Multiple U.S. government agencies have publicly released assessments, including significant criticism, of the labour situation in Malaysia’s palm oil sector. This has led to negative consequences for Malaysian exports of palm oil to the U.S. market.
The Malaysian Palm Oil Council (MPOC) has undertaken a close assessment of a number of the source materials cited by the U.S. Department of Labor (DoL), U.S. Department of State (State), and the U.S. Department of Homeland Security’s Customs & Border Protection (CBP).
The sources themselves, and the data and evidence they present, deserve significant scrutiny.
Our research uncovers significant shortcomings in the data and sources cited, and used, by these U.S. authorities:
Old Data: Much of the data provided by sources such as NGOs, or petitioner organisations, are out-of-date (in some cases by almost 40 years) or are not applicable to the specific complexities of the Malaysian palm oil sector.
Glaring Omissions: The U.S. Department of Labor’s assessment of the palm oil sector relies on significantly outdated sources and datasets, and fails to take into account initiatives undertaken by the private sector in terms of preventative action.
MisleadingAccusations: The U.S. Department of Labor claims widespread forced child labour across Malaysia’s palm oils sector. However, the research cited and used to make these claims finds no evidence of widespread forced child labour that violates international norms.
Bias: There is reliance in several instances on reports by lobby groups that are explicitly opposed to palm oil in South East Asia. Using such reports as source documentation is not serious public policy, given the pre-existing bias built into those organisations. This approach undermines the claim that the findings by the U.S. authorities are taken from independent and evidence-based groups. Moreover, it undermines the goals of rooting out forced labour.
Failure to Acknowledge Progress: The U.S. State Department’s assessment similarly fails to acknowledge the work undertaken by the private sector to establish better practices, including NGO and trade union collaboration where legislation and regulation have not kept up to date with global benchmarks.
Response to U.S. Department of Labor Report
Research and sources are 10 years out-of-date on average; many are older
Omission of data and evidence that tells the positive story about Malaysian palm oil – including very limited inclusion of comments from Malaysian government or private sector
Lack of understanding or acceptance of the importance of private sector initiatives, in driving progress
The U.S. Department of Labor’s Trafficking Victims Protection Act (TVPRA) assessment produces a ‘list of goods’ the agency “has reason to believe” might be produced with either child labour or forced labour. Malaysian palm oil is included in this list for both child labour and forced labour.
The methodology for the TVPRA list is considerably weak, and appears to generate ad hoc results mostly based on media materials and advocacy campaigns. In 2014, palm oil from Malaysia was added to this list. There are considerable flaws in the DoL assessment of Malaysia’s palm oil sector, specifically:
There is no specific accusation levelled at Malaysian palm oil
The assessment is limited purely to the inclusion of a bibliography, and then supplemented with a listing of those bibliographic materials.
Shallow and out-of-date research in the DoL Bibliography
The median age of the sources used in the bibliography is 10 years, i.e. from 2012. A number of the sources used do not mention palm oil in any depth at all; the sector is only mentioned in passing in relation to broader problems with Malaysia’s labour governance.
Failure to account for private sector initiatives
Although there have been shortcomings in some parts of Malaysia’s regulatory regime, the research by both the DoL and State fails to take into account the non-government, i.e. industry, initiatives in addressing forced and child labour risks, and the extensive collaborations that have taken place between the private sector and NGOs. The absurdity of this is underlined by the inclusion of report by NGO Finnwatch criticising one company, but the absence of subsequent reports by the same NGO that were a result of increased transparency and ongoing collaboration between the company and the NGO. Such cherry-picking is a significant flaw in the material.
Case Study
Exploitative Labor Practices in the Global Palm Oil Industry Accenture, 2013
This report is still referred to on a regular basis by campaigners against the palm oil industry, and arguably played a role in the decision to disrupt some palm oil exports to the U.S. It was commissioned by consulting firm Accenture by the NGO Humanity United, a group that Malaysian palm oil companies have collaborated with at various points.
This report was comprehensive and very broad in scope. The bulk of the 57-page report concerns the industry in general; there are a number of claims about migration and immigration abuses, and a very small number of claims about the industry — just 8 claims altogether. There are, however, significant problems with the report’s claims.
