Tracking Developments on FGV
The US government has imposed a ban on the import of palm oil from Malaysian owned FGV.
Reuters reported that:
“The United States said on Wednesday it has banned the import of palm oil from Malaysian company FGV Holdings FGVH.KL over allegations that it used forced labour in the production process.
FGV, the world’s largest crude palm oil producer, has long faced allegations from some international non-governmental organisations that foreign workers at its plantations work in abusive conditions.
The U.S. Customs and Border Protection (CBP) said the ban is the result of a year-long investigation that revealed forced labor indicators including abuse of the vulnerable, deception, physical and sexual violence, intimidation and threats, retention of identity documents, among others.”
The allegations referred to in the US CBP’s decision comes from a complaint filed to the CBP by a coalition of NGOs.
“Today a coalition of labor, environmental, and social justice NGOs filed a formal complaint with U.S. Customs and Border Protection (CBP), seeking to stop the importation of palm oil products produced by FGV Holdings Berhad (FGV), one of Malaysia’s largest palm oil companies and a joint venture partner of Procter & Gamble.
The complaint cites recent field reports documenting cases of forced labor and human trafficking on FGV-owned palm oil plantations across Malaysia. Under the Tariff Act of 1930, U.S. Customs is required to deny entry to goods that arrive at U.S. ports if there is reasonable cause to believe they contain materials made with forced labor.”
The labor problems at FGV operations started in 2015 when a Wall Street Journal report on labour abuses led to the suspension of membership of several FGV operations by the RSPO.
Procter & Gamble which has vested interests in FGV operations issued a statement in 2019 on the labor issues and said:
“An RSPO complaint was filed in 2018 against FGV regarding the alleged conditions of forced labor among its foreign worker population. This catalyzed FGV to take a more holistic approach toward preventing and addressing human rights issues within its supply chain. FGV took a number of actions in response to the complaint including hiring senior management with human rights expertise, developing an action plan to remediate issues and implementing a supplier code of conduct, guidelines and procedures for the responsible recruitment of foreign workers. While these actions are important, P&G and a range of stakeholders believe that FGV’s pace of progress to improve its human rights record can, and must, be expedited.”
This was followed by an acknowledgement of the problems by FGV which said:
“There are several allegations made against FGV in the petition, citing a number of sources, including an article in the Wall Street Journal which was published on 26th July 2015. Regrettably, some of those allegations were indeed factually accurate at the time. Most have been corrected over the period commencing December 2018, with one major item that is expected to be completed by the end of this calendar year. This pertains to the legalisation of foreign workers in the state of Sabah, which has required engagement at government level and involves policy changes.”
Following this, the Fair Labor Association announced in November 2019 that:
“The Fair Labor Association (FLA) announced today that its board of directors approved the applications of FGV Holdings Berhad (FGV) and Procter & Gamble Chemicals (PGC) to become participating companies in the FLA. The FLA affiliation demonstrates the commitment by FGV, a major industry supplier of palm oil and palm kernel oil, to address systemic labor issues in its palm oil supply chain. PGC’s participation, and active support of FGV, shows a desire to drive long-term change in the palm oil supply chain for the industry as a whole.”
The progress appears to have fell short as a new report by Associated Press continued to name Procter & Gamble and FGV in a report published in September 2020. AP investigators interviewed 130 people and issued a damning report that:
“An invisible workforce of millions of laborers from some of the poorest corners of Asia toil in the palm oil industry, many of them enduring various forms of exploitation, with the most serious abuses including child labor, outright slavery and allegations of rape.”
Did FGV's progress on addressing the rights of its workers fall short?
The US CBP replied in an email to CSPO Watch that:
"CBP has a statutory mandate to ensure that products entering U.S. commerce are free of forced labor. CBP will not modify or revoke a Withhold Release Order until all the indicators of forced labor identified by the agency are sufficiently addressed and it is demonstrated that prison and/or forced labor is no longer being used to produce the goods targeted by the order. Commitments or remediation plans alone generally are not sufficient to prove the admissibility of merchandise."
