he Edge Markets (08/03/2021) - KUALA LUMPUR (March 8): Malaysia's palm oil sector stands to lose an estimated RM11.83 billion in revenue for each year that pandemic curbs restrict the supply of workers, an industry grouping said today.

The world's second largest palm producer relies on foreigners for 70% of its plantation workforce, but the flow of workers from nations such as Indonesia and Bangladesh has dried up since border closures in the middle of March last year.

"The labour-intensive plantation sector has been registering a net outflow of foreign workers, especially over the past one year, as and when their employment contracts expire," the grouping of 12 industry bodies said in a joint statement.

Many workers also chose not to extend their contracts, the grouping, which spans associations of growers, refiners and millers, added.

The shortage of workers has led to an annual loss of 17.14 million tonnes of palm fruit bunches, or a reduction of 20% in yield, as well as an annual loss of 3.43 million tonnes of crude palm oil (CPO) production and 857,000 tonnes of palm kernel, it said.

"The opportunity loss amounts to an estimated RM11.83 billion of revenue a year, and profit of RM4.37 billion a year," the grouping said.

Its calculation assumed prices of CPO and palm kernel at RM3,000 and RM1,800 per tonne each, the statement added.

The pandemic curbs mean the government also faces a loss of RM896 million in income tax revenue each year, it said.

Tight supplies have helped drive Malaysia's benchmark CPO prices to a 10-year high of RM3,903 a tonne today.

But planters are not able to fully exploit the high price as a severe lack of harvest workers means estate production cannot be optimised, the grouping said.

National yields will fall below potential if staffing stays insufficient by the beginning of the peak production season in June, it warned.

It appealed to the government to lift curbs on entry and recruitment of foreign workers after Malaysia's key palm planting state of Sarawak reopened to migrants last week.

Read more at https://www.theedgemarkets.com/article/labour-curbs-seen-costing-malaysias-palm-industry-rm118b-annual-revenue