1. MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES (MPIC)
INTERNATIONAL PLANTATION INDUSTRY
CONFERENCE AND EXHIBITION
(IPiCEX2012)
5th November 2012
ISSUES AND CHALLENGES ON LABOUR IN PLANTATION INDUSTRY: A MALAYSIAN PERSPECTIVE
Mr. Ramesh Veloo - Chairperson
Datuk Dr. Rosti S. - Nooross Consultants
Distinguished Guests
Ladies and Gentlemen
Salam Sejahtera, Salam 1Malaysia and a very good afternoon to all of you.
I would like to thank the International Institute of Plantation Management (IIPM) for this opportunity.
My presentation today will be on “Issues and Challenges on Labour in Plantation Industry: A Malaysian Perspective”.
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES (MPIC)

2. SCOPE OF THE PRESENTATION
Contribution of the commodity industries to the economy of Malaysia (2007 – 2011)
Targets of National Commodity Policy,
Labour requirement in plantation sector (2012)
Labour requirement by the year 2020
Introduction
Low participation of local workers
High dependency on foreign workers
Mechanization related issues
Issues
To modernize the plantation sector by 2020
To increase local workers participation in plantation sector
Challenges
Foreign workers approval
Innovations in the plantation and commodities sector (Mechanization)
Human capital development
Initiatives Taken
Way Forward
Ladies and gentleman,
Scope of my presentation today will be on:
Contribution of the commodities industry to the economy of Malaysia
Manpower requirement in commodities industry
Issues related to the manpower needs in commodities industry
Challenges to be addressed with regard to the manpower needs
And, the way forward.
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

3. CONTRIBUTION OF THE COMMODITY INDUSTRIES TO THE ECONOMY OF MALAYSIA (2007 – 2011)
INTRODUCTION
Chart shows commodities export and its contribution for Gross Domestic Product (GDP) from the year 2007 to Figures shown are based on data provided by Department of Statistics, Malaysia.
Total commodities export in the year 2011 was RM 141 billion and there was an increase of RM 27 billion from the year 2010.
Furthermore, the plantation industry contributes a total sum of RM billion to the GDP in the year 2011.
According to MATRADE, commodities export is the second largest export products of Malaysia right behind E & E products export.
MPIC has initiated the National Commodity Policy which outlines 7 thrusts as focus area to accelerate and transform our country to become commodity hub of the world.
At an estimated growth rate of 7.9% per annum, the commodities export is expected to contribute RM billion in the year compared to RM 141 billion in 2011.
Source : Department of Statistics, Malaysia
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

4. NATIONAL KEY ECONOMIC AREA (NKEA)
Contribution to Gross National Income
Palm Oil – RM178 billion
Rubber – RM52.9 billion
Focus on high value added products/
downstream activities
Palm Oil RM178b
Rubber RM52.9b
GNI
RM28.5b
GDP
RM242.6b
Exports
INTRODUCTION
Ladies and gentlemen,
Palm oil industry has been identified as one of the core economic driver under the National Key Economic Area (NKEA). The implementation of the 8 Entry Point Projects for palm oil will further enhance palm oil contribution to the national economy by increasing the Gross National Income (GNI) to RM 178 Billion by the year 2020.
Meanwhile, the implementation of 4 Entry Point Projects for rubber will further enhance natural rubber contribution to the national economy by increasing the GNI to RM 52.9 billion by the year
8 Entry Point Projects for Palm Oil:
1. Accelerating the Replanting and New Planting of Oil Palm
2. Improving Fresh Fruit Bunch (FBB) Yield;
3. Improving Worker Productivity
4. Increasing Oil Extraction Rate (OER)
5. Developing Biogas at Palm Oil Mills by 2020
6. Developing Oleo Derivatives
7. Commercialising Second-Generation Bio fuel
8. Expediting Growth in Food and Health-based Downstream Segments
4 Entry Point Projects for Rubber:
1. Increasing Average National Rubber Productivity to 2,000 kg/ha/year by 2020
2. Ensuring Sustainability of the Upstream Rubber Industry
3. Increasing World Market Share of Latex Gloves to 65 per cent
4. Commercialising Ekoprena and Pureprena (Green Rubber)
Entry Point Projects
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

