The number of workers or laborers in the oil palm plantation sector is very large, if palm oil companies implement business practices that are responsive to social issues including employment and the environment, the palm oil industry can contribute to improving Indonesia's economic conditions in a better and sustainable way. However, the situation on the ground is often different. According to the International Labor Organization (ILO) there are 281 million workers living in extreme poverty in developing countries such as China, India, Malaysia and Thailand. In Indonesia alone, there are 16 million workers in the palm oil supply chain, of which 3,78 million are plantation workers.
An investigative report published by The Associate Press said that almost all workers in Malaysian and Indonesian palm oil plantations complained about the company's treatment of them. Some stated that they felt cheated, threatened, detained against their will or forced to pay off debts they could not settle. Some workers report that they are regularly harassed by the authorities, transported in raids and held in government facilities (AP, 2020).
The practice of palm oil business certainly cannot be separated from financing or investment support, so that financial institutions or investors have a relationship and are also responsible for the business practices being funded, and the palm oil industry is no exception. In this context, the Financial Services Authority (OJK) has published the Book of Credit/Financing for Plantation and Palm Oil Industry (2019) with the aim of increasing the banking/finance industry's understanding of the palm oil business process, so that it is hoped that the distribution of credit/financing in the palm oil industry can running with low risk and taking into account the aspects of Environmental, Social and Good Governance (LST). The aspect of protection for palm oil workers is regulated in the manual, but there are still many banks and financial institutions that provide credit to palm oil companies without considering the practices of palm oil companies that ignore their workers.
Even though labor problems always arise from time to time, domestic and foreign financial or banking institutions are still not concerned with the issue of protecting palm oil industry workers in the credit disbursement process. The world's top financial institutions such as Deutsche Bank, BNY Mellon, Cigroup, HSBC and Vanguard Group continue to pour their investments into palm oil companies so that palm oil production exploded globally from only 5 million tons in 1999 to 72 million tons in 2020. Even the US noted that this had happened. a 900 percent surge in demand over the last 7 decades (AP 2020).
On World Labor Day 2021, the Coalition for Palm Oil Workers asks the Indonesian government to prioritize the protection, safety and welfare of oil palm plantation workers. The Palm Oil Workers Coalition views that the government is still ignorant of the conditions and fate of palm oil plantation workers, while the government is very "generous" towards the palm oil industry players.
This study aims to take a closer look at the problems that occur to labor workers, especially in oil palm plantation areas in West Kalimantan and Central Sulawesi. In addition, this study also seeks to track the financial flows of the company that is the object of the study as a case study that can complement the bank rating assessment that has been carried out by Responsibank Indonesia. It is hoped that this study will become one of the evidences for policy makers, business actors in the palm oil sector and palm oil workers' organizations to take joint steps to improve the conditions of workers or laborers in the oil palm plantation sector.
Download the report “Violations of Oil Palm Plantation Workers' Rights: Case Studies in West Kalimantan and Central Sulawesi” below:
