Malaysia’s palm oil giant FGV vows to clear name after US import ban

Indonesia and Malaysia are the two biggest producers of palm oil.
Indonesia and Malaysia are the two biggest producers of palm oil.PHOTO: REUTERS

KUALA LUMPUR – Malaysia’s largest palm oil company FGV Holdings defended its labour practices on Thursday (Oct 1), saying it was disappointed with the United States authorities for banning palm oil imports from the company, citing forced labour. 

FGV Holdings Berhad, the world’s largest crude palm oil producer, said in a statement it has worked towards rectifying its labour standards progressively since 2015, and it will continue to engage the US Customs and Border Protection (CBP) to clear the company’s name.

On Wednesday, the US CBP said it was issuing a Withhold Release Order on palm oil and palm oil products from FGV after finding indications of forced labour in FGV’s production process. 

The CBP order came just over a week after a report in Associated Press alleged widespread human right violations at palm oil plantations in Malaysia and Indonesia. 

FGV responded to the report with a statement on Saturday (Sept 26) before the CBP ban. 

“FGV is disappointed that such a decision has been made when FGV has been taking concrete steps over the past several years in demonstrating its commitment to respect human rights and uphold labour standards,” FGV said. 

It said its efforts have been “well documented” and the issues raised by the report have been the subject of public discourse since 2015. 

It stressed on the difference between its operations and that of the Federal Land Development Authority (Felda), a government agency that is FGV’s biggest shareholder. 

“FGV would like to clarify that it is not the commercial arm of Felda,” it said on Saturday. The AP report documented labour practices at palm oil plantations linked to Felda. 

Felda owns 34 per cent of FGV’s shares, but FGV stressed that its operations were “unique and independent”. 

FGV claimed that it does not employ refugees among its 15,000 foreign workers. 

The AP report had alleged that some of the exploited workers in Malaysian plantations are Rohingya refugees. It also denied holding its workers’ passports, another allegation that surfaced in the report.

The North America sector, including Canada, accounts for 5 per cent of FGV’s total revenue last year and valued at RM700 million (S$230 million), down from RM800 million in 2018. 

FGV also has an oleochemical plant in the US in Washington which produces products such as fatty acid cuts. The plant is the third largest oleochemicals player in North America. 

FGV was previously known as the global arm of Felda before it was publicly listed as Felda Global Ventures in 2012, in an initial public offering (IPO) valued at RM10 billion, the second biggest IPO that year after Facebook, and the biggest in Asia. 

A Wall Street Journal report in 2015 similarly alleged poor labour standards at FGV’s plantations, and the company said it has since  invested in rectifying its labour standards. 

Shares of FGV fell as much as 9.6 per cent, its largest intraday drop in six months. They closed at RM1.05, down 10 sen or 8.7 per cent.