5. LABOUR REQUIREMENT IN PLANTATION SECTOR (2012)
Commodity
Area (Hectare)
Labour Requirement
(A)
Ideal Land:Labour
Ratio
(Hectare/ Rerson)
Existing Labour (Sept. 2012)
Labour Shortage
(A - B)
Local
Foreign
Total
(B)
Palm Oil
5,027,959
502,796
10 : 1
94,774
299,560
394,334
108,462
Rubber
1,025,000
170,833
6 : 1
423,1951
31,790
454,985
(92,533)
Cocoa
21,710
17,947
1.21 : 1
15,7902
250
16,040
1,902
Pepper
14,791
29,582
1 : 2
67,2473 29
67,276
(37,694)
6,089,460
721,158
601,006
331,629
932,635
110,364
INTRODUCTION
Table shows the labour requirement by the end of year 2012, projected based on the targeted hectarage of commodity plantation. It was calculated using the land : labour ratio used in the foreign workers approval.
Based on the hectarage, total labour requirement for the plantation sector by the end of year 2012 is 925,182 workers.
As at September 2012, total existing labour are 893,795 workers. This consist of 482,921 local workers and 411,147 foreigners. However, palm oil sector alone employs 379,078 or 92.2% of foreigners in the plantation industry.
Based on land:labour ratio, it seems that the palm oil sector is facing labour shortage of 166,799 workers.
But, labour requirement reported by palm oil estates through e- Labour system is just 28,000 workers as at September 2012.
1 415,929 are rubber owner-operators. Shortage still happens for rubber sector, mainly in estates.
2 15,390 are cocoa owner-operators. No shortage reported for cocoa.
3 67,247 are pepper owner-operators. No shortage reported for pepper.
Additional requirements based on ideal land : labour ratio – 110,364 workers.
Actual labour shortage reported by palm oil estates through e-Labour – 26,167 workers
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

6. ACTUAL LABOUR SHORTAGE IN PALM OIL ESTATES (AS AT SEPTEMBER 2012)
Job Categories
P.M
Sabah
Sarawak
Malaysia
Shortage
(%)
Harvester & FFB Collector
6,029
2,877
3,339
12,245
46.79
Field Workers (Weeding, Fertilizer application & Pruning)
4,684
1,725
3,506
9,915
37.89
Other than field workers (Gardener, drivers & Security guard)
911
616
902
2,429
9.28
Others (Mondore, etc)
757
331
490
1,578
6.03
Total Shortage
12,381
5,549
8,237
26,167
INTRODUCTION
Table shows the labour requirement by the end of year 2012, projected based on the targeted hectarage of commodity plantation. It was calculated using the land : labour ratio used in the foreign workers approval.
Based on the hectarage, total labour requirement for the plantation sector by the end of year 2012 is 925,182 workers.
As at September 2012, total existing labour are 893,795 workers. This consist of 482,921 local workers and 411,147 foreigners. However, palm oil sector alone employs 379,078 or 92.2% of foreigners in the plantation industry.
Based on land:labour ratio, it seems that the palm oil sector is facing labour shortage of 166,799 workers.
But, labour requirement reported by palm oil estates through e- Labour system is just 28,000 workers as at September 2012.
Total Planted Area Covered By Survey (Million ha)
4.35
Total Responded Area (Million ha)
4.01
Responded Area (%)
92.31
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

