KUALA LUMPUR (Sept 13): Nearly five months after submitting a comprehensive report to the Customs and Border Protection (US CBP) on allegations of forced labour against the planter, Sime Darby Plantation Bhd (SDP) says it is still awaiting a decision and feedback from the US law enforcement agency.

“The latest update is that we have submitted the report in April [this year]. We are engaging with them. And we are [still] waiting for a decision from the US CBP,” SDP’s chief sustainability officer Rashyid Redza Anwarudin told theedgemarkets.com on the sidelines at the 7th International Palm Oil Sustainability Conference (IPOSC) on Tuesday (Sept 13).

Asked when the decision on lifting the withhold release order (WRO) imposed on the group will be made, Rashyid said that the US CBP will decide on this matter, and SDP has no say in the process. 

“It is something that is between us and the US CBP,” he added when asked if there was any feedback given since the submission of the report.

SDP had filed the impact report submission on April 26 this year, which included a detailed assessment of its Malaysian operations mapped against each of the International Labour Organisation forced labour indicators, as well as an in-depth description of improved governance structures and management systems. 

Additionally, copies of policies, guidelines and standard operating procedures, details of facilities at SDP's operating units, corresponding supporting evidence, and independent reports from third-party consultants appointed by SDP to assess various aspects of its operations, were also included. 

US CBP had on Dec 30, 2020 issued the WRO to SDP and subsequently issued the findings on Jan 28 this year against palm oil and palm oil products made by SDP and its subsidiaries and joint ventures at SDP’s Malaysian operations, saying its certain palm oil products are produced using convict, forced or indentured labour.

In July, Deputy Human Resource Minister Datuk Awang Hashim told the Parliament that the ministry remains actively engaged in dealings with all relevant parties including the US CBP, towards dropping the orders imposed upon the companies.

He added that the ministry needs a year to deal with the issue of six Malaysian companies that are still subject to the WROs by the US CBP.

Over the past two years, eight Malaysian companies have been subject to WROs by the US CBP, noted the Pendang MP. These companies comprise producers of rubber gloves and palm oil products.

A quick check on the US CBP’s website by theedgemarkets.com showed that a total of six Malaysian entities, namely from the plantation and glove sectors, have been slapped with WROs, with their status showing as "active" respectively.

The six entities, as updated on Sept 13, 2022 by the US CBP, are FGV Holdings Bhd, SDP, Smart Glove, Brightway Group, YTY Group, as well as Maxter Glove Manufacturing Sdn Bhd, Maxwell Glove Manufacturing Bhd and Supermax Glove Manufacturing (collectively).

A WRO is issued when the US CBP has reasonable evidence of the use of forced labour in the manufacturing or production of goods entering the US supply chain, and allows the agency to detain the products in question, unless the importers can prove the absence of forced labour in the products' supply chain.

SDP had previously stated in its latest quarterly report that further delays in the intake of new legal migrant workers continue to affect the group's harvesting operations at its Malaysian operations. 

This is expected to impact the plantation group's total fresh fruit bunch production, which is expected to be lower compared to FY21. 

When asked when the migrant worker issue will be resolved, Rashyid said: "We are still looking into this issue".

SDP’s net profit for the first half ended June 30, 2022 (1HFY22) rose 29.77% to RM1.53 billion from RM1.18 billion in 1HFY21, as revenue grew 23.3% to RM9.97 billion from RM8.08 billion, amid buoyant crude palm oil and palm kernel prices. 

At Tuesday’s noon break, SDP shares settled down five sen or 1.15% to RM4.28, giving the plantation group a market capitalisation of RM29.6 billion. The stock has risen 11.46% year-to-date. 

Read also:
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Sime Darby Plantation submits comprehensive report to US Customs over forced labour claims 
Sime Darby Plantation to submit impact report to US CBP by end-April 
HR Ministry needs a year to resolve issue of six companies under US sanctions