US bans Malaysian palm oil producer over forced labour

  • Published
A man's hand holding palm seedsImage source, Getty Images

US Customs and Border Protection (CBP) has blocked the import of palm oil made by a Malaysian producer over forced labour concerns.

CBP cited physical and sexual abuse, debt bondage and abusive conditions as reasons for blocking FGV Holdings.

Shipments from the company and its subsidiaries will be held at US entry ports.

In a statement, FGV said it had taken "concrete steps" to improve workers conditions.

CBP said a year-long investigation revealed "restriction of movement, isolation, physical and sexual violence, intimidation and threats, retention of identity documents, withholding of wages, debt bondage, abusive working and living conditions, and excessive overtime."

The investigation also raised concerns that forced child labour is potentially being used in FGV's palm oil production process.

FGV is a publicly-listed company, and according to its website it accounts for about 15% of Malaysia's annual production of crude palm oil.

Image source, Getty Images

Palm oil is used for a wide range of food products, cosmetics, pharmaceuticals and biofuels.

"The use of forced labour in the production of such a ubiquitous product allows companies to profit from the abuse of vulnerable workers," said Brenda Smith, executive assistant commissioner of CBP's Office of Trade.

Media caption,

Make-up artist Emmy Burbidge travels to Papua New Guinea to discover the truth about what’s in her products

"These companies are creating unfair competition for legitimately sourced goods and exposing the public to products that fail to meet ethical standards," she said.

The US has increased its use of import bans since 2016, when a change in US law renewed CBP's ability to act against products made with forced labour.

Over the last few months, the US has issued a number of so-called Withhold Release Orders against Chinese companies over alleged forced labour concerns in the Xinjiang province.

'Concrete steps'

FGV expressed disappointment at the decision, and said it had taken "concrete steps" to demonstrate "its commitment to respect human rights and to uphold labour standards".

"It is worth reiterating that FGV does not tolerate any form of human rights infringements or criminal offense in its operations," the company said in a statement.

The company's plantations rely heavily on migrant workers, including more than 11,000 Indonesians and nearly 5,000 Indians.

FGV said it had strengthened its procedures to hire workers and invested around $84m (£65m) to upgrade housing facilities on plantations.

It rejected claims that it confiscated workers passports and said it had installed 32,000 "safety boxes" throughout all its 68 complexes to help workers secure their documents.

Previous concerns

FGV itself noted that its labour issues have been publicly debated for the last five years.

Other organisations have previously voiced concerns over FGV's practices.

In January, the not-for-profit Roundtable on Sustainable Palm Oil suspended the sustainability certification process for some of FGV's plantations.

It also re-imposed a suspension of its certification for FGV's Kilang Sawit Serting facility, which it suspended two years earlier over labour concerns before reversing its decision.

FGV's share price fell 8% on Thursday.