This article first appeared in Forum, The Edge Malaysia Weekly on December 4, 2023 - December 10, 2023
When Amir left his home country for a new job in Malaysia, he envisioned a brighter future for his family. He invested his life savings and took out a loan for his recruitment fee and waited eagerly for the opportunities ahead. His excitement waned as he found himself on a remote plantation, with his passport held by his employers and no freedom to leave during his time off work. Isolation and loneliness became his companions, yet he remained dedicated to supporting his family.
Amir’s story mirrors that of countless workers in Malaysia, facing conditions that may unknowingly signal forced labour, according to the International Labor Organization (ILO).
In the ever-evolving landscape of international business, regulatory bodies in Malaysia and worldwide mandate environmental, social and governance (ESG) and sustainability reporting. Malaysian companies must comply with national and international standards to retain global market share and profitability, avoiding risks such as import bans, like the Withhold Release Order by the US Customs and Border Protection, that have a long-term impact on a business.
In November 2021, the Ministry of Human Resources released the National Action Plan on Forced Labour (NAPFL) 2021-2025. This strategic initiative aims to eradicate forced labour in the country by 2030. The action plan highlights indicators of forced labour from the ILO and outlines four key pillars: prevention, protection, prosecution and partnerships. It includes a practical guide for adopting and implementing initiatives and robust monitoring strategies for each pillar.
Additionally, the revised Malaysian Sustainable Palm Oil (MSPO 2.0, updated in 2022) certification scheme now includes a criterion to “ensure no forms of forced or trafficked labour as well as child labour are used”. More recently, Bursa Malaysia’s move to also require a mandate for sustainability reporting further underscores the importance of highlighting indicators related to forced labour and supply chain due diligence. While these national-level initiatives are promising, translating compliance into practices is akin to a marathon, with migrant workers still grappling with harsh conditions, debt bondage, deceptive recruitment processes and more.
We have already seen some prominent companies in Malaysia experience the repercussions of non-compliance. Import bans, plummeting share prices and irreversible damage to reputation forced them to overhaul policies and practices over extended periods to reinstate business operations.
Companies could avoid such repercussions by complying with international and national standards from the outset.
Encouraging companies to adopt better labour practices necessitates understanding the significant benefits. Compliance shields a company’s reputation, enhances access to global market share, creates new business opportunities, increases profitability and attracts better investors. It reduces the risk of penalties and import bans and provides substantial long-term financial benefits.
Compliance is not merely about meeting the regulatory requirements but safeguarding the workforce’s well-being. Workers like Mohan, a migrant worker who was promised a job in the garment industry, found himself as a line worker in a factory upon arriving in Malaysia. While his employers provided accommodation, there was inadequate access to clean water, inconsistent electricity and a lack of proper food. However, Mohan was bound by his contract with a considerable debt to pay off. He had no choice but to endure these conditions.
Workers are the backbone of businesses, and addressing their fundamental needs is a matter of ethics and good business sense. Ensuring acceptable living conditions, freeing workers from debt bondage incurred from recruitment fees, conducting regular due diligence practices and setting up grievance mechanisms contribute to improved worker well-being, satisfaction, loyalty and retention.
The risks associated with non-compliance far outweigh the effort required for change. Loss of investor confidence, security and market share, coupled with the low motivation of workers leading to poor employee retention cycles, underscores the urgency for change.
The NAPFL provides a road map for companies to get it right and make these changes now. By 2025, there will be “improved legal compliance and enforcement related to forced labour”. The latest changes to the Employment Act support this, as it now includes a clause on forced labour, stating that violation is liable to a fine not exceeding RM100,000, imprisonment for a term not exceeding two years, or both.
Regardless of their market share, companies have less than two years to catch up. The time to act is now.
As the adoption of ESG criteria and investment opportunities increase in Malaysia, companies must transform labour practices or risk being left behind. Holding onto outdated business practices is no longer an option; embracing better social policies is imperative.
Change can be overwhelming, often hindered by a need for more awareness and access to support and information. Earthworm Foundation’s newly launched booklet, Get It Right: How to Build Better Labour Practices for Plantations and Other Sectors, is based on the NAPFL. Developed in collaboration with the Ministry of Human Resources, this comprehensive guide offers companies a starting point for implementing change in their business.
Supported by the Ministry of Plantation and Commodities, this booklet includes a step-by-step process to assess and evaluate existing labour practices in a company. It also shares information on roles and responsibilities for driving better labour practices, understanding the benefits and the repercussions of non-compliance.
The elimination of forced labour in the country does not lie solely with companies alone. As of January 2023, sustainability initiatives by the government, corporations, regulators and civil society have significantly increased. This multi-stakeholder approach provides support and collaboration and enables a much-needed collective effort in realising Malaysia’s vision of a workforce free from forced labour by 2030.
Prime Minister Datuk Seri Anwar Ibrahim’s proposed budget, allocating RM80 million to the palm oil industry for sustainability improvements and to counter anti-palm oil campaign movements, exemplifies the commitment to a collective effort. Malaysia’s palm oil industry makes up about 5% of the country’s economy, and this critical resource benefits players within the sector.
Policies and action plans like the NAPFL provide a solid guideline for growth, consistency with up-to-date labour practices and alignment with globally accepted sustainability practices. With greater awareness and support, companies hiring migrant workers like Amir and Mohan have a chance to get it right from the beginning.
In line with the multi-stakeholder approach, Earthworm Foundation partners with the private, government, community and civil society sectors to co-create solutions to environmental and social challenges in supply chains for businesses seeking to get it right. This includes assistance in understanding and applying the NAPFL and other legal compliance requirements to build long-term, better labour practices and policies.
With deeper awareness, understanding and empathy, getting it right can lead to a new dawn in the labour force for Malaysia.
Quek Karl Yen is the regional director for Asia at Earthworm Foundation and has worked for the organisation for over a decade. Earthworm Foundation is a global non-profit that partners with the private, government, community and civil society sectors to create solutions to environmental and social challenges in supply chains.
Save by subscribing to us for your print and/or digital copy.