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27 January, 2002 (Business Times) - THEY form almost 70 per cent of theconstruction workforce and an equally sizeable proportion of domestichelpers as well as plantation workers, yet this week, Malaysians made aresounding call to send Indonesian migrant workers back home.

29 January, 2002 (Business Times) - EFFORTS to reduce the population ofIndonesian workers in Malaysia may appear to work well on paper but inpractice, it may carry a high price tag.In recent weeks Indonesian workers had made front-page news in Malaysiawhen they were involved in two rioting incidents.Almost immediately came the calls to halt the arrivals of new Indonesianworkers and to immediately deport those who are here illegally.It was a case of paying the price for the country’s economic success. Thecountry’s average 8 per cent economic growth, registered since themid-1990s, had generated plenty of jobs, and this had attracted thelargely unskilled workforce from Indonesia because Malaysians had turnedto better paying and less physically strenuous jobs. Filling the void hadbeen some 2 million foreign workers.While the economic downturn beginning 1997 had brought the number down toabout 1 million, it is widely believed that, including illegal workers,there are now about 3 million foreign workers in the country.Official estimate quotes a much lower number, 800,000 in all, but only onthe legal foreign workers as at September last year. Of this, 64 per centwas employed in the manufacturing and plantation sectors.Indonesians formed 74 per cent of the lot, followed by Bangladeshis (18per cent), Filipinos (2 per cent), Thais (1 per cent) and others (5 percent).Indonesia has been the biggest supplier of workers to Malaysia by virtueof its close proximity which translates into cheaper costs for employerswho engage them.Malaysian Employers Federation (MEF) executive director Shamsuddin Bardansaid Indonesian workers are easy to train as they speak the same languageas Malaysians, and share a rather similar culture.“Communication is an important factor when recruiting foreign workers,” hesaid.Malayan Agricultural Producers Association (Mapa) director Mohamad Audongsaid Indonesian workers are favoured in estates as most of them areengaged in agricultural work in their home country.However, the recent rioting incidents by Indonesian workers could changethe landscape altogether as authorities are close to adopting some sort ofa “hire Indonesians last” policy.Experts, however, think that the move may not be an easy one to implement,primarily due to the sheer number of Indonesians already present in theunskilled labour market in Malaysia.Economists and employers believe that the construction, plantation,services and other labour-intensive manufacturing industries would beaffected.RAM Consultancy Services Sdn Bhd chief operating officer Dr Yeah Kim Lengsaid employers who have to get replacements for their Indonesian workerswill probably incur additional costs in training workers from othercountries.Estate owners will likely replace the Indonesians with Bangladeshi workersbecause based on productivity, they are second after the Indonesians,Mohamad Audong said.Mapa members, which represent about 450 rubber and oil palm estates inPeninsular Malaysia, employ about 37,000 foreign workers.Mohamad Audong said in the long run, the higher cost of recruiting workersother than Indonesians will manifest in higher labour costs for employers.Mapa will be appealing to the Government for some flexibility in therecruitment of Indonesian workers if its members are unable to get therequired number of workers from other countries.“We’ll ask the Government to reconsider on a case-by-case basis,” MohamadAudong said.MEF’s Shamsuddin concurs, saying that the immediate impact of theGovernment’s ruling is serious. He urged the Government to give adequatetime for employers to adjust to the new ruling.“I believe the policy needs to have a lead time so that people will not becaught by surprise… give enough time for the employers to make allnecessary adjustments,” he said.He expressed concern that manufacturers may not meet their export ordersif they are not able to recruit adequate manpower.On another aspect, RAM’s Yeah sees the Government’s recent move as asignal for labour-intensive industries to go for automation.Meanwhile, economist Tan Sri Ramon Navaratnam said employers must see theneed to innovate and introduce more capital-intensive technologies.The plantation sector, he said, should adopt a long-term economic outlookand think of high-yield production methods while getting rid oflow-yielding rubber and oil palm trees.Navaratnam also suggested that Malaysia imports natural rubber fromIndonesia so that the value-added downstream activities can be carried outin the country.“We should let the low-cost labour-intensive industries be run bycountries with lower labour costs because they still have a unskilled orsemi-skilled workforce,” he said.He added that Malaysia should not delay its shift to higher technologicalproduction or else it will lose out in the competition with othercountries in the region with lower labour costs.Navaratnam sees the Government’s decisive step in deporting troublesomeforeign workers immediately as a move towards stabilising the local labourmarket as well as to increase business and public confidence.Navaratnam, however, cautioned that the policy regarding foreign workersshould be sustainable and not implemented on an ad-hoc basis.“It should be spelt out clearly so that employers are convinced that theGovernment has a new policy on migrant labour.“If not, employers will hope that the new measure will eventually fadeaway and they can revert to the old and unproductive way of employingforeign labour,” he said.Economists also agree that reducing foreign workers will help reduce theoutflow of money from the country.RAM’s Yeah said between RM3 billion and RM4.8 billion are repatriated in ayear, given that there are one million migrant workers in the country.This is based on the assumption that these workers save half of theirearnings which range from RM350 to RM800 amonth. “It is quite a substantial outflow,” he noted.Another economist pointed out that money taken out by foreign workers fromMalaysia could be considerably more, considering that there is also a highnumber of illegal workers in the country.He estimates that the figure could well be above RM5 billion a year.As for helping the domestic consumption, Yeah said foreign workers dospend locally but their expenditure may not be that significant comparedto the local people.“They are in the low-income group and they do not establish households inthe country, so their spending will be quite small,” he said.National Union of Plantation Workers (NUPW), which represents 50,000permanent workers in the Peninsular Malaysia’s plantation sector like oilpalm, rubber and cocoa estates, has another view.NUPW general secretary A. Navamukundan said the sector’s dependency onforeign workers can be reduced if the quality of life in the estates canbe further improved.He said the locals are leaving the estates to seek better opportunitiesand living conditions in towns and cities.He feels that the Government has to play a role in upgrading the livingconditions in the estates so that the younger generation of workers willbe attracted to job opportunities in the sector.The task of providing basic amenities to workers and their families inestates should not be left solely to employers, he added.He also stressed that the current ruling of hiring Indonesian workers asthe last resort will only diversify the sources of foreign labour and willnot really address the country’s dependency on foreign workers.

