Labour crunch hurts Malaysian palm oil growers as Indonesians stay home

Sun Apr 27, 2014 5:45pm EDT
 
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By Anuradha Raghu

KUALA LUMPUR (Reuters) - A slump in the number of Indonesian workers applying for jobs in Malaysia's palm oil sector is worsening a labour crunch that industry players say is taking a heavy toll on the export earnings of the world's second-largest grower of the edible oil.

The two countries account for about 85 percent of the global output of palm oil - used in foods ranging from margarines and biscuits to instant noodles - and Indonesia's booming economy also poses a longer-term threat to its own palm oil output as urbanisation drains rural workers.

Malaysia has long relied on plantation workers from neighbouring Indonesia to harvest fresh fruit bunches from oil palm trees that can grow up to 20 metres (66 feet) tall - jobs that are proving hard to replace with mechanisation.

But the number of Indonesians willing to leave their homes and families for the gruelling work is dwindling due to higher wages at home and rapid urbanisation in Southeast Asia's biggest economy. Indonesian applicants for jobs in Malaysia's palm oil sector plunged to 38,000 in 2013 from more than 120,000 in each of the previous two years, according to data from the Indonesian embassy in Kuala Lumpur.

"Some are not interested (in working on plantations) anymore," said Abdul Rahim, a 32-year-old Indonesian working on a 2,000-hectare oil palm estate in Malaysia's Selangor state neighbouring the capital Kuala Lumpur.

"If I have the means, I will go home and open up my own business there."

Industry officials and analysts estimate that planters lose up to 5-10 percent of their fruit each year due to labour shortages, cutting Malaysia's total export revenues by about 2.5 billion ringgit ($766 million) annually.

In 2013, Malaysia's palm oil exports dipped to 45.27 billion ringgit ($13.85 billion), its lowest since 2010, from 52.99 billion ringgit a year before. Palm oil accounts for about six percent of the country's total exports.   Continued...

 
Indonesian worker Abdul Rahim Gani, 32, carries oil palm fruits at Felda Bukit Cerakah in district of Klang outside Kuala Lumpur April 16, 2014. REUTERS/Samsul Said