FORCED AND CHILD LABOR REPORT - MALAYSIA

UNCLAS SECTION 01 OF 02 KUALA LUMPUR 000460

SIPDIS

FOR EAP/MTS, DOL/ILAB - RACHEL RIGBY, DRL/ILCSR - MARK
MITTELHAUSER, AND G/TIP - STEVE STEINER
STATE PASS TO USTR - WEISEL AND ROSENBERG

E.O. 12958: N/A
TAGS: PHUM PGOV ELAB ECON ETRD MY
SUBJECT: FORCED AND CHILD LABOR REPORT - MALAYSIA

REF: REF: STATE 43120 - INSTRUCTIONS

Introduction
--------------


1. Embassy sources have reported incidents of forced labor
in Malaysia's garment industry, and forced labor and
exploitative child labor in the palm oil sector. We received
corroborating reports from multiple sources for most
information, but Embassy officers have not had the
opportunity to conduct first-hand verification of the
reports. Embassy sources do not have credible estimates of
the extent of forced labor and exploitative child labor in
the garment and palm oil sectors, and determining the extent
of such problems would require further research. This cable
responds to the Department of Labor's request for
information, reftel.

Garments
--------------


2. Goods: Garments.


A. Type of exploitation: Forced labor (debt-bondage,
contract switching, and passport confiscation).


B. Sources of information and years: Post gathered all
information during the last 12 months from a credible local
NGO, the Malaysian Trade Union Congress (MTUC),a credible
international NGO, the government-sponsored national human
rights commission (SUHAKAM),interviews with migrant workers,
and credible journalists. Most of the information was
reported by multiple sources.


C. Narrative: All sources agree some laborers working in
garment factories work in conditions of forced labor, as
defined reftel. The majority of foreign laborers, both men
and women, are from regional countries including Thailand,
Vietnam, Indonesia, the Philippines, and Bangladesh. Some
Malaysians from rural areas also reportedly are subject to
forced labor in garment factories. Debt-bondage, contract
substitution, passport confiscation were the most common
catalysts for forced labor. In some cases, sources report
that employers deny workers the freedom to leave, forcing
them to live and work on the company's premises.

Most sources informed us that "agents," both officially
licensed and unlicensed, recruited some workers with promises
of high paying jobs, later unfulfilled. Some migrant workers
signed contracts in their home countries. Upon arrival,
some employers required workers to sign new contracts, which
advantaged the employer and substantially reduced promised
salaries and/or required workers to work longer hours.
Debt-bondage is a common factor is such cases. However, in
some cases workers accumulated more debt because they had
access only to company stores for necessities such as food
and housing. In one documented case, Vietnamese working in a
Penang clothing factory that which produces designer clothing
received 8.90 to 30 ringgit ($2.75 - $9.40) net pay for two
weeks labor after various deductions from their salaries.

Sources also noted that in some cases, workers are not free
to leave the factories' premises. In such instances,
employers sometimes locked workers inside their quarters,
located on the factory's compound, to prevent workers from
leaving. Also, passports were confiscated and employers
threaten workers that, if they left, the company would report
them to Immigration and the workers would be detained as
illegal migrants.


D. Incidence: Sources do not have credible estimates on the
number of persons working in conditions of forced labor, or
the number of factories using forced labor.

Palm Oil
--------------


3. Goods: Palm oil.


A. Type of exploitation: Forced labor (debt-bondage,
contract switching, and passport confiscation) and child
labor (family debt-bondage).


B. Sources of information and years: Post gathered all
information during the last 18 months from the Malaysian
Trade Union Congress (MTUC),credible international
organizations, and credible journalists. Most of the
information was reported by multiple sources.

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C. Narrative: We do not have credible estimates of the
number of palm oil plantation employees working in conditions
of forced labor. Sources stated that some plantation workers
experienced debt-bondage, and some plantations utilize child
labor. Migrant workers from Indonesia, the Philippines, and
Bangladesh, and ethnic Indian Malaysians constitute the
largest groups working on plantations. According to sources,
workers on plantations using forced labor include men, women,
and children.

A local newspaper described how ethnic Indian Malaysian
families become subject to forced labor on palm oil
plantations. A family's original debt most often occurs when
a person begins employment on a smaller plantation. These
small plantations pay workers with coupons rather than cash.
The coupons are good only at the company store and traded for
essentials. They are not enough to sustain a worker and his
family for the entire month and debt begins to grow. Sources
told us when a worker owes about 10,000 ringgit (about
$3,125),the "debt" is sold to a larger plantation. As the
debt grows, other family members, if they are in Malaysia,
may be forced to work in an attempt to reduce the debt.
Eventually, in such cases, the entire family, including
children, could be forced to work. Plantations using forced
labor may continue selling the debt to larger plantations and
both families and workers could lose their freedom of
movement.

Some plantations are situated in isolated locations. Often,
company stores are the only source of necessities available
to workers, which adds to their debt. Some sources report
workers physically abused for attempting to leave a
plantation. Reports indicate that some workers do not leave
their plantations for several years at a time.


D. Incidence: Sources did not have credible estimates of
the number of persons affected by conditions of forced labor
and exploitative child labor on palm oil plantations.
Sources, however, expressed concern regarding the conditions
on palm oil plantations that could lend themselves to
potential abuse.

Efforts to Combat Forced Labor and Child Labor
-------------- -


4. A government official from the Ministry of Human
Resources, contacted for the purposes of this report, stated
that the government of Malaysia (GOM) does not believe forced
labor to be a significant problem. The GOM does acknowledge
that underpayment of wages and working excessive hours does
occur. The official stated that the GOM normally launches an
investigation only after receipt of a formal complaint. A
respected journalist noted that the government has yet to
investigate a case of alleged forced labor at a palm oil
plantation in the state of Negeri Sembilan. The victims,
assisted by local NGOs, first lodged a formal complaint in
January 2007. Ishak Mohamed, Director of Immigration
Enforcement, publicly warned employers in January 2008 they
could be charged under Malaysia's Anti-Trafficking in Persons
Act if they abused employees.


5. The government-sanctioned human rights body SUHAKAM
monitors and reports on labor conditions and exploitation.
SUHAKAM highlighted some of the labor issues existing in
Malaysia in its Human Rights Report for 2007, released May

2008. The report also included recommendations for
addressing labor exploitation, including adopting the
principles of the International Labour Office (ILO)
Declaration on Fundamental Rights and Principles at Work and
the ratification of the International Convention on the
Protection of the Rights of All Migrant Workers and Members
of Their Families. The MTUC and Bar Council use existing
Malaysian labor laws to file labor claims for victims of
forced labor. Other local NGOs, such as Tenaganita, provide
counseling and lobby GOM for better protection against forced
labor.
SHEAR