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Indonesian palm oil workers arrive in Malaysia after bureaucratic hiccups
The world's second-largest palm oil producer lacks at least 1.2 million workers across its manufacturing, plantation and construction sectors, a shortage worsening daily as economic activity bounces back from the pandemic.
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alaysia has received the first group of Indonesian migrant workers since reopening its borders, with the hopes of easing a major labor shortage on oil palm plantations.
The world's second-largest palm oil producer lacks at least 1.2 million workers across its manufacturing, plantation and construction sectors, a shortage worsening daily as economic activity bounces back from the pandemic.
The country has not seen a significant return of migrant workers despite reopening borders in April due to slow government approvals and protracted negotiations with Indonesia and Bangladesh over worker protections.
"As of [Wednesday], we have approved requests for 4,699 workers for the plantation [sector] only," Indonesia's ambassador to Malaysia, Hermono, told Reuters.
Indonesia last month barred a group of about 150 plantation workers from traveling to Malaysia because recruiters did not follow proper emigration procedures and most of the workers did not have the right visa.
The arrival of migrant workers will help ease a shortage of more than 100,000 workers in oil palm plantations, which have been forced to leave thousands of tons of palm fruit rotting on trees due to a lack of harvesters.
Malaysia's Human Resources Ministry did not immediately respond to a request for comment.
Kulim (Malaysia) Berhad has received its first "post-pandemic batch" of migrant workers, the oil palm planter said on Thursday.
Kulim said it had on Wednesday evening welcomed 37 workers from Indonesia's Lombok island.
They were the first group of Indonesian migrant workers to enter Malaysia since borders reopened, and were long awaited by oil palm planters grappling with lower production and a shortage of over 100,000 workers.
"After two years of the pandemic, we can now expect more workers to arrive while adhering to the stringent processes and procedures," Kulim chief operating officer Fairuz Ismail said in response to a Reuters query.
Malaysian companies from oil palm plantations to semiconductor makers have been refusing orders and forgoing billions in sales, hampered by a shortage of more than a million workers that threatens the country's economic recovery.
The export-reliant nation, a key link in the global supply chain, relies on millions of foreigners for factory, plantation and service sector jobs shunned by locals as dirty, dangerous and difficult.
Manufacturers, who make up nearly one-fourth of the economy, fear losing customers to other countries as growth picks up.
"Despite the greater optimism in outlook and increase in sales, some companies are gravely hampered in their ability to fulfill orders," Soh Thian Lai, president of the Federation of Malaysian Manufacturers, which represents over 3,500 companies, said earlier this month.
Oil palm growers are at breaking point, said Carl Bek-Nielsen, chief executive director of oil palm grower United Plantations.
"The situation is dire and very much like having to play a game of football against 11 men but only being allowed to field seven," he said.
Manufacturers say they are short 600,000 workers, construction needs 550,000, chipmakers lack 15,000 and cannot meet demand despite a global chip shortage, and medical glove makers say they require 12,000 workers.
Malaysia's manufacturing Purchasing Managers' Index dropped to 50.1 in May from 51.6 in April, barely remaining in expansion, as the sector shed the most jobs since August 2020, according to data from S&P Global.
Chipmakers are turning away customers, locals are not interested in working in the industry and many who do join leave in less than half a year, says Wong Siew Hai, president of the Malaysia Semiconductor Industry Association.
The palm oil industry, which contributes 5 percent to Malaysia's economy, warns 3 million tons of crop could be lost this year as fruit rots unpicked, meaning losses of more than US$4 billion. The rubber glove industry estimates $700 million of lost revenue this year if the labor shortage persists.
