Malaysia palm oil producers look to prisons, rehab centres to solve labour crunch

Malaysia's labour-reliant palm oil companies are looking to recruit recovering drug addicts and prisoners to solve a severe shortage of migrant foreign workers as the coronavirus pandemic shuts borders and hampers output of the edible oil.

Planters in the world's second-largest producer have in recent months embarked on rare recruitment drives to hire locals to do everything from harvesting to fertilising crops, but response has been lukewarm.

Migrants from Indonesia and Bangladesh make up nearly 85 per cent of plantation hands in an industry locals typically shun as dirty, dangerous and difficult. But travel and movement restrictions have left producers grappling with a shortage of 37,000 workers, nearly 10 per cent of the total workforce.

The shortage, especially during the peak production months of September-November, will hurt output by delaying the harvest of perishable fruit, giving an edge to no. 1 producer Indonesia, which has no significant labour problems.

The Malaysian Palm Oil Association (MPOA) estimated the industry has lost up to 30 per cent of its potential yield as the labour crunch delays harvesting, and pegged the country's crude palm oil output to be much lower than last year's 19.9 million tonnes.

"We are even reaching out to ... the Drug Prevention Association of Malaysia, as well as the Prisons Department in search of locals," MPOA said in a statement on Tuesday evening.

Collaboration with the Prisons Department to recruit some parolees and prisoners dates back to 2016, but now more companies are interested in the programme, MPOA Chief Executive Nageeb Wahab told Reuters.

Sime Darby Plantation, the world's largest palm producer by land size, on Wednesday said it is 2,500 workers short - about 10% of its foreign labour force - and that companies are "desperate" to explore every opportunity for new recruits.

"We are looking at prisons for those who are going to be released in the next few months," Sime Darby's Chief Financial Officer Renaka Ramachandran said in a webinar. "We have also gone to drug rehabilitation centres and try to employ anyone who could be appropriate."