First, sources are not given in a number of these cases. In a series of three claims about the industry’s treatment of workers on plantations, no sources are given.
Second, the report at various points conflates Indonesia and Malaysia, specifically in relation to the arrangements between plantation companies and smallholders. This is significant given the vast differences between land tenure regimes in the two countries and the way smallholder schemes have been developed (and continue to develop) in both countries.
Third, some of the source evidence on child labour used is more than 30 years old, meaning that it is significantly out of date not just in terms of quantified data, but also qualified data. For example, thirty years ago, the proportion of migrant labour in the Malaysian workforce was significantly lower than it is now, meaning that any discussion of child labour would have likely referred to domestic workers and families.
Fourth, some of the numerical estimates cited by advocacy groups appear to greatly overstate published academic estimates in relation to stateless children.
Despite this, and the decade-old data in the report, the document continues to be used by the US Department of Labor and formed part of the Grant Einhofer petition to US Customs and Border Protection.
It should also be noted that the authors of the report – Humanity United – have previously praised the efforts of the industry in terms of increasing transparency, and specifically as part of Senate testimony in 2015.
Why, then, are source materials being used by DoL that clearly emphasise historic allegations – including some from decades ago – rather than addressing the positive story of progress made by the palm oil industry in the present day? Such cherry-picking leads to the suspicion of dice being loaded against Malaysia in the preparation of the DoL report’s source material. This is not a serious approach to public policy.
The claims within the report, sources and responses are summarised below.
CLAIM
SOURCE
ANALYSIS
In Malaysia, forced labor in the palm oil industry is generally a result of international trafficking in people.
No source is given.
As there is no evidence given for any of the statements made, it’s impossible to assess the veracity of the claims.
… workers are completely at the whim of plantation owners or managers, whose priority it is to maximize productivity, often at the expense of reasonable working and living conditions and the rights of plantation workers. When faced with these conditions, workers have little recourse other than to leave the plantations; however, workers are unable to do so due to the closed nature of plantations.
No source is given.
As there is no evidence given for any of the statements made, it’s impossible to assess the veracity of the claims.
However, commitments from Malaysian industry have been strong and numerous in recent months to address similar allegations. The MPOA Responsible Employment Charter, for example, commits the industry to banning all debt-bondage scenarios.
Workers are often forced to submit work permits, visas, and passports to employers, which makes it impossible for them to legally depart plantations. This often does not prevent migrant workers from leaving the premises. However, if they leave, migrants are highly susceptible to extortion by local police, whose primary course of action is to return workers to the plantations where they are employed. Those migrants that successfully escape a plantation are unable to find legal employment in Malaysia. If they do find employment elsewhere, it is often at small, independent plantations that draw few visits from industry and government regulatory groups, making these migrants susceptible to further exploitative labor practices.
No source is given.
As there is no evidence given for any of the statements made, it’s impossible to assess the veracity of the claims. However, the examples of similar situations that have been found on the public record focus specifically on operations in Indonesia rather than Malaysia. Given conflation of Malaysia and Indonesia at other points in the report, it is possible that the authors may have again conflated the two countries.
Commercial estates may exploit smallholder plantation owners – a section in the report that contains claims about the relationships between commercial plantations and smallholders
Multiple — sources are accurate
The report does not specify that the allegations relate solely to Indonesia, and none of the sources are related to Malaysia
In Malaysia, children can be found working on palm oil plantations, where they assist their parents to collect loose fruit, help carry and load bunches of oil palm fruit, and weed the oil palm fields. One report estimates that 60 percent of the children working on palm oil plantations in Malaysia are 6 to 10 years old.
The source given is an interview with CAMSA, an NGO based in Malaysia, however, it would appear that the source is incorrect and is conflated with the source below (USDOL 1995). There is no substantiation for the data, nor is any context given, specifically in relation to the status of the parent workers, e.g. whether they are working with their families outside of educational hours, which is within international norms.
In order for workers on plantations to meet their daily quota of palm fruit harvested and collected, it has been identified that “assistance from the child worker is the savior.”