From that email from the US CBP, it is clear that "progress" or "remediation plans" will not be enough to lift the WRO on FGV shipments.
What will lift the order will be a clear indicator from FGV that all past allegations have been addressed and corrected. The necessary actions from FGV will need to be done in two stages.
1. Removing all indicators of forced labor according to the International Labor Organization (ILO) to allow its shipments into the US.
2. Should the Malaysian government have issues with any of the indicators especially pertaining to children in the work force, that should be left to a G2G discussion to justify child labor in a developing country.
The immediate goal should be the lifting of restrictions on FGV shipments into the US as the ripple effect from this decision by the CBP could impact more palm oil producers.
Published September 30, 2019. CSPO Watch
Reuters reported that:
“The United States said on Wednesday it has banned the import of palm oil from Malaysian company FGV Holdings FGVH.KL over allegations that it used forced labour in the production process.
FGV, the world’s largest crude palm oil producer, has long faced allegations from some international non-governmental organisations that foreign workers at its plantations work in abusive conditions.
The U.S. Customs and Border Protection (CBP) said the ban is the result of a year-long investigation that revealed forced labor indicators including abuse of the vulnerable, deception, physical and sexual violence, intimidation and threats, retention of identity documents, among others.”
The allegations referred to in the US CBP’s decision comes from a complaint filed to the CBP by a coalition of NGOs.
“Today a coalition of labor, environmental, and social justice NGOs filed a formal complaint with U.S. Customs and Border Protection (CBP), seeking to stop the importation of palm oil products produced by FGV Holdings Berhad (FGV), one of Malaysia’s largest palm oil companies and a joint venture partner of Procter & Gamble.
The complaint cites recent field reports documenting cases of forced labor and human trafficking on FGV-owned palm oil plantations across Malaysia. Under the Tariff Act of 1930, U.S. Customs is required to deny entry to goods that arrive at U.S. ports if there is reasonable cause to believe they contain materials made with forced labor.”
The labor problems at FGV operations started in 2015 when a Wall Street Journal report on labour abuses led to the suspension of membership of several FGV operations by the RSPO.
Procter & Gamble which has vested interests in FGV operations issued a statement in 2019 on the labor issues and said:
“An RSPO complaint was filed in 2018 against FGV regarding the alleged conditions of forced labor among its foreign worker population. This catalyzed FGV to take a more holistic approach toward preventing and addressing human rights issues within its supply chain. FGV took a number of actions in response to the complaint including hiring senior management with human rights expertise, developing an action plan to remediate issues and implementing a supplier code of conduct, guidelines and procedures for the responsible recruitment of foreign workers. While these actions are important, P&G and a range of stakeholders believe that FGV’s pace of progress to improve its human rights record can, and must, be expedited.”
This was followed by an acknowledgement of the problems by FGV which said:
“There are several allegations made against FGV in the petition, citing a number of sources, including an article in the Wall Street Journal which was published on 26th July 2015. Regrettably, some of those allegations were indeed factually accurate at the time. Most have been corrected over the period commencing December 2018, with one major item that is expected to be completed by the end of this calendar year. This pertains to the legalisation of foreign workers in the state of Sabah, which has required engagement at government level and involves policy changes.”
Following this, the Fair Labor Association announced in November 2019 that:
“The Fair Labor Association (FLA) announced today that its board of directors approved the applications of FGV Holdings Berhad (FGV) and Procter & Gamble Chemicals (PGC) to become participating companies in the FLA. The FLA affiliation demonstrates the commitment by FGV, a major industry supplier of palm oil and palm kernel oil, to address systemic labor issues in its palm oil supply chain. PGC’s participation, and active support of FGV, shows a desire to drive long-term change in the palm oil supply chain for the industry as a whole.”
The progress appears to have fell short as a new report by Associated Press continued to name Procter & Gamble and FGV in a report published in September 2020. AP investigators interviewed 130 people and issued a damning report that:
“An invisible workforce of millions of laborers from some of the poorest corners of Asia toil in the palm oil industry, many of them enduring various forms of exploitation, with the most serious abuses including child labor, outright slavery and allegations of rape.”
