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Palm oil industry may be affected by exit of foreign workers

Posted on December 16, 2012, Sunday

SANDAKAN: Indonesian workers in the palm oil industry are apparently returning home now because of the upswing in the palm oil industry in their home country, and this has raised concerns on the ability of the Malaysian palm oil industry to fill the void with local workers.

According to Malaysian Palm Oil Association executive secretary Genga G Pillai, rumours that Indonesian palm oil workers are returning home are true but how it will affect the local palm oil industry is still yet to be known.

“Locals do not normally want to work at something they consider as 3D (dirty, dangerous, demeaning) jobs. You can even see this in the construction sector. They would prefer office jobs and such. But as to how the return of these foreign workers to their homeland will affect the industry, we’ll have to wait and see,” said Pillai in a phone interview with The Borneo Post.

The Sun Daily has reported that Indonesia is currently the largest exporter of the commodity, with over 7.3 million hectares of land dedicated to palm oil in 2009, from only 274,000 hectares in the 1980s. The industry had also raised the country’s GDP above 6.0 per cent a year since 2005.

However, according to a report in Bloomberg.com, both countries would “tumble into a bear market next year” as their monthly output surges while demand from Europe and China declines.

Pillai said most oil palm mills in Sabah were refusing to accept fresh fruit bunches (FFB) because there was already a glut of FFB locally while the world market’s demand for crude palm oil (CPO) was diminishing.

According to a Bloomberg survey, Malaysia’s production of palm oil in November exceeded exports by over 2.5 million tons, compared to 2.51 million tons in October.

Global economic slowdown is said to be one of the main reasons for the decline in demand.

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