KUALA LUMPUR – The Malaysian Palm Oil Association (MPOA) has hit out at the US Customs and Border Protection (CBP), demanding evidence after barring exports of FGV Holdings Bhd.
MPOA chief executive officer Datuk Nageeb Wahab said the country’s plantations industry is well regulated and Malaysian authorities could have attended the matter to resolve it internally.
He also expressed concern over the potential ban of palm oil products by another plantation giant, Sime Darby Plantation Bhd (SDP).
FGV and SDP are large-cap companies listed on Bursa Malaysia with a combined market value of more than RM1 billion and also government-linked corporations.
“We view with concern the US suspension on FGV and the potential ban on Sime Darby Plantation products. Legitimacy is subjective because CBP has the jurisdictional right to impose the ban.
“What we are questioning is why the decision was made based on allegations and petitions by third parties without engaging or showing us any evidence of the allegations. The industry is guided and bound by Malaysian legislation, laws and certification compliance.
“If ever there are any violations made as alleged then action can be taken on the culprits. MPOA and the parties involved are engaging with the relevant authorities, including the US Embassy to resolve this matter soonest possible,” Nageeb told The Vibes in an email interview.
Despite the CBP ban not directly affecting the Malaysian economy as the US palm oil market only makes up a small share of total exports, Nageeb said MPOA’s bigger concern is the reputational damage it may cause the industry and the government.
Take heed of sanction
Meanwhile, Sunway University’s Professor Yeah Kim Leng warned other players in the sector to take heed of the US sanction.
“Of course, this has a dampening impact on their stock prices which have fallen because of the suspension. Other companies must take note to make sure it doesn’t become industry-wide because it will have a wider impact.
“Currently the impact is localised and not industry-wide but it is a signal to the industry to take heed, pay attention to the causes that they don’t breach the conditions that have subjected them to suspension.
“They need to make sure that workers’ rights are not infringed. That is the trigger for the ban this time,” said Yeah, who is senior fellow and director of the Economic Studies Programme at Sunway’s Jeffrey Cheah Institute on Southeast Asia.
Companies such as FGV, he added, should look to traditional and alternative markets to ensure margins are not further squeezed.
As Malaysia’s traditional markets are in Asia and Africa, Yeah said companies have to step up their marketing efforts to boost revenue in these regions.
“Otherwise they won’t be able to get the sales.” – The Vibes, October 14, 2020
