,According to Malaysian Palm Oil Association (MPOA) chief executive officer Datuk Nageeb Wahab, (pic) the crunch of foreign workers in the labour-intensive plantation sector has doubled this year from last year’s gap of 40,000 workers.
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KUALA LUMPUR: There is a concern about the profitability and sustainability of the plantation sector beyond next year, given the severe shortage of foreign workers due to the closure of the national borders.
According to Malaysian Palm Oil Association (MPOA) chief executive officer Datuk Nageeb Wahab, the crunch of foreign workers in the labour-intensive plantation sector has doubled this year from last year’s gap of 40,000 workers.
Nageeb envisaged that the total loss in revenue for the sector could potentially increase to between RM18bil and RM20bil this year compared with RM12bil last year despite the higher crude palm oil (CPO) price.
As such, the severe shortage of workers could result in the country’s CPO production falling to 18 million tonnes this year from 19.14 million tonnes last year.
“To date, the country’s production is already lower by 7% from last year.
“Judging by the potential crop decline this year, I am anticipating CPO production to be only around 18 million tonnes this year, reflecting the shortage of workers in the country,” he opined.Oil palm fruits harvesting at a Felda plantation. - File pic
A significant outflow of foreign workers has led to the shortage of labour in the estates nationwide, he said.
In general, the average turnaround rate is between 3% and 5% of workers leaving the industry per year.
On the other hand, Kenanga Research analyst Adrian Kok pointed out that the local planters have been able to enjoy higher profitability in the first half of the year compared with last year, thanks to higher CPO price.
However, due to the lower production, planters were not able to realise the full benefits of the high price of CPO.
Year to date, Nageeb said the CPO price had remained at “good levels” due to the supply risks of competing oils from the adverse weather conditions in Canada and the United States as well as the shortfall in CPO production.
“If the prices stay above RM3,000 per tonne, plantation companies can still survive reasonably well. The higher price of CPO is the only consolation we have for now.
“We hope it stays, or this can lead to the gradual demise of the local palm oil industry,” noted Nageeb.
Nonetheless, it is not only the planters that would lose out in terms of revenue, but the government could incur potential corporate tax revenue losses of between RM1.5bil and RM1.6bil should the price of CPO average RM3,500 per tonne this year.