PETALING JAYA: The recent freeze on the new intake of foreign workers and higher levy on companies with a larger percentage of foreign workers are putting an additional burden on the plantation industry, says the Malaysian Agricultural Producers Association (MAPA).
President Mohamad Helmy Othman Basha said to stay competitive, the local industry will need to improve on its productivity, and have sustainable prices and cost of production.
“All these can only be achieved if the plantation companies have sufficient numbers and a timely supply of foreign workers, ” he said in his speech at MAPA’s 54th AGM yesterday.
Helmy noted that the government must recognise that the employment of foreign workers in the local plantation industry was “a necessity rather than a matter of choice”, as many local workers shun manual work in the estates.
“Before the outbreak of Covid-19, the shortage of foreign workers was about 31,000, but the situation is worse now with an estimated shortage of 62,000.
“If this severe shortage continues, the loss of productivity is estimated to be over RM16bil per year. This is a big loss not only to the plantation companies, but also to government coffers, ” Helmy pointed out.
He further added that planters would likely reach a point where it may no longer be profitable for the industry to accommodate further increases in the labour cost.
The government recently proposed a multi-tier levy payment system applicable to all industries, whereby a higher levy payment will be imposed on the industries which utilise a higher percentage of foreign workers in their workforce. MAPA, in principle, supports the government’s aim to cap the reliance on foreign workers to 15% of the total workforce.
“However, we hold the view that introducing a one fit-for-all system is not the best solution. The multi-tier system should acknowledge the peculiarities and unique situation of the plantation industry compared with other industries, ” Helmy noted.
Hence, the plantation fraternity is now appealing to the government to seriously consider a multi-tier system based on the “Land-to-Labour Ratio” principle.
“This is more suitable for the plantation industry as it would encourage mechanisation, thus reducing reliance on foreign workers and at the same time increasing productivity.
“We believe that the ‘Land to Labour Ratio’ system on the levy payment is the best way forward to lower the dependency on foreign workers.
“The proposed system incentivises successful productivity increases with a discount to the base levy payment currently fixed at RM640 per worker per year, ” explained Helmy.
There is also a critical need to intensify efforts in maximising mechanisation of the estate operations to reduce labour dependence, as well as the cost of production.
Therefore, the adoption of mechanisation in suitable areas is a must for each and every member of MAPA, he added.
Helmy also highlighted the plantation industry being a vital pillar of the country’s economy.
The export value of oil palm products alone in 2019 was RM65.5bil.
“However, we will not be in a position to preserve the sustainability of our golden crop if the cost of production continues to be on an upward trend, while the crude palm oil price is going downward, ” added Helmy.
He noted that the government should protect and not heavily tax and burden the plantation industry.
When compared with other plantation crop producers in the region, Malaysia is by far the highest cost producer, by almost 50% in some cases.
“Wages continue to escalate and form the single biggest component of the production cost: in the case of rubber, it is about 65% and oil palm about 45%.
“But thanks to our efforts on research and development, plantations have, for the time being, maintained a technological edge.
“Through this advantage, the plantations have been able to produce, per unit area, enhanced yields and superior crops, ” Helmy added.
He also said MAPA’s firm stand is that any upward revision to the minimum wage rates should invariably take into account the financial ability of employers to sustain any further increases in the labour cost and the prevailing economic condition.
On the international front, the local plantation industry must act cohesively, intelligently and decisively against irresponsible NGOs and other anti-palm oil lobby groups.
As for the volatile CPO prices, Helmy noted that “we do not know how long this will last.
“In order to weather these trying times, we have to be more efficient and when better times come, which we know they will, we need to be more prudent in the management of our reserves.”
Therefore, the plantation companies should continue to unite under the umbrella of MAPA so that the challenges affecting the industry are confronted collectively, consistently and completely.