Did FGV's progress on addressing the rights of its workers fall short?
The US CBP replied in an email to CSPO Watch that:
"CBP has a statutory mandate to ensure that products entering U.S. commerce are free of forced labor. CBP will not modify or revoke a Withhold Release Order until all the indicators of forced labor identified by the agency are sufficiently addressed and it is demonstrated that prison and/or forced labor is no longer being used to produce the goods targeted by the order. Commitments or remediation plans alone generally are not sufficient to prove the admissibility of merchandise."
From that email from the US CBP, it is clear that "progress" or "remediation plans" will not be enough to lift the WRO on FGV shipments.
What will lift the order will be a clear indicator from FGV that all past allegations have been addressed and corrected. The necessary actions from FGV will need to be done in two stages.
1. Removing all indicators of forced labor according to the International Labor Organization (ILO) to allow its shipments into the US.
2. Should the Malaysian government have issues with any of the indicators especially pertaining to children in the work force, that should be left to a G2G discussion to justify child labor in a developing country.
The immediate goal should be the lifting of restrictions on FGV shipments into the US as the ripple effect from this decision by the CBP could impact more palm oil producers.
Published September 30, 2019. CSPO Watch
Updates:
October 27, 2020. When Should You Buy FGV Holdings Berhad (KLSE:FGV)?
While FGV Holdings Berhad (KLSE:FGV) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the KLSE, rising to highs of RM1.34 and falling to the lows of RM1.01. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether FGV Holdings Berhad’s current trading price of RM1.05 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at FGV Holdings Berhad’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. SimplyWallStreet
October 27, 2020. Malaysian tycoon Syed Mokhtar makes his move on FGV
AFTER at least three years of speculation, Tan Sri Syed Mokhtar Albukhary has finally made his move on FGV Holdings Bhd.
Last week, the businessman’s vehicle Perspective Lane (M) Sdn Bhd (PLSB) sent an expression of interest to “participate in FGV via an injection of plantation assets into FGV, for share consideration”. If the deal goes through, PLSB could become the single-largest shareholder of FGV. TheEdgeMarkets
- Felda plans to regain control of 350,000ha land leased to FGV, says chairman
KUALA LUMPUR, Oct 18 — The Federal Land Development Authority (Felda) intends to reclaim some 350,000 hectares of land that it has leased to FGV Holdings Berhad (FGV) as a means to shore up its financial position, Berita Harian reported today.
In an exclusive interview with the Malay daily, Felda chairman Datuk Seri Idris Jusoh said the matter has already been agreed upon by its board of directors and the company is currently awaiting the government’s directive before negotiations can begin with FGV. MalayMail
- Malaysia Tycoon Seeks Stake in Major Palm Oil Producer, and Stock Jumps
October 16, Bloomberg. Malaysian tycoon Syed Mokhtar Albukhary is seeking to combine his plantation assets with FGV Holdings Bhd. in a potential merger aimed at securing a stake in one of Malaysia’s biggest palm oil producers. FGV shares rallied.
Perspective Land (M) Sdn., owned by Syed Mokhtar, intends to “inject” its plantation assets into FGV, according to a filing from FGV late Thursday. The closely-held company would potentially become the single largest shareholder in the latter if the transaction comes to fruition, it said. Bloomberg
October 27, 2020. When Should You Buy FGV Holdings Berhad (KLSE:FGV)?
While FGV Holdings Berhad (KLSE:FGV) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the KLSE, rising to highs of RM1.34 and falling to the lows of RM1.01. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether FGV Holdings Berhad’s current trading price of RM1.05 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at FGV Holdings Berhad’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. SimplyWallStreet
October 27, 2020. Malaysian tycoon Syed Mokhtar makes his move on FGV
AFTER at least three years of speculation, Tan Sri Syed Mokhtar Albukhary has finally made his move on FGV Holdings Bhd.
