Malaysia’s palm oil and glove exports will suffer a minimal impact should Canada decide to ban the import of the products following allegations of forced labour practices in the industries.
Industry expert MR Chandran said Canada is not a very big market for Malaysian palm oil which can be diverted to domestic use or other new or existing export markets.
“They have not done anything yet at the moment. I think Canada is trying to follow what the US has done. The US Customs and Border Protection (CBP) banned Sime Darby Plantation Bhd and FGV Holdings Bhd last year.
“However, there is no evidence to prove the allegations until now which is ridiculous. Sime Darby Plantation has a few international certifications such as the Roundtable on Sustainable Palm Oil, so what is the basis?” he told The Malaysian Reserve (TMR).
Reuters reported last week that Canada is investigating allegations of forced labour in Malaysia’s palm oil and glove manufacturing industries.
Employment and Social Development Canada’s Labour Programme was actively researching a number of forced labour allegations in different countries and sectors, including palm oil and glove manufacturing in Malaysia.
Malaysian firms, which include some of the world’s biggest palm oil and rubber glove producers, have faced increasing scrutiny in recent years over reports of labour abuses and destruction of tropical jungles.
Chandran questioned how the US and Canada could come with allegations concerning Movement Control Orders that have been in place since March 18, 2020, to combat the spread of the Covid-19 pandemic.
“How can they go to the ground and make an audit? Probably, it is only done through phone interviews or somebody has complained. What is the justification, where is the proof?” he added.
According to open data available from Canadian government, Malaysia exported some RM282 million worth of palm oil and RM1.31 billion worth of rubber gloves to the country in 2020.
Chandran did not express concern that such action could spread to other countries, especially European countries.
“The European Union has its own rules and regulations. Both Malaysia and Indonesia have a lot of investment in Europe — in the downstream space which creates a lot of jobs for European. So, I don’t think Europe will take such a drastic measure,” he said.
The US CBP has stopped and/or confiscated Malaysian-made gloves in the past on the ground of forced labour indicators, such as excessive hours, abusive living and working conditions, debt bondage, intimidation, physical and sexual violence and the retention of identity documents by companies.
The sanctioned companies include Top Glove Corp Bhd, Sime Darby Plantation and FGV Holdings.
An analyst at a local brokerage said the Canadian action will have a minimal impact because Canada is not a major market for the big four local glove companies.
“Western countries raising forced labour issues in Malaysian companies is not something new. I strongly believe our companies have done a good job to adopt labour guidelines.
“All the impact of such action has been factored into the share prices of the glove and plantation companies,” he told TMR.