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Statement in Response to Finnwatch’s Report Entitled Migrant Workers’ Rights in Oil Palm Estates in Malaysia, Case: IOI Group, Mekassar
02/07/2021Corporate Communications

IOI Corporation Berhad (IOI) refers to Finnwatch’s report published on 30 June 2021 and various media articles mentioning about the report. IOI acknowledges the report and takes its recommendations as part of our continuous improvement on existing systems and processes.

According to the report, the investigation was conducted through video interviews with 7 workers using a mobile phone connection which were translated by the complainant, as well as obtaining photographs of employees’ living conditions and various documents sent by IOI. The 7 workers are all from India and based at Mekassar Estate, one of IOI’s 103 plantation operating units in Malaysia which collectively employ approximately 16,000 workers.

IOI has been committed to the “No Recruitment Fees Policy” since 2017. However, the report fails to differentiate between recruitment fees and collection of illegal monies from the workers at their source country by unknown person which is unverified and undocumented. Under the International Labour Organisation’s (ILO) definition of recruitment fees, these payments fall under “illegitimate, unreasonable and undisclosed costs” and should not be recognised as recruitment fees. IOI strongly condemns this type of illegal practices. As the activities took place at the source country and are beyond IOI’s jurisdiction, cooperation from the source country’s government is required to prevent such violation and exploitation from recurring. Reimbursement of illegally collected monies would only encourage further illegal collection of money from workers and could violate anti-bribery and anti-corruption regulations. IOI has reported the matter to the Indian Embassy for formal investigation and has suspended the recruitment agency (which was alleged to be affiliated to the unknown person) as well as the recruitment of workers from India.

On IOI’s commitment to make ex-gratia payments to workers who had been charged recruitment fees before the introduction of our no-recruitment fees policy, payments had been made in phases. 635 workers eligible to receive the ex-gratia payment had been paid between late 2017 and 2019 and the balance 283 workers eligible for the payment were also paid by June 2021.

IOI’s recruitment process is governed by our “Foreign Workers Recruitment Guideline & Procedure” established in 2017, in line with IOI Sustainable Palm Oil Policy and ILO’s requirements. IOI has always taken steps to conduct workers’ interview and to brief them on the nature of their work in the presence of a translator. A video on IOI’s company profile and job functions is also shown to the workers during the recruitment process at the source country before they sign the contract.

Under IOI’s “Guideline for Minimum Wage & Leave Pay”, our workers are guaranteed to receive at least the statutory minimum wage. This is in line with national regulation, collective agreement with the National Union for Plantation Workers (NUPW) and industry practice. Further, to address potential wage payment issues, IOI has issued the “Worker’s Work Verification Guideline” to provide a transparent process for workers to verify their working hours and wages calculation in order to ensure fair payment. As part of IOI’s commitment towards fair and decent wages for our workers, IOI took part in “The Fair and Decent Wage Study”, which was conducted independently and financed fully by Monash University. The objective of the study was to develop a pragmatic benchmarking on fair and decent wage for plantation workers and it was based on the Anker method.

IOI views the findings in the report seriously and will strive to further improve the implementation of our labour policies as well as the working conditions in our plantations. We have been engaging with Finnwatch on this case since August 2020, and the progress has been reported on our website at https://www.ioigroup.com/Content/S/PDF/Grievance_others.pdf.

Within the next few months, IOI will undergo an audit supervised by one of our key customers and assisted by a reputable international labour rights consulting firm. The audit will cover a broad spectrum of our plantation operating units and will seek to ascertain any non-compliance with our labour policies or unsatisfactory working conditions faced by our 16,000 workers in Malaysia.

IOI has been working with a number of local and international labour rights experts and NGOs during the last five years to monitor the implementation of our labour policies. Reports by some of these experts and NGOs have been complimentary, while others have been critical like this Finnwatch’s report. The critical reports have caused some demoralisation and disappointment among our 2,500 supervisory employees in the plantation operating units who have put in a lot of effort to ensure the proper implementation of our company’s labour policies and practices. Nevertheless, we will continue to further engage, raise awareness and train our supervisory employees on responsible business conducts and address grievances swiftly.

Finally, IOI is committed and determined to achieve our objective of being a responsible and exemplary company in respecting labour rights and providing productive employment as well as good working environment for our employees.


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