THURS, 31 January, 2002 (Business Times) - IOI CORPORATION Bhd, alreadyone of the most cost-efficient plantation companies, plans torevolutionalise the oil palm industry by raising its palm oil yields by atleast 50 per cent.

KUALA LUMPUR, Wed. 30 January, 2002 ( Business Times) - Many oil palmsmallholders are having second thoughts about taking part in a governmentscheme in which they are paid to have their ageing palms felled.

Kuala Lumpur 30 January, 2002 (Business Times) - THE ongoing flap overreducing the number of Indonesian workers appears to be a storm in ateacup, going by the share price movements of plantation companies whichare among the largest employers of these workers.

KUALA LUMPUR, Jan. 28 (Dow Jones) - Malaysia wants to supply a big chunkof the 2.4 million metric tons of palm oil China plans to import thisyear, Primary Industries Minister Lim Keng Yaik was quoted by the Bernamanews agency as saying Monday.As part of its obligations under the World Trade Organization, China hasagreed to allow the import of 2.4 million tons of palm oil this year, butthe agencies that will import the palm oil or the individual quotas foreach one of them are yet to be announced.The Bernama report, however, noted that out of the total quota, 1.4million tons have been given to individual importers, 800,000 tons tostate-owned enterprises and 200,000 tons set aside for countertrade.Malaysia has already proposed to award railway construction work toChinese companies and pay for the work in palm oil.When contacted, a source close to the Malaysian Palm Oil Promotion Councilsaid Chinese authorities are expected to issue the quotas before the LunarNew Year next week, but no announcement has been made yet.

Thursday, January 24, 2002 (The Star) - MORE Malaysian oil palm plantationcompanies are expected to invest aggressively abroad, once the outcome ofearlier investments by at least 40 local companies in Indonesia, SolomonIslands and Papua New Guinea begin to bear fruit.Affin-UOB Securities Sdn Bhd said in its January 2002 Investment Reviewreport that the continued expansion by palm oil producers would beencouraged by oil palm crops having a much higher yield per ha than otherseed oils and the commodity’s relatively cheaper production costs comparedwith other vegetable oils.The world demand for palm oil is expected to increase from the present 20million tonnes per year to 40 million in 2020.Affin-UOB Securities said a large portion of the demand would continue tocome from Indonesia, India, China, Pakistan and Malaysia.As demand grows, Oil World projects palm oil would become the leadingedible oil in 2012.“If this demand is to be met, 300,000ha of new planting is required yearlyover the next 20 years,’’ Affin-UOB Securities said, adding that amajority of new land is expected to come from within Indonesia wherelabour and land are plentiful.In Malaysia, the land availability particularly in peninsular Malaysia isvirtually approaching saturation point with new plantings mostly inSarawak and Sabah.