USDOL, 1995
The USDOL source quotes from another source, which is a report from 1992. However, the primary source of the original quote and data is in fact a report published in 1984 – almost 40 years ago.
In Malaysia, it is estimated that between 72,000 and 200,000 stateless children work on palm oil plantations.
Asia Foundation 2010
There is no primary source for this data. However, the only published estimates (from 2009) estimate approximately 36,000 Indonesian stateless children in Sabah.
The U.S. State Department’s Trafficking in Persons (TIP) report has alleged the use of trafficked labour in Malaysia since 2005.
The methodology for State’s TIP report and the tier placement of countries is based entirely upon a government’s legal, regulatory and policy responses to human trafficking; it does not consider non-government or private sector responses, despite the fact that private sector actions – including in the Malaysian palm oil sector – have a significant positive effect on the ground, at improving labour rights and resolving issues raised by the TIP report.
This means that efforts by certain subsectors (e.g. palm oil) or individual companies to prevent, mitigate or remediate problems within their supply chains will not necessarily be recognised by State, even if those actions materially and verifiably succeed at resolving questions raised in the TIP report. It is therefore not practical for industry to respond to all claims in the TIP report on palm oil.
Despite whatever problems there may or may not be in Malaysia, the private sector – specifically the palm oil industry – has taken a number of measures to address the treatment of immigrant workers in the country.
Unlike the DoL report, the TIP report does not publish a bibliography of sources. It is understood from consultations with U.S. officials that State has relied heavily upon the Fair Labor Association’s 2018 report as a bibliographic source. These sources are noted in the Annex.
Report recommendation text: “Take steps to eliminate recruitment or placement fees charged to workers by recruiters and ensure recruitment fees are paid by employers.”
The industry, government, and NGOs have taken clear steps to eliminate recruitment and placement fees charged to workers via the MSPO (Malaysian Sustainable Palm Oil) certification system.
MSPO certification is a mandatory certification system for all Malaysian palm oil supply chain participants, from large plantations and smallholders through to mills, processors and traders.
The MSPO standards were revised to specifically eliminate the ILO’s 11 indicators of forced labour, with specific and clear prohibitions on: “a) Abuse of vulnerability; b) Deception; c) Lack of freedom of workers to resign and restriction of movement; d) Isolation; e) Physical and sexual violence; f) Retention of identity documents or passports except during the renewal process and/or legal administration purpose with the consignment letter agreed by both parties; g) Withholding of wages; h) Debt bondage; i) Abusive working and living conditions; j) Payment of statutory recruitment fees by workers; k) Involuntary or excessive overtime; l) Contract substitution; and m) Penalty for termination of employment.”
The standards were developed and revised with the participation of the Malaysian Trade Union Congress (Malaysia’s labour representative at the ILO) and the National Union of Plantation Workers (NUPW).
MSPO is audited via independent third-party auditors, including requirements for social audit training and experience for all auditors.
TIP Recommendation: “Continue to expand cooperation with NGOs, including through financial or in-kind support to NGOs to provide some victim rehabilitation services.”
The industry has collaborated at length with NGOs in order to prevent worker exploitation, and has now recently provided financial support as remediation for victims of underpaid workers.
Industry collaboration with NGOs includes organisations Verité, Finnwatch, Proforest, and the Fair Labour Association, among others.
In addition, the revised mandatory MSPO standards were developed and revised with the participation of the Malaysian Trade Union Congress and the National Union of Plantation Workers.
TIP Recommendation: “Effectively enforce the law prohibiting employers from retaining passports without employees’ consent, including by increasing resources for labor inspectors, and include language explicitly stating passports will remain in the employee’s possession in model contracts and future bilateral memoranda of understanding with labor source countries.”
As noted above, the mandatory MSPO standards contain blanket prohibitions on the “f) Retention of identity documents or passports except during the renewal process and/or legal administration purpose with the consignment letter agreed by both parties.”
The Malaysian Palm Oil Association (MPOA)’s Responsible Employment Charter also commits explicitly to “prohibition on recruitment fees” among many other commitments. Individual companies, notably Sime Darby Plantations, have made explicit commitments to remediation for any past recruitment fees paid by workers.
