The Federal Land Development Authority (FELDA) was established in 1956 as a statutory body attached to the Ministry of Lands in Malaysia.

Under FELDA’s direction, the cultivation of oil palm accelerated in the 1960s in response to the government’s agricultural diversification programme, which was created to reduce the dependence on exports of rubber and tin. As a result, the first plantation of palm oil was established a year later in Pahang, which is located on the East Coast region of Peninsular Malaysia. By 1984, FELDA had developed and planted around 360,000 hectares with oil palm trees (66%), rubber trees (30%), and other crops (4%). By the end of 2000, oil palms made up 80% of the total land area operated by FELDA. In order to gain transparency in the growing palm oil industry and to cope with the environmental and social impacts of years of intense cultivation, the Roundtable on Sustainable Palm Oil (RSPO) was established in 2004.

Despite the efforts of the RSPO, the United States Department of Labor found forced labour issues related to the palm oil industry in Malaysia and noted that the government had taken insufficient efforts to stop human trafficking. In 2013, the United Nations Office on Drugs and Crime investigated the flow of illegal Rohingya Muslim migrants in search of work in Malaysia and further recognised the presence of overland human trafficking from Myanmar into Malaysia and then on to Indonesia as a means to flee to Australia. The Wall Street Journal published reports in 2015 of human trafficking, forced labour, illegal employment, abuse, non-compliance with minimum wage legislation, and inhumane housing on Malaysian plantations, including the plantations run by FGV Holdings Berhad (FGV).

FGV’s CORPORATE ACCOUNTABILITY FOR HUMAN RIGHTS VIOLATIONS IN MALAYSIA

Spurred by the negative press attention, the Secretariat of the RSPO conducted an independent assessment through Accreditation Services International in order to investigate labour conditions in all RSPO members, starting with Malaysia. The results were published through the Compliance Audit and Investigation Report, which noted numerous flaws in the [RSPO] evaluation including that the Certification Body of the RSPO audit did not cover the plantations managed by FGV’s smallholders and found that health and safety requirements were neglected during the monitoring processes. Moreover, FGV was unable to present adequate evidence of control of contractors and smallholders who managed their plantations.

Additionally, adequate equipment was not provided, non-compliance with the minimum wage requirement was proved on several plantations, and identity documents were retained under a signed declaration stating workers’ will to cede them, despite the fact that a significant portion of them came from nearby countries and could not understand Malaysian.

However, the report lacks consideration of human trafficking, abuse, inhuman housing and illegal employment, responding only partially to the allegations risen by the press and the United States Department of Labor. Reacting to the Compliance Audit and Investigation Report, FGV published a statement acknowledging the responsibility and committing to improve.

In March of 2016, the Complaints Panel of RSPO decided to suspend the Principles & Criteria Certificate, which sets forth the global guidelines for producing palm oil sustainably according to RSPO, until re-audits were conducted in all facilities and FGV was given thirty days to send a one-year action plan to tackle all points made by the report. Consequently, the pending certifications were withdrawn.

In November of 2018, the RSPO issued its Complaints Panel’s Decision, which determined that FGV needed to conduct a full legal audit and review all its units after discovering signs of forced and trafficked labour, recognising passport retention (as passports were kept in safety boxes present in all estates), confusing wages, differential treatment between local and foreign workers, and FGV’s inability to control and monitor its contractors. Ten months later, in August of 2019, the Roundtable lifted the suspension of FGV’s certificate, stating that the state-owned enterprise had addressed most of the requirements settled in 2018. The lift lasted until January of 2020, when the RSPO reviewed the 6 audits conducted from December 2018 to October 2019,  found FGV’s efforts to be insufficient and suspended the certificate again. In July of 2020, FGV issued its Action Plan in Response to RSPO’s Complaints Panel’s Directives of 2018, stating that the practice of outsourcing migrant workers to contractors has totally stopped and has been addressed.

In September 2020, the United States banned imports of palm oil from FGV Holdings. According to the United States Customs and Border Protection, the order was the result of a year-long investigation that revealed forced labour indicators including abuse of vulnerability, restriction of movement, isolation, physical and sexual violence, intimidation and threats, withholding of wages, debt bondage, and abusive working along with concerns that forced child labour is potentially being used in FGV’s palm oil production processes.

STATE’S DUTY TO RESPECT AND PROTECT

In general terms, states have the duty to protect and promote the rule of law, including the duty to ensure equality and fair application of the law. Under international law, states are obliged to respect, protect and fulfil the human rights of individuals within their jurisdiction, which includes the duty to protect against human rights abuse and to take appropriate steps to prevent, investigate and redress wrongful conduct.

In Malaysia, the Palm Oil Act has regulated the palm oil industry since 1998. Therein, the Malaysian Palm Oil Board (MPOB) was established as the main regulatory body in order to evaluate, monitor and supervise the palm oil industry, but the Act of Creation does not contemplate the creation of any responsible body intended to safeguard human rights, conduct investigations of this nature, or sanction related misconducts.

The government, after the U.S. ban on FGV’s products, said it would take action against companies that violate labour laws and that it was investigating the performance of the palm oil sector in Malaysia along with the International Labour Organization (ILO) and the United Nations (UN). Last March, the ILO placed Malaysia in the serious failure to submit category, which comprises of governments that have repeatedly ignored requests for reports on specific issues.

Today, the debate on palm oil industry practices in Malaysia revolves around whether human rights violations persist or not, but there is no remedy provided for the victims of the industry as the government has been unable to intervene and settle responsibilities properly. FGV, despite being a state-owned enterprise, has not been sanctioned on the offences proved in the Compliance Audit and Investigation Report. The only attempts to combat labour wrongful practices are currently undertaken by the RSPO, which does not have the faculties to determine corporate liability, whether criminal or tort, and only controls 19% of the overall palm oil production worldwide.

Currently, FGV has 416,685 hectares of landbank and 68 palm oil mills operating in Malaysia, and the country has seen further human rights abuses, some of them related to human trafficking.

Gabriela was born in Havana, but has lived in Madrid for the last 10 years. She studied Law in Spain, undertook a master's in International Relations and Economic Analysis, and recently completed a master's in Law. Her research interests include Business & Human Rights, Economics, Human Development and Policy in Europe, Asia and Africa.

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