Kuala Lumpur, 29 January, 2002 - MALAYSIA’S crude palm oil (CPO) exportsto India are set to gain up to 500,000 tonnes in view of a possible moveby the latter to restrict imports of soyabean oil.Traders said under the tariff-rate quota (TRQ) ruling, Indian importersmay opt to buy either Malaysia’s or Indonesia’s palm oil to offsetsoyabean imports that will be affected by the ruling.“However, that chunk may also go to Malaysia’s rival Indonesia but due toIndia’s preference on refined oil, Malaysia will have the upperhand,” atrader told Business Times in Kuala Lumpur yesterday.“Coupled with fantastic exports to China in view of the Lunar New Year,CPO prices are not expected to dip below the RM1,200 a tonne level,” saidthe trader.Last week, Reuters had reported that New Delhi was considering imposingduties of 75 per cent, up from the current 45 per cent, on soyabeanimports in excess of 500,000 tonnes.The proposal is set to be announced officially by its Finance Ministryduring the Indian Budget slated on February 28.The subcontinent last year imported 1.5 million tonnes of both soyabeanand soyabean oil from countries such as Argentina and Brazil.India, Malaysia’s biggest CPO buyer, currently slaps a 65 per cent duty onMalaysia’s CPO after reducing it from 75 per cent in November last year.Under the TRQ, a particular quantity of edible oil can be imported on aparticular tariff with another set of tariff rates for the subsequentamount.Under the plan, India will slap a 45 per cent duty on the first 500,000tonnes of soyabean oil bought from outside followed by a 75 per cent dutyfor the following amount.The TRQ is not new because India had enforced a similar ruling forsunflower seed and rapeseed, whose exports were restricted to 150,000tonnes each year.China, Malaysia’s third biggest buyer of palm oil last year, alsopractises the TRQ system.The reasons behind the ruling is not clear but traders said it isobviously a move made by the subcontinent to boost its domestic edible oilsector such as cotton oil and mustard oil.“The ruling will also protect local farmers and reduce dependency onoutside supplies,” said a trader.He added that with the new ruling the discriminatory discount of aroundUS$80 (US$1 = RM3.80) can be narrowed down to between US$30 and US$40 inthe near future.India is Malaysia’s biggest palm oil customer buying 2.03 million tonneslast year and 2000. It bought 2.38 million tonnes in 1999.Malaysia is the world’s biggest producer of CPO producing 8.32 milliontonnes in 1986 valued at RM9.4 billion.In 2000, Malaysia produced 10.38 million tonnes and exported at about 140countries worldwide valued at RM12.47 billion.According to the Malaysian Palm Oil Board, Malaysia produced 11.803million tonnes last year of which, 10.59 million tonnes were exported.

JAKARTA, Jan 29 (Reuters) - Indonesia expects to supply 720,000 tonnes ofpalm oil to China this year, or 30 percent of the big buyer's importquota, the Indonesian Palm Oil Producers Association (GAPKI) said onTuesday.GAPKI chairman Derom Bangun said China would raise its palm oil importquotas to 2.4 million tonnes in 2002 from 1.4 million tonnes last year,following its entry into the World Trade Organisation (WTO)."China is set to issue 2.4 million tonnes in quotas this year and weexpect to take the opportunity of supplying 720,000 tonnes," Bangun toldReuters by telephone from Medan, capital of the palm oil growing area ofNorth Sumatra province.Indonesia is the world's second largest palm oil producer afterMalaysia.Bangun said Indonesia's palm oil exports to China were seen at 450,000tonnes in 2001, some 30-35 percent of China's imports of 1.4 milliontonnes for that year.China imposes quotas on edible oil to limit imports."Rising quotas from China is forecast to boost the prices of palm oil,especially CPO, in the international market," Bangun said.Indonesia's Crude Palm Oil (CPO) was traded at $330 a tonne CIF Rotterdamfor January shipment on Monday. More than 80 percent of Indonesia's palmoil exports are in the form of CPO.Malaysia supplied around 60 percent of China's quotas last year, Bangunadded."This year, they will still control the Chinese market," Bangun said.

KUALA LUMPUR, Jan 29 (Reuters) - An Iraqi state firm has contracted to buynearly 100,000 tonnes of palm oil from Malaysia for delivery in the nextsix months -- the country's first large purchase since the end of the GulfWar, an industry source said on Tuesday."This is the first time a Malaysian company gets an order to supplysuch large quantity to Iraq," said the source from a leading Malaysianfirm which gets the contract."Iraq used to buy sunflower oil and corn oil in large quantities, butwith prices of both oils going up due to less and less availability, palmoil products have become the obvious choice," said the source.The contract shown to Reuters said the palm oil should be of Malaysianorigin and consisted of 87,758 tonnes of RBD palm oil, 9,680 tonnes of RBDpalm stearin and 2,026 tonnes of palm kernel oil which should be shippedin a six-month period.Iraq was expected to buy some 200,000 tonnes of palm oil from Malaysiain 2002 because the country's cooking oil manufacturing sector had resumedactivity, said the source.Iraqi embassy officials in Kuala Lumpur declined comment.

KUALA LUMPUR, Jan 23 (Bernama) -- JustCommodity Pte Ltd, the only softwaresolutions company that is set up to support the information technology(IT) needs for commodity sector, will start its business on a small scalein Kuala Lumpur tomorrow.

18 January, 2002 (Oil World-Weekly)