Indonesia, Malaysia agree on palm oil non-competition, migrant worker protection

Palm oil prices were among several issues the two leaders discussed in their meeting in Jakarta on April 1, 2022. PHOTO: REUTERS

JAKARTA (REUTERS) - Malaysia and Indonesia agreed that global prices of palm oil should be determined by the two biggest producers and they should not compete, Prime Minister Ismail Sabri Yaakob said after meeting Indonesia's President Joko Widodo on Friday (April 1).

Palm oil prices were among several issues the two leaders discussed in their meeting in Jakarta, he said, without elaborating further on the palm oil discussion.

"Price of palm oil should be determined together by Malaysia and Indonesia and there should be no competition in terms of pricing because Malaysia and Indonesia are the two countries that control the total palm oil exports," Mr Ismail Sabri said.

The two South-east Asian nations account for roughly 85 per cent of the world's palm oil production.

However, top producer Indonesia is struggling to control cooking oil prices at home as producers refer to global prices in their production costs. Authorities have previously said domestic and international prices should not be linked.

Indonesia had earlier this year restricted export volumes and capped crude palm oil and olein prices sold at home but later scrapped the policies.

Jokowi, as the Indonesian president is widely known, did not comment on palm oil in his remarks.

Earlier on Friday, the two leaders witnessed the signing of an agreement to improve protection for migrant workers.

The memorandum of understanding comes after concerns over the treatment of some Indonesian workers in Malaysia and will cover wages and allow workers to file complaints through a new application, Mr Ismail said.

"This MoU will ensure that every process and protection mechanism...will be done comprehensively by all relevant parties, in accordance with the laws of the two countries," the Malaysian leader said after the agreement was signed at the state palace.

The MoU aims to put in place a system designed to match Indonesian domestic workers with suitable employers, part of initiatives which also include applications designed to strengthen wage protection and complaint mechanisms.

Malaysia’s labour-starved palm oil industry has for months awaited the signing of a domestic worker agreement, which is expected to pave the way for the hiring of plantation workers.

With hundreds of thousands of Indonesians employed in Malaysia, many in the palm oil and construction sectors, President Widodo said he hoped the scope of the agreement could soon be expanded.

"Indonesian migrant workers have contributed a lot to economic development in Malaysia. It’s only right they get rights and protection," he said.

"I hope that similar partnerships can be extended to other sectors such as farming, manufacturing and services." 

The new measures also follow several deadly incidents at sea in recent months, where more than 18 people have died attempting to illegally cross into Malaysia on overloaded boats that have capsized.

According to rights group Migrant CARE, between 100,000 and 200,000 Indonesians travel illegally to Malaysia each year for work, many of them recruited by trafficking gangs.

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