PUTRAJAYA must solve labour shortages and production disruptions in the palm oil sector before increasing exports, Bangi MP Dr Ong Kian Ming has said.

The former deputy international trade and industry minister said that even though the domestic and global economy reopened this year, production in the palm oil sector has not returned to pre-pandemic levels. 

Ong said the labour shortage in the palm oil sector is at approximately 120,000 workers, as estimated by the Malaysian Estate Owners Association.

“It looks unlikely to be resolved this year due to continued uncertainty at the government-to-government level between Malaysia and Indonesia with regard to policies that are supposed to be in place to protect foreign labour in Malaysia, especially in the plantation sector,” Ong said in a statement today.

“The labour shortages in the palm oil sector is just one example of the larger failure of the government to have a coordinated approach to tackle the problem across the relevant ministries,” he added.

These ministries include home, human resources as well as international trade and industry.

“This policy failure is one of the factors that have led to domestic supply chain bottlenecks and disruptions, which also partly explains the increase in the cost of production.”

Noting Prime Minister Ismail Sabri Yaakob’s recent visit to Turkiye, where Malaysia seeks to increase its exports to the country, Ong said promises to export more palm oil would be “false” if domestic production issues are not effectively managed.

On lower production levels, Ong cited data from the Malaysian Palm Oil Board, which showed that production of crude palm oil (CPO) from January to May this year was only at 6.8 million tonnes.

This, Ong said, was 18.7% less than for the same time period in 2019, which stood at 8.3 million tonnes. 

“Even though CPO prices have increased from just over RM2,000 / tonne in 2019 to a high of more than RM7,000 / tonne in May of this year, it has fallen since to slightly above RM4,000.

“Domestic producers of palm oil and related products have not been able to adequately capture the benefits of this price increase.”

Ong added that the government should not take the same approach of banning the export of palm oil related products in order to “solve” domestic shortages of cooking oil.

“We have seen the harm caused by the ban in the export of chickens where companies in other countries have been forced to look for alternative export sources, to the detriment of Malaysian producers.

“The government should instead take a more pro-active approach towards solving the labour shortage issue in the palm oil sector and other sectors as well.” – July 12, 2022.