Response to Claims Made in Petitions to U.S. Customs and Border Protection
Several of the source documents are not actually focused on palm oil
Only 10 (of 48) reports cited actually used direct informant information
Child labour (which is not prevalent in Malaysia) is given unjustified weight and prominence
The petitions made to the U.S. Customs and Border Protection (CBP) rely heavily on specific NGO reports. This can be demonstrated by the following:
The Grant and Einhofer petition to CBP against FGV
The Liberty Shared petition to CBP against Sime Darby Plantations
There are a large number of reports authored by NGOs that either make direct claims about the labour situation in Malaysia, or are often used as secondary sources to support claims made about labour in Malaysia.
It is important that these additional sources are also assessed critically; desk-based research that does not vet its sources can result in the distortion of data and/or repeating of unsubstantiated claims. The consequences for companies and workers that can flow from such sources, are substantial and serious, as we have seen from some of the largest Malaysian companies in recent weeks and months. Sources must therefore be rock-solid if they are to be used in cases with some tough sanctions.
The risks of this can be seen in the use of Section 307 by environmental campaigners to petition CBP to create trade disruptions for palm oil imports. The petition by Grant and Eisenhofer resulted in a significant disruption for exporters.
In addition to NGO reports that are funded by non-government sources, there are a number of reports that have been funded under USAID programs, specifically those authored by Winrock and Liberty Shared.
Liberty Shared is a long-standing partner of the U.S. government through USAID, the US international development agency. Its first collaborations with USAID commenced in 2016 on the Counter Trafficking in Persons (CTIP) program as part of a consortium with aid contractor Winrock.
The Liberty Shared complaint against Sime Darby Plantations in April 2020 to CBP was unusual in that CBP was working with USAID’s Counter Trafficking in Persons (CTIP) program at that point in time. At the time Liberty Shared was finalising a report on recruitment in the palm oil sector in Malaysia for the CTIP program; the CTIP report was published in September 2020.
This situation is unusual; it can be inferred that one US government agency (USAID) was paying an external group to lobby another government agency (CBP) to undertake action against Malaysian exports.
The petitions to the U.S. Customs and Border Protection (CBP) also include a number of references from NGO reports (such as those below), which require scrutiny where CBP failed in their public duty to do so.
Trapped: The Exploitation of Migrant Workers in Malaysia Amnesty International, 2010
This NGO report is an extensive and detailed examination of labour exploitation in Malaysia, focusing particularly on indentured labour and the problems of unethical recruitment. It should, however, be noted that palm oil is not mentioned at all throughout the report, although references to plantations are made several times. The emphasis on manufacturing should be noted in that there are approximately 20 references made to plantations but a total of 71 references made factory or factories. This would appear to indicate the emphasis of the reporting. No palm oil incidents are listed, nor are any palm oil companies. This source does not demonstrate a need, nor make any recommendations, for a focus on the palm oil sector.
Review of Labour Migration Policy in Malaysia ILO, 2016
This ILO Report is a critical and impartial examination of labour policy in Malaysia and its potential impacts on the Malaysian economy, as well as its impacts on the lives of workers. The report takes an impartial view of all industries in comparison, noting that the use of migrant labour in Malaysia is prevalent across all sectors. No companies mentioned and no specific incidents are referred to; it can be considered highly credible in that it undertakes qualitative and quantitative research on the prevalence of labour exploitation in Malaysia for migrants, and impartially assesses them across different sectors.
Triple Discrimination: Woman, Pregnant, and Migrant Fair Labor Association
This paper has been mentioned in criticisms of the palm oil industry, such as the petition against FGV to CBP. However, palm oil is not mentioned at any point in the report, nor is the Malaysian plantation sector.
Sold Like Fish: Crimes Against Humanity, Mass Graves and Human Trafficking from Myanmar and Bangladesh to Malaysia from 2012 to 2015 Suhakam, 2019
This report is an examination of human trafficking between Myanmar/Bangladesh and Malaysia in the period from 2012- to 2015, when mass graves of refugees were found at the Malaysia-Thailand border as a result of human trafficking. The report focuses almost entirely on human trafficking and ethical recruitment, and is less concerned with any specific sectoral problems; palm oil is not mentioned in the report at any point.