7. LOW PARTICIPATION OF LOCAL WORKERS
Due to the 3D factors (Dirty, Difficult & Dangerous)
Location of workplace in rural areas
Inadequate infrastructure facilities at plantation area
Lack Of Interest
Job creation at technical level (skilled and semi-skilled) level is very low
Shortage is mostly at the low level job categories (harvesting and maintenance works)
Higher Level Of Education
Soybean Harvesting in Iowa, United States
ISSUES
Ladies and gentlemen,
We may now look at the issues related to the plantation industries. Firstly, the issue regarding low participation of local workers in plantation sector.
Plantation sector offers a large numbers of employment opportunity among other sectors in Malaysia, but in reality there is reluctance among Malaysians to work in plantation industry especially in palm oil and rubber sectors.
3D factors (Dirty, Difficult & Dangerous), location of workplace in rural areas and inadequate infrastructure facilities at plantation areas are among the factors that’s contributes for lack of interest among Malaysians to work in plantation sector.
Apart from this, high literacy rate among Malaysian also preventing them from accepting low level jobs at plantation sector. Most of the manpower need and shortage at plantation sector is at low level job categories like harvesting and maintenance works.
On the other hand, our plantation industry is lacking in creating more job opportunities at technical level (skilled and semi-skilled) since industry seems yet to ready to utilise mechanization at a bigger scale.
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

8. HIGH DEPENDENCY ON FOREIGN WORKERS
Lack of mechanization
Insufficient supply of local labour
Employment of the illegal immigrants (PATI) still exist
Too dependent on Indonesian workers
Plantation Sectors Are Labour Intensive
The development of palm oil industry in Indonesia
Competition with other sectors and nations that requires foreign workers
High cost of employing foreign workers
Difficulties In Recruiting Foreign Workers
Mechanized Harvesting In Developed Countries
Soybean Harvesting
ISSUES
Sweet corn Harvesting
Secondly, the issue regarding our high dependency on foreign workers for plantation sector.
As at September 2012, there were 411,147 foreigners employed at plantation and commodities sector. This comprises 46% of the total workforce in the industry.
It is also noted that, palm oil sector employs the highest number of foreign workers (379,078 workers) followed by rubber sector with 31,790 foreign workers.
This clearly shows the dominance and dependency on foreign workers is high and among the contributing factors for this scenario are insufficient supply of local workers and lack of mechanization.
Apart from this, it is also worth to mention that our palm oil sector is too dependent on Indonesian workers.
Before the implementation of the 6P program, we have witnessed a large numbers of illegal workers (PATI) were employed in plantation sectors. Yet, it is estimated that there are notable number of illegal workers still employed even after the completion of the 6P program period.
To contradict with this, it is also learnt that our industry is facing difficulties in recruiting fresh foreign workforce in recent time given the development of the palm oil industry in Indonesia and competition from other sectors locally and emerging markets in other countries.
Thus, a shortage in supply of workforce will demand a higher pay and we are facing a situation where our industry will have to pay extra to secure every current and new foreign workers in future.
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

9. MECHANIZATION RELATED ISSUES
Difficult and undulating terrain
High cost of mechanization
Complacency – resistance to change
Difficulties in implementing mechanization
ISSUES
Despite various efforts by our agencies to introduce mechanization in plantation sector aiming to reduce the usage of manpower, we are also facing some problems in implementing the mechanization at a larger scale.
From our findings, the main problem related to the implementation of mechanization is due to difficult and undulating terrain of plantation area.
Apart from that, high cost of mechanization is also a contributing factor which preventing smallholders and estate owners to use mechanization at a larger scale.
It is also learnt that, there is resistance among smallholders and estate owners to adopt the mechanization because they were too complacent with current working style (using manpower).
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

10. TO MODERNIZE PLANTATION SECTOR BY 2020
Increase usage of mechanization in plantation works
Increase industry participation in R&D&C
Come up with various practical new innovations
Reduce the land : labour ratio for each category of field works
CHALLENGES
Ladies and gentlemen,
I have discussed some of the issues related to the plantation sector in my earlier slides. Now, let me discuss further on some of the challenges faced by our commodities industry.
MPIC through its agencies has developed and introduced various mechanisation for plantation works. But, currently we are facing difficulties to increase the usage of mechanization in plantation works.
Currently, most of the R&D&C efforts are being conducted by MPIC and agencies with little support from the plantation industry. Thus, it is expected the plantation industry will participate more actively in R&D&C activities.
It is also a challenge for us to work together to come up with various practical new innovations in future.
Apart from that, efforts should be taken to reduce the current land:labour ratio for each category of field works which will contribute for reduction in the number of workers required for each plantation sectors thus reducing the dependency on foreign workers.
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

11. TO INCREASE LOCAL WORKERS PARTICIPATION IN PLANTATION SECTOR
Adaptation to newer technologies and skills upgrading
Cooperation to improve image of the commodity sector through formal training
Increase job creation at technical and management level
Enhancing Skills of The Domestic Labour Force
CHALLENGES
It is important for us to further improve and attract more local workers to join the plantation sector.
We may increase participation of local workers through enhancing skills of the domestic labour force by adapting to newer technologies and skills upgrading, improving image of the commodity sector through formal trainings and increased job creation for locals at technical and management level.
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

12. APPROVAL OF FOREIGN WORKERS (AS AT 30th SEPTEMBER 2012)
Fast Track 2011
328 Companies
27,094 workers
Fast Track 2012
145 Companies
23,491 workers
Normal Track 2012
515 Companies
27,060 workers
6P Program
6,679 Companies
37,945 workers
Bangladesh
G2G Mechanism
Underway
INITIATIVES TAKEN
Ladies and gentlemen,
In the last few slides, I have discussed about the issues and challenges pertaining to the plantation and commodities industry. Now, I would be glad to share about some of the initiatives that has been implemented by MPIC and it’s agencies to tackle the issues identified in the long run.
MPIC always concerns about the labour requirement in plantations sector. In 2011, total number of 27,094 workers has been approved for plantation sector through Fast Track initiative.
In 2012, total number of 50,551 workers has been approved so far through Fast Track and normal initiatives.
Moreover, 37,945 workers has been legalized to work in plantation sectors through 6P Program.
Apart from that, initiative is being carried out to increase the number of workers from Bangladesh to work in plantation sector.
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

13. INNOVATION IN THE PLANTATION AND COMMODITIES SECTOR (MECHANIZATION)
Harvesting Technologies
CANTAS – Mechanized cutter for oil palm
ART – Mechanized tapping of rubber
G-FLEX
Transportation
Motorcycle Trailer
Compact Transporter
Beluga
Others
Roller Picker – Loose fruit collector
Mark III
COBRE - Cocoa pod breaking machine
INITIATIVES TAKEN
Dear members of the floor,
I wish to explain further by citing some examples of the mechanizations that are commercially viable and proven in easing the workload of the farmers.
i) CANTAS
CANTAS is a motorized tool developed by MPOB and used to harvest oil palm fruit bunches and aiming at increased productivity and to reduce the need for foreign manpower. According to findings by MPOB Cantas has been proven to increase productivity per worker from 1.5 tonnes to 2.8 tonnes FFB per day, thus allowing them to cover area of 35 hectares per day compared to 21 hectares if using sickle.
Smallholders can purchase CANTAS at discounted price through CANTAS Discount Scheme (SKIDIC).
ii) G-FLEX
G-FLEX used to increase the productivity of rubber trees by stimulation and currently being used by various agencies including FELCRA, FELDA and RISDA. G-FLEX is designed for easy installation (300 – 400 trees in a day) and being sold at relatively cheap price at RM 1.20.
iii) Compact Transporter (CT)
Compact Transporter (CT) is a stable and easy to drive single chassis machine developed mainly to transport fresh fruit bunches (FFB) and also able to cater for other farming purposes such as fertilization and poisoning.
iv) Roller Picker & Mark III
Roller Picker is a manual tool to collect loose oil palm fruits using rolling concept and Mark III is a motorised tool to collect loose oil palm fruits using suction concept.
These, among others are few examples of the mechanization initiatives that has been successfully implemented to ease the day-to-day work in the commodities sector to attract more local workforce in the long run.
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

14. FINDINGS ON PERFORMANCE OF CANTAS BY KULIM (PILIPS’12)
AREA : FIELD P2000 & FIELD P2003 ( HA) at Ladang Sungai Sembrong
A. Saving on Price Bonus (P.B) and Price Incentive (P.I)
CONVENTIONAL
(ASSUMPTION)
USING CANTAS
(ACTUAL)
No. of harvester require
20 harvester
12 harvester
Days work in 2011
292 days
Total Mandays in 2011
4,437 mandays
2,662 mandays
P.B + P.I
4,437 RM 9.37
2,662 RM 9.37 RM
= RM 41,574.69
= RM 24,942.94
TOTAL SAVING ON P.B + P.I = RM 16,631.75
INITIATIVES TAKEN
Dear members of the floor,
I am glad that, some of our industry players are very keen in utilizing the mechanization at their estates. I would like to share the findings on performance of Cantas by KULIM (M) Berhad, that was presented at Palm Industry Labour : Issues, Performance & Sustainability Seminar (PILIPS 2012). The finding is based on case study conducted at Ladang Sungai Sembrong, involving total land area of hectares.
As we can see from the table, Ladang Sungai Sembrong will be need 20 harvesters (it can be more) if they use conventional way of harvesting. But in actuality, they only need 12 harvesters since they resort to the use of Cantas for harvesting.
It means there is 40% of reduction in term of manpower usage. This clearly shows the effectiveness of CANTAS.
Moreover, adopting mechanization would also reduce the amount of money in term of price bonus, price incentive, and recruitment cost.
On the workers’ side, they are happy because their productivity is higher than usual, resulting in higher pay per month.
B. Saving on recruitment cost – General Expenditure
Saving - 8 RM 1, / head = RM 10,242.80
GRAND TOTAL = RM 16, RM 10,242.80
= RM 26,874.55
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

15. HUMAN CAPITAL DEVELOPMENT
IMPAC
PLASMA
ACADEMY HEVEA
WISDEC
KOKO
KENAF
LADA
SMART PARTNERSHIP
GOVERNMENT AGENCIES
LOCAL UNIVERSITIES
RISDA
MARDI
PRIVATE SECTOR
Mechanization
INITIATIVES TAKEN
HUMAN
CAPITAL
DEVELOPMENT
National Commodity Policy (DKN), 2011–2020 strategizes human capital development as one of the long-term strategy to create skilled and semi-skilled local workers.
MPIC has taken lead to develop human capital for plantation and commodities industry through The Institute of Malaysian Plantation and Commodities (IMPAC). IMPAC was established in the year of 2010 to coordinate various courses and trainings conducted by agencies under MPIC to produce trained workforce and to increase the use of mechanization in plantation and commodities sector.
Only minimal amount of fees charged for the participants and most of the expenses to provide trainings is being absorbed by IMPAC and its agencies.
Among the courses conducted is KOML – Kursus Operator Mekanisasi Ladang which provides hands-on training on mechanization and management for palm oil sector. Upon successful completion of the course, participants will be awarded with IMPAC and Sijil Kemahiran Malaysia (SKM) certificates.
IMPAC is aiming and formulating strategies to reach out more locals to become trained and skilled workforce for plantation and commodities sector.
Skilled & semi-skilled labours
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

16. Commodities sector to adopt mechanization
THE WAY FORWARD
MPIC will provide continuous support for plantation and commodities industry
Commodities sector to adopt mechanization
Welcome smart partnership between IMPAC and the plantation industry
THE WAY FORWARD
Ladies and gentleman,
I would like to conclude my presentation today with assurance that MPIC will continue it’s support for plantation and commodities industry with regards to the supply of the foreign workers to cater the industry needs in the coming years. We know your struggles and we will always be there to shoulder you.
At the same time, MPIC encourages commodities industry players to move forward and change the way the business is done. Hopefully, commodities industry players will actively participate in the implementation of mechanization and ultimately, able to minimize their dependency on foreign labours.
MPIC welcomes any form of smart partnership between industry and IMPAC for training of more locals to work in the plantation sectors.
Last but not least, I truly hope that together we can lead a change.
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES

17. THANK YOU
Thank you.
MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES