POINTERS: The Importance of Labour in the Supply and Demand of Palm Oil in Malaysia

Datuk Dr. Choo Yuen May

Datuk Dr Choo Yuen May is the Director-General of the Malaysian Palm Oil Board (MPOB). She oversees and directs programmes that keep the oil palm industry at the forefront of science and foster economic growth and innovation. She has leveraged on her renowned research and leadership position to take stewardship of six and a half of the 8 entry project points (EPP) for oil palm under the Economic Transformation Program launched recently by the Prime Minister. Datuk Choo is recognized internationally for her pioneering work in the field of palm biodiesel [normal grade palm biodiesel (pour point + 15°C and winter grade palm biodiesel (pour point – 21°C)]. The principal focus of her current research is the development of novel, efficient and green processes for the palm-based industry. These include the Production and evaluation of palm biofuel including first and second generation biofuel and palm aviation fuel and Production of palm phytonutrients. She also works closely on Sustainability and Climate Change, in particular Life Cycle Assessment of Oil Palm and Products. Datuk Choo has been elected as a Fellow of the Academy of Sciences Malaysia, Fellow of the Malaysian Oil Scientists and Technologies Association, Fellow of the Malaysian Institute of Chemistry and Fellow of the Malaysian Scientific Association. She has authored and co-authored more than 600 scholarly articles, and 50 patents of which 29 have been granted and 21 pending. Several of the patents have been successfully commercialized, the most significant being the biodiesel technologies. Other technologies are those related to extraction of carotenoids, vitamin E and sterols, production of red palm oil and manufacture of palm-based industry solvents and degreaser Datuk Choo has been honoured with more than 126 international and national awards, the most prestigious of which include. The Knight of the International Order of Merit of Inventors awarded by International Federation of Inventors Association ( IFIA ), Most Outstanding Malaysian Women Award in conjunction with the International Women’s Day Celebration 2011, WIPO ( World Intellectual Property Organization ) Gold Medal for Best Women Inventions 1994 and 2003 and Anugerah Karya Inovasi Saintis awarded by the Ministry of Plantation Industries and Commodities.

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		Mr. Azman Ismail Qualifications : • Diploma in Accountancy, Politeknik Kota Bahru [1990] • Bachelor of Economics (Hons), University Kebangsaan Malaysia [1997] • Master of Economics, University Putra Malaysia [2008] Working Experience : 1998 : Joined MPOB as research officer. Currently : Senior Research Officer of Techno- Economics Unit, Malaysian Palm Oil Board Research Interest : • Cost of Production • Labour in Oil Palm Plantations VIEW PROFILE

The Malaysian oil palm industry plays an important role in the agricultural development of the country and contributes significantly to the country’s Gross Domestic Product (GDP), foreign exchange and creation of employment opportunities. On average, the industry contributes 5% to 7% of GDP and for the last five years the industry has contributed on average about RM65.3 billion per year to export revenue. Increase in palm oil production and strong palm oil demand coupled with firmer prices contributed to the increase in the export revenue. In 2012, oil palm planted area was 5.08 million hectares, an increase of 1.5% or 76,820 hectares compared to the previous year. In the Malaysian oil palm plantation sector, job opportunities were created since the sector is highly dependent on manual labour. However, low involvement of the locals (due to 3D perception - dangerous, dirty and difficult) provided avenues for foreign workers to work in the plantation sectors. In 2012, it was estimated that there were 435,763 workforce in oil palm plantation sector. Out of the total, 334,075 or 76.66% were foreigners. Foreign workers were employed mainly in high labour demand operations such as harvesting, field work and other general works. These days, the main issue in oil palm plantation sector is labour shortage problem especially for fresh fruit bunch harvesting and collection. Efforts have been done by the Government to reduce the labour shortage problem. One of the solutions is to encourage estate owners to mechanize their operations.

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Questions & Answers (13) :

11 years ago

Dear Mr. Agnes C Sequino, For your info, this seminar organised by MPOC. so please contact relevant officers in MPOC to get the password. or if you want me to email my paper to you please give me your email address. tq

Agnes C Sequino

11 years ago

I tried to open the full report but I cant open it using the password given to me by MPOB.May I ask for help please?

Agnes C Sequino

11 years ago

Dear Mr. Ng Kian Seng, Thanks again for your questions. Land-labour ratio for field works (inclusive of administrative works) in Malaysia is 10.9 : 1 (1 worker for 10.9 hectares). The ratios in P. Malaysia, Sabah and Sarawak are 13.51 : 1, 7.75 : 1 and 11.81 : 1, respectively. Topography is indentified as one of the factors contributes to high land-labour ratio in Sabah. As you aware, our oil palm plantation sector is heavily dependent on foreign worker. We estimated about 76.5% of total workforce are foreign labour. On regional basis, the highest percentage of foreign worker is Sabah i.e. 88.2%, followed by Sarawak 77.8% and P. Malaysia 64.8%. Total foreign labour in Sabah is 174,343, the highest as compared to other regions. Foreign labour in P. Malaysia and Sarawak are 135,669 and 76,901 respectively. In my opinion, distance is the main factor why Sabah can easily attract foreign worker compared to other regions. Foreign workers who employed by estates normally stay in the estates but if employed by contractor they may be stay in the estate or outside the estates.

Ng Kian Seng

11 years ago

TQ Mr. Azman for providing me an insightful answer to my previous question. My next question is pertaining to labour to plantation land ratio. I was told that different region in Malaysia operates with different ratio. Is the difference in the ratio large? I do not understand why certain region can attract workers easier than the other. After all harvesters and collectors would all need to stay in the estate. Do you have an opinion on this?

Ng Kian Seng

11 years ago

Dear Ng Kian Seng, Thanks for your question. Critical labour shortage occurs at plantation level and mostly for harvesting and FFB collection as well as field works such as weeding, manuring and pruning. Cost and topography are amongst the main constraints to the estate owners in adopting technology. Even though, MPOB has introduced motorized cutter (CANTAS) for FFB harvesting but adoption by estate owners is still low. The feedback received by the users indicated that the machines can increase labour productivity and reduce number of labour. For instance, they claimed that Cantas can increase productivity by more than 100% as compared to manual and reduce labour requirement by 40-50%. However, there are some technical and operational problem on CANTAS need to be improved such as limited reach of pole, frequent breakdown, high vibration, heavy machine, price of spare parts, difficulty to get spare parts and inefficient after sale service by supplier. To solve the problem, MPOB has conducted a collaborative study with selected universities and companies to improve the machine. For evacuation of FFB in peat area, MPOB has introduced BELUGA which can increase productivity up to 50% and reduce labour usage about 50%.

Ng Kian Seng

11 years ago

Dear Peter Lavina, Thanks again for your question. Malaysian palm oil industry, especially oil palm plantation sector is too dependent on foreign labour. To overcome this problem, the government has encouraged estate owners to increase level mechanization especially for harvesting and FFB collection and upkeep and maintenance. In addition, the government has implemented minimum wage in order to attract locals to work in oil palm plantations. For your information, one of the targets under the palm oil NKEA is to reduce foreign workers and for upstream activities only, the target is to reduce a total of 110,000 foreign workers. So, i think you got the answer. thanks

Ng Kian Seng

11 years ago

Dear En. Azman., MPOB. What is your experience relating technology and labour shortage problem.

Peter Lavina

11 years ago

Thank you for your reply on the Filipino workers in Sabah. Their number is quite significant. I hope the recent incidents involving claimants from Sulu in Lahad Datu did not affect these workers. With the onset of the ASEAN integration by the end of 2015, do you think Malaysian labor shortage will ease with free flow of labor across borders?

Peter Lavina

11 years ago

Dear Sir, Thanks for your questions. For your information, in 2012, we estimated that a total of 20,222 Filipino hired in oil palm plantation for various job categories in Malaysia. Out of the total, 99.9 % were in Sabah and the rest in Peninsular Malaysia. Legally, Sarawak do not allow recruitment of foreign workers from Philippines and the state has only one source country i.e. Indonesia. However, according to The Star Online (11 January, 2013), plantation companies in Sarawak are now allowed to recruit workers from Bangladesh and Myanmar on a government-to-government (G-to-G) mechanism in order to overcome labour shortage occurred in the state. In Sabah, most of foreign workers from Philippines are hired as field works (fertilizer application, weeding and pruning) and harvesting and FFB collection i.e. 46.1% and 37.2% respectively (out of 20,222). Most of plantations in Sabah as well as in Malaysia face labour shortage for these two job categories and these categories are very crucial in oil palm plantations.

Peter Lavina

11 years ago

Dear Sir, Thanks for the questions. The Palm Oil NKEA is targeted to raise total GNI contribution by RM125 billion to reach RM178 billion by 2020. In achieving this, the Malaysian Government has implemented eight core entry point projects (EPP) spanning across the palm oil value chain to capture the fast-growing global demand for palm oil, which registered a growth rate of 10 percent between 2000 and 2009. These EPPs will also create 41,600 new local jobs upstream and 81,800 additional jobs downstream, of which 40 percent will be high-skilled jobs earning an average monthly income of RM6,000. These high-skilled jobs more on downstream activities such as engineering, chemistry, food bio technology, design engineering, etc. The government has agreed to implement a programme to recruit foreign workers from Bangladesh on G to G mechanism. In the initial stage, Malaysian government has requested 10,000 workers from Bangladesh to address labour shortage problem faced by oil palm plantation in Peninsular Malaysia. To date, 198 workers (1 worker run away) have been recruited as pilot test and the government will open the application to all plantations if the current mechanism successful.

Anonymous

11 years ago

Dear Sir/Madam, Can you please elaborate further on your slide no 3 about the "HIgh skilled job with average monthly income of RM 6,000" what type of job are you referring? Worker shortage has been a teething problem over the years, can all the government related parties be more proactive to come together to expedite the Bangladesh workers to come in to stop our national GDP "rotting" away from the unharvested bunches. Thank you.

Anonymous

11 years ago

I met the manager of an oil palm nursery in North Cotabato, Mindanao and I learned he worked for over 20 years in plantations in Peninsular Malaysia. How significant or insignificant are Filipino migrant workers in oil palm plantations in Sabah and Sarawak?

Anonymous

11 years ago

Ladies and gentlemen, for any figures please refer to ppt. Tq