Clear Commitment: No More Recruitment Fees for Palm Oil Workers


Reforms undertaken by the Malaysian palm oil sector over the past 6-9 months are making significant advances ahead of the industry’s own expectations, but also are clearly aligned with the expectations and conditions set out by the U.S. government.

A case in point is recruitment fees. The Malaysian palm oil sector has set a clear and unshakeable commitment to ban and remove all such fees. The palm sector has stated the ban clearly, and is implementing and enforcing this ban in practice.

These fees – often paid by migrant workers to middlemen recruitment agencies, who then forced the workers to repay out of wages without the direct knowledge of the plantation company employing their services, effectively keeping them in debt bondage – were stated as a major concern by the U.S. Customs & Border Protection (CBP).

Under Malaysian Government rules, much of the process of attracting migrant workers is handled on a government-to-government basis – including through Memoranda of Understanding with governments from where migrant workers arrive, including Bangladesh and Nepal. This process has caused difficulties for Malaysian employers to fully understand the entire supply chain process, because some rogue agencies in source countries were charging fees without the knowledge of the end-employer in Malaysia. Evidence of this emerges in a survey of Nepalese workers that indicates that although Malaysian firms had covered the recruitment costs of imported workers through recruitment firms, the local recruitment agents in Nepal had simultaneously charged recruited workers in Nepal and not informed them that their costs would be covered. Similarly, research engaging Bangladeshi workers has indicated that there a number of domestic middle-men in the recruitment process, and that in some cases Bangladeshi workers arrive in Malaysia to learn that the promised work does not exist, increasing the vulnerability of migrants to exploitation.

This research demonstrates the problems that existed in the past – but also highlights the tangible progress that is being made at a rapid pace. The specific problems that are now known and understood, are being solved. The Malaysian Government has signed a strengthened MoU with Bangladesh to protect worker rights, and other countries may follow. The prohibition of recruitment fees, whether or not included legally under the MoU, will in any case be enforced by the Malaysian Palm Oil Association’s Responsible Employment Charter. Requiring recruitment agencies to apply the IOM standards in their recruitment processes, for example, will further erode the ability of rogue actors to undercut these commitments.

In recent months, Malaysia’s largest companies – and companies in the plantation sector – have objectively taken the greatest steps to mitigate and remediate incidents involving migrant workers, including the application of third-party voluntary standards. The palm oil sector is now a leader in the country, for reforms and improved treatment of migrant labour.

These steps can be replicated across the industry – and in other parts of the economy that rely on migrant workers. It is equally important, though, that a strong signal is sent by the U.S. authorities that these costly and difficult reforms will have a positive impact on the industry’s ability to secure access to the U.S. market (and non U.S. markets) now and in the future. The shared goal of improving labour rights and ending forced labour requires commitment, and movement, from all sides. Malaysia is doing its part; others must now do theirs.