed 32,250 safety boxes throughout all of their 68 housing colonies for workers to keep all travel documents safely. The company also stated that they have spent up to RM350 million over a period of three years, upgrading housing and medical benefits for workers.

The company also boldly states that they have “never tolerated any form of human rights infringements or criminal offense in its operations,” and have previously submitted “evidences of compliance with labour standards” to the CBP since 2019, and will “continue its engagement with the US agency to clear its name.”

Resource credit: Salleh Buang / New Straits Times

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