This article first appeared in The Edge Financial Daily on April 1, 2020

KUALA LUMPUR: The closure of oil palm estates and mill operations in three additional districts in Sabah due to the government’s movement control order (MCO) as a result of the Covid-19 outbreak could be a cause for concern in the oil palm plantation industry.

The Malaysian Palm Oil Association (MPOA) and the Malaysian Estate Owner Association (MEOA) estimated a total revenue loss of RM860 million for closure that lasted a month in Sabah.

In a joint statement, they pointed out there would also be a loss of RM57 million in revenue from the 7.5% palm oil sales tax.

The closure of operations in three additional districts will hit 65% of the total planted hectarage of 1.2 million hectares (ha) —  75% of the state’s production.

Some 100,000 workers will be affected as well, they said.

The associations intend to appeal the government’s decision to extend the shutdown of palm oil companies operating in six districts — Kalabakan, Semporna, Kunak, Tawau, Lahad Datu and Kinabatangan — to April 14.

“The industry fully appreciates and understands the state government’s concerns about the rising Covid-19 incidents in Sabah and the measures being taken to save lives and we fully support the concerns.

“The industry, however, is even more concerned [about] the social impact [of] the decision on the closure and the resulting consequential damage to the industry,” said the joint statement.

In particular, the associations noted idle workers confined in their homes for long hours, without practising social distancing, and living in close proximity with  one another could make them more vulnerable to virus infection.

The MPOA and MEOA also said it is difficult to stop workers from leaving, and highlighted security and crime threats of such workers wandering, which the associations view as defeating the MCO’s objective.

They also highlighted the risk of losing workers, as they would have to resort to leaving the estates for employment elsewhere or return to their home countries for good.

Further, they stressed not many companies can afford to pay workers’ wages without any revenue.

“Once normal operations resume, the industry would likely face a labour shortage, extended harvesting rounds, high free fatty acids and default palm oil contracts — some examples of the immediate impact on operations,” they said.

The MPOA and MEOA said the palm oil industry had given its commitment to support the government in containing the Covid-19 spread by adhering to “radical and robust guidelines and SOPs (standard operating procedures)” at all of its estates and mills.

“We are even agreeable to a temporary closure of our operating units with employees affected by Covid-19 and taking the necessary measures to cleanse and disinfect the affected premises.

“Considering all the aforementioned factors, we humbly request and appeal to the Sabah state government to reconsider its decision and allow us to resume operations only for the essential and critical ones, [for] example, harvesting, crop evacuation and milling, during the MCO.

“The industry strongly feels we can better contain the [virus] spread by continuing operations rather than curbing them,” the statement said.