The Hidden Workforce: Exploiting Undocumented Migrants in Malaysian Plantations

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The Hidden Workforce: Exploiting Undocumented Migrants in Malaysian Plantations

Alvin Wong

April 19, 2025

In this essay, I examine the effect of indenturization and illegalization of migrant workers from other Southeast Asian countries, such as Indonesia, on sustaining the Malaysian palm oil plantation industry. I argue that the recruitment of foreign undocumented workers is quintessential to sustaining Malaysia’s palm oil industry because they are cheap and easily exploitable. Their precarity allowed employers to impose harsher working conditions, which made them susceptible to threats of abuse and deportation and low wages, which maximized monetary profits and non-monetary benefits. Moreover, the Malaysian state is alert to the undocumented workers, yet complicitly maintains the rights of plantations because of higher tractability and a higher share of profits, hence allowing for the regional enterprises and the global north to extract profits through palm oil plantation in Malaysia.

Planting Plantations in the Semi-Peripheral Malaysia

Malaysia is the second largest palm oil-producing country in the world, producing 18.7 million tons of palm oil annually, only behind Indonesia, and almost doubling the rest of the world combined ^{^[1]}. Malaysia could be considered a ‘semi-periphery’ state dependent on “core” countries and corporations, including the British colonial government, the Malaysian plantation companies and transnational palm oil buyers.^{^[2]} Below, I will discuss the formulation of plantations as the hegemonic plant cultivation method in Malaysia, and how the colonial and post-colonial states have been promoting plantations in the replacement of smallholders’ cropping in Malaysia.

The British arrival in Malaysia introduced a radical reimagination of land as a productive commodity. Polanyi pointed out that the political-economic researchers’ obsession with land’s “economic function” has turned land into an object of “property rights and access to resources.”^{^[3]} Land also becomes a matter of economic development that can be improved for greater productivity, efficiency and connectivity. According to Bosma, since the 1850s, there has been a fetishization of “specialization in commodity production.”^{^[4]} Through private acquisition of land, the British could implement mass monocropping, which allowed concentrated plantation to take place, aided with widespread fertilization, and land productivity was drastically increased.^{^[5]}

Once land became a property for sale and development, the British colonial state could actualize its plan to expand the plantation by removing local farmers’ rights to land. In 1956, the newly established Federal Land Development Authority (FELDA) promulgated a farmers’ resettlement scheme, a massive land grab project aimed at “improving” the land productivity (Bosma, 162). FELDA then reallocated land to private corporations for developing palm oil plantations (Fougère, 461). As a result, smallholders surrendered autonomy of commodity production to FELDA and became “indebted sharecroppers” of privatized plantations who now have to pay off their debts and rents to the company, ironically, of their land (Bosma, 162).

The Malaysian state and foreign power exertion in Malaysian palm oil has continued and even arguably strengthened the hegemony of the plantation after decolonization. After independence, FELDA accounted for 30% of Malaysia’s palm oil production, the largest in the country.^{^[6]} Recently, Unilever is the largest global palm oil buyer and has continuously invested in Malaysian plantations, except for IOI, one of the large Malaysian plantation companies.^{^[7]} Roundtable for Sustainable Palm Oil (RSPO), the transnational governing body of palm oil sustainability and the representative of stakeholders of palm oil production, was co-founded by IOI.^{^[8]} However, the opinions of local communities and smallholders are usually ignored unless they receive support from NGOs.^{^[9]} This leaves strong cronyism between dominant palm oil corporations, RSPO and the Malaysian state, allowing preferential policy treatments to plantation owners, therefore, guaranteeing plantation’s persistence in Malaysia.^{^[10]}

The clear losers in the plantation game are the local farmers. However, there is also another group of losers that are often ignored—the foreign migrant workers in the palm plantations. Plantation owners and the Malaysian state often underplayed the significance of migrant workers, primarily because they have been benefiting from indenturing workers with debt, underpayment and social exploitation.

Extracting Palm Oil from (Invisible) Migrants

From the Malaysian government’s immigration department, there are currently almost 500,000 workers in Malaysian palm oil production, about 80% of the workers in palm plantations are migrant workers.^{^[11]} This certainly showed the importance of migrant workers in supporting the Malaysian agricultural economy. Nonetheless, these data are extremely distorted because they have not taken account of the larger population of undocumented labour, which has underestimated Malaysia’s reliance on migrant workers. Bosma even estimated that in Sarawak, one of Malaysia’s 13 states, and from Indonesia alone, there was an influx of 0.6 to 1.7 million undocumented workers working in plantations.^{^[12]} Therefore, I would explain the rationale of importing labour, oftentimes undocumented, to the plantations and locate the stakeholders involved that make the transnational work happen.

Certain practical specificities of palm oil plantation lead to favouritism of young, male migrant workers. Firstly, palm cultivation only requires 36 to 52 working days per year, which is three to six times less labour-intensive than other crops such as growing chili.^{^[13]} Therefore, plantation owners prefer workers who can accept casual wages and working days.^{^[14]} Secondly, oil palm harvesting “favored young men,” therefore required frequent replenishment of the new labour force.^{^[15]} Thirdly, an extra supply of labour is required during harvesting season, which happens only for a few days, therefore, short-term, seasonal temporary workers working at casual wages are preferred.^{^[16]} Therefore, migrant workers, especially undocumented ones, would be preferred because there are fewer legal and financial consequences of layoff or underpayment.

Another reason leading to a demand for foreign workers, as Bosma pointed out, is Malaysia’s high education and emigration rate.^{^[17]} Different from Indonesia, where most of the emigrants are low-skilled workers, a majority of Malaysians are educated or at least literate.^{^[18]} Yet, the mass educated population failed to compete for the limited middle-class occupations. Therefore, over the decades, a mass exodus of educated, young population went to wealthier states such as Japan and Singapore as undocumented migrants, or to Indonesia and the Philippines as managerial positions.^{^[19]} As a result, the lack of domestic labour supply means there is a demand for foreign labour in Malaysia.

However, even though knowing that Malaysian plantations would exploit migrant workers, there is still a consistently immense supply of workers. Interestingly, most of the migrant workers came from the bordering state of Indonesia, the largest palm oil growing country, generating more than 50% of the world’s palm oil share.^{^[20]} The reason for the Indonesian workers to come to Malaysia is not because of the saturation of Indonesia’s economy, but because Indonesian plantations offered too little compensation for work. The wages on Malaysian palm oil plantations are seven to fourteen times the domestic payment for the same work.^{^[21]}

Although comparatively better off, migrant palm oil plantation workers in Malaysia are still in a disadvantaged working position vulnerable to the exploitation of plantation owners, the state and other stakeholders, including agencies and the workers’ more affluent counterparts. As I argued earlier, the documentation and undocumentation of workers serve as powerful instruments in facilitating an exploitative, tractable form of labour. In the following two sections, I will evaluate my statement in terms of the economic and social rights of migrant workers.

Handcuffs of Debt: Indenturing of Foreign Labour

As established earlier, Malaysia’s plantation economy growth relies on “cheap immigrant labor.”^{^[22]} Even when the wages of Malaysian palm oil plantations are usually higher than those in Indonesia, the foreign workers in Malaysia are far from being paid fair and square. Because palm cultivation is seasonal, plantation owners pay their workers based on piecemeal work and productivity rather than working hours, leading to unreliable and fluctuating payments. Moreover, according to the International Organization for Migration, plantation owners most likely would not cover their workers’ cost of accommodation, water and electricity bills, or only provide a negligible sum of 10 ringgits, or USD 1.85, as subsidies.^{^[23]} Plantation owners also frequently made unexplained deductions from the wages of their workers.^{^[24]} For example, a case in the IOM report stated that his employer deducted his salary because his previous tenant had an outstanding debt of 1000 ringgits.^{^[25]} Therefore, undocumented workers are especially prone to salary exploitation without legal consequences.

Moreover, the recruiting agency system has been playing a huge role in creating debt bondage and undocumented passages for undocumented workers. Firstly, the migrant workers are indebted before they even set off for work. The plantation owners have to pay recruiting fees to middleman agencies in advance.^{^[26]} In return, recruiting agencies would first collect an upfront payment of administrative fees from the migrants before they depart for work.^{^[27]} These administrative fees ranged from 1 to 11 months of minimum wage earnings in Malaysia, however, the sum is considerably large compared to the daily earnings of these workers in their respective peripheral rural home countries.^{^[28]} Worse still, these recruitment fees on average exceeded the government’s legal recruitment fee ceiling, while there appears to be no strict regulations or enforcement forcing recruiting agencies to comply with the fee ceiling.^{^[29]} As a result, the workers are forced to borrow money from other wealthier counterparts, and, expectedly, such regulations on undocumented workers will be nearly non-existent given that there is no monitoring in the official census.

Lastly, the rich locals from the emigrating countries are also complicit with the recruiting agencies in indenturing their fellow migrant compatriots. Due to the expensive recruitment fees, the workers could only borrow money from loans, usually from the village heads or village brokers.^{^[30]} As a result, the sum of money statistics, usually considered as “remittance,” are mostly used as loan repayments for the loaners.^{^[31]} Worse still, some of these village sub-agents also charge extra fees for their benefits by telling the migrants to sign agreements that are not necessary in the recruitment process.^{^[32]} The loaning mechanism also cemented the status quo patron-client relationship within the village, as anyone who wished to work in foreign lands had to go through the sponsorship from and the documentation issued by village heads, which conveniently facilitated the financial “trickle-down” effects within the emigrating countries.^{^[33]}

Therefore, whether documented or not, migrant workers are paid unreasonably by plantation employers and are indentured by recruiting middlemen and their hometown village nobles through unauthorized exploitation. The undocumented workers are more susceptible to economic exploitation because of their inability to find state support due to a lack of status.

Theft of Social Rights: Creation of Undocumented Labour

Foreign workers in Malaysia are extremely precarious in terms of social rights. According to the Sarawak Labour Ordinance, all foreign workers in Sarawak must work with their own passport, work permits, immigration ID cards and employment contracts.^{^[34]} However, foreign workers, even with valid passports and identification documents, could risk deportation or deprivation of social human rights.

Firstly, employers do not need to guarantee that foreign workers will have a safe working environment. Although employers are required to purchase medical insurance for their workers, it is common that workers work without any insurance to save the employment costs.^{^[35]} During the COVID-19 pandemic, social protection measures such as the provision of subsidies, unemployment benefits or social security were unavailable to migrant workers, especially the informal undocumented workers.^{^[36]} However, as argued in the previous sections, the transnational plantation representatives such as RSPO are highly collaborative with domestic plantation companies, prioritizing owners’ interests over workers’ rights.^{^[37]} These exposed workers were exposed to social security threats, unprotected by laws or state regulations, and unchecked by the state, forcing them to depend on and be indentured to their employers.

Secondