Malaysia Doesn't Agree With 'Drastic' US Block of Sime Darby Palm Oil

Malaysia said Thursday that it did not agree with the “drastic” U.S. action to block palm oil giant Sime Darby’s products and that Washington should have given the company a chance to disprove allegations of forced labor on its plantations.

U.S. Customs and Border Protection (CBP) had on Wednesday announced an immediate block on imports of palm oil and related products from Sime Darby Plantation (SBP), saying a months-long investigation had uncovered almost a dozen forced labor indicators in its production process.

“KPPK does not agree with the drastic action taken by the U.S. without giving the company a first chance to prove that the allegations made may be totally baseless,” Mohammad Khairuddin Aman Razali, Plantation Industries and Commodities (KPKK) minister, said in a statement.

His ministry “took note of the drastic measures taken by the Donald Trump administration yesterday … without referring to the Malaysian Government on the validity of the accusation of the use of forced labor in the industry,” he added.

He acknowledged that there had been forced labor in the country’s palm oil plantation sector, but said a study conducted in 2018 showed those cases were isolated ones.

The results of this study were shared with the U.S. Embassy in Kuala Lumpur last month, Khairuddin said.

“However … if the allegations made by the U.S. are true, appropriate and firm action will be taken against any company involved in the issue of forced labor,” he added.

Sime Darby was the second Malaysian palm oil producer to have its products barred by the CBP over the alleged use of forced labor. In September, the CBP blocked palm oil products manufactured by FGV Holdings Berhad.

Palm oil giant responds

Meanwhile, Sime Darby, Malaysia’s largest palm oil producer by plantation area, said on Thursday that it was awaiting further information from the U.S. so that it could “meaningfully address” Washington’s decision to block imports of its products.

“The CBP’s news release does not provide sufficient information to allow SDP to meaningfully address the allegations that triggered the issuance of the Withhold Release Order,” the company said in a statement.

“Nevertheless, we look forward to receiving pertinent information and working with CBP in order to address their concerns and quickly resolve this matter.”

Sime Darby said it would engage with anti-trafficking organization Liberty Shared to get more information on the petition it filed with CBP urging the agency to ban imports of the company’s products.

“The allegations made suggest a breach in the implementation of SDP’s own strict policies. It would be in the interest of all parties, especially our foreign workforce and women employees, if these matters are addressed expeditiously,” Sime Darby said.

Meanwhile, the Malaysian Palm Oil Certification Council expressed “great concern” over CBP’s ban on Sime Darby products.

Its certification scheme is mandatory for the country’s industry and all certificate holders are bound to abide by Malaysia’s anti-trafficking and anti-migrant smuggling laws, said the council’s Acting Chief Executive Officer Simon Selvaraj.

 Any violations that are substantiated “may result in the certification being suspended or revoked,” Selvaraj said.

‘CBP should work with Malaysia’

For its part, the Roundtable on Sustainable Palm Oil (RSPO) said Thursday that an independent audit this year of Sime Darby labor practice did not show evidence of forced labor.

RSPO is a multinational entity that monitors the industry’s ecological impact and labor practices.

“We can confirm that an initial review of audit findings earlier this year did not generate any red flags against Sime Darby Plantations. We rely on independent auditors to detect violations of this nature and to date, no non-conformances have been identified on any certified SDP plantations,” the group said in a statement.

RSPO said it has “zero tolerance” for forced labor practices, but it also urged the U.S. government to study the impact the block on Sime Darby products will have on the company’s workforce.

“We will take swift action against businesses that intentionally violate our standards, but we must foster a transparent and equitable dialogue with governments and local communities,” RSPO Chief Executive Officer Designate Beverley Postma said in a statement.

“The RSPO once again calls on the U.S. government and CBP to work with all relevant partners to conduct a full risk assessment of the impact any sanctions will have on these vulnerable populations and to work jointly with the Malaysian government towards a positive outcome that allows both countries to meet their commitments to the UN Sustainable Development Goals.”

The group has also launched its own investigation into the violations in Sime Darby that the CBP indicated, the statement said.