Last week, the businessman’s vehicle Perspective Lane (M) Sdn Bhd (PLSB) sent an expression of interest to “participate in FGV via an injection of plantation assets into FGV, for share consideration”. If the deal goes through, PLSB could become the single-largest shareholder of FGV. TheEdgeMarkets
- Felda plans to regain control of 350,000ha land leased to FGV, says chairman
KUALA LUMPUR, Oct 18 — The Federal Land Development Authority (Felda) intends to reclaim some 350,000 hectares of land that it has leased to FGV Holdings Berhad (FGV) as a means to shore up its financial position, Berita Harian reported today.
In an exclusive interview with the Malay daily, Felda chairman Datuk Seri Idris Jusoh said the matter has already been agreed upon by its board of directors and the company is currently awaiting the government’s directive before negotiations can begin with FGV. MalayMail
- Malaysia Tycoon Seeks Stake in Major Palm Oil Producer, and Stock Jumps
October 16, Bloomberg. Malaysian tycoon Syed Mokhtar Albukhary is seeking to combine his plantation assets with FGV Holdings Bhd. in a potential merger aimed at securing a stake in one of Malaysia’s biggest palm oil producers. FGV shares rallied.
Perspective Land (M) Sdn., owned by Syed Mokhtar, intends to “inject” its plantation assets into FGV, according to a filing from FGV late Thursday. The closely-held company would potentially become the single largest shareholder in the latter if the transaction comes to fruition, it said. Bloomberg
October 16, 2020. US Customs to consider petition, audit to lift import ban on Malaysian palm oil producer FGV
KUALA LUMPUR (REUTERS) - The US Customs has told Malaysia's FGV Holdings it would consider a petition to revoke an import ban on the company's palm oil products if it can provide credible evidence that it does not use forced labour, FGV said on Thursday (Oct 15). TheStraitsTimes
October 10, 2020. FGV releases details on its investment of 350 million MYR to improve housing for workers. Will this sway the opinion of the US CBP? To read new coverage, click on this link
KPPK to submit report to avoid further restrictions on commodity products
KUALA LUMPUR, Oct 1 -- The Ministry of Plantation Industries and Commodities (KPPK) will submit a final report soon on the labour situation in the Malaysian oil palm plantation sector to the United States Labour Department and other international organisations to avoid further restrictions on Malaysian commodities.
Its minister Datuk Mohd Khairuddin Aman Razali said the move was part of the initiative to remove the Malaysian oil palm plantation sector from the Trafficking Victims Protection Reauthorisation Act list. Bernama
KUALA LUMPUR (REUTERS) - The US Customs has told Malaysia's FGV Holdings it would consider a petition to revoke an import ban on the company's palm oil products if it can provide credible evidence that it does not use forced labour, FGV said on Thursday (Oct 15). TheStraitsTimes
October 10, 2020. FGV releases details on its investment of 350 million MYR to improve housing for workers. Will this sway the opinion of the US CBP? To read new coverage, click on this link
KPPK to submit report to avoid further restrictions on commodity products
KUALA LUMPUR, Oct 1 -- The Ministry of Plantation Industries and Commodities (KPPK) will submit a final report soon on the labour situation in the Malaysian oil palm plantation sector to the United States Labour Department and other international organisations to avoid further restrictions on Malaysian commodities.
Its minister Datuk Mohd Khairuddin Aman Razali said the move was part of the initiative to remove the Malaysian oil palm plantation sector from the Trafficking Victims Protection Reauthorisation Act list. Bernama
Updates October 01, 2020:
- FGV Responds to CBP Issues Detention Order on Palm Oil Produced with Forced Labour in Malaysia dated 30 September 2020 by United States Customs and Border Protection. Read press release from FGV.
- Fair Labor Association (FLA) responded to our queries by directing us to this updated report on FGV progress to address labor issues.
- FGV Responds to CBP Issues Detention Order on Palm Oil Produced with Forced Labour in Malaysia dated 30 September 2020 by United States Customs and Border Protection. Read press release from FGV.
- Fair Labor Association (FLA) responded to our queries by directing us to this updated report on FGV progress to address labor issues.