KUALA LUMPUR: The plantation sector is breathing a sigh of relief following the government's recent approval to recruit some 32,000 foreign workers to address the acute workforce shortage in the oil palm industry.
Malaysian Palm Oil Association (MPOA) chief executive officer Datuk Mohamad Nageeb Wahab said the approval to bring foreign workers to Malaysia would immensely help the industry to mitigate the acute production shortfall experienced currently.
"While our needs are much higher than what was approved, nevertheless, it would provide much relief to the industry.
"We welcomed and thanked the government for this piece of good news. However, a few technicalities need to be ironed out, such as standard operating procedures (SOPs) and the source country government green light for the workers to leave their country before they can start work here," he told the New Straits Times.
He said MPOA is hopeful these foreign workers can be in Malaysia as early as possible. However, it might take some time before the industry can physically deploy them at the plantations.
"Once they are here, besides fulfilling the authorities SOPs, they need to be again trained for the tasks assigned to them," he said.
MPOA reiterated the century-old industry would likely miss its target of adding an additional RM20 billion to its revenue for 2021, mainly dragged by the nationwide acute labour shortage of about 75,000 harvesters.
The industry would also need to ensure some 32,000 foreign workers prove their capabilities to manage and adhere to the SOPs.
Mohamad Nageeb said MPOA is hopeful the government to allow the industry to bring in the remaining requirements (foreign labour), enabling the industry to optimise their potential production of more than 20 million tonnes annually.
The oil palm sector had been experiencing a labour shortage even before the pandemic and exacerbated since the government freezing the intake of foreign workers in March 2020.
This shortage translated to about 20 per cent to 30 per cent shortfall in Malaysia's crude palm oil (CPO) potential production last year.
"This shortfall has also resulted in our cost of production spiralling up as well as our competitive edge."
Mohamad Nageeb said the oil palm sector was not fully exploiting the current historically high CPO price, especially after its future price breached over RM5,000 per ton recently.
"Although oil palm companies and smallholders are enjoying good profits, they could have done much, much better."
Mohamad Nageeb said MPOA expects the local CPO production to hover around 18 million tonnes in 2021, the lowest ever in 30 years.
For the first nine months of 2021, the average CPO price stood at about RM4,200 per tonne, according to MPOA.
"Since the pandemic, we have enforced strict SOPs across all our plantations and mills, and our track record in managing the incidents has been impressive by the number of infections at oil palm estates," he said.
The plantation industry is highly dependent on foreign workers and accounts for about 84 per cent of its optimum total workforce.
As a result of the labour shortage, the industry lost an estimated RM10 billion to RM12 billion in revenue for 2020, on the back of an average CPO price of RM2,685 per tonne.
Malaysia produced about 19.14 million metric tonnes of CPO in 2020, accounting for 26 per cent of the world's production.
Meanwhile, the industry generated export revenue of RM73.3 billion and contributed 3.6 per cent of the country's gross domestic product in 2020.
MPOA said that about six million hectares had been planted with oil palm in Malaysia over the years, covering about 69 per cent of the country's agricultural land.
While the industry is aggressively pursuing automation and mechanisation to reduce dependence on guest workers, the discovery process may take some time.
"Until then, we would still have to rely on guest workers. So the fallacy that guest workers are cheap is untrue.
"We would rather have locals, but the reality is that most of them are not interested even with attractive packages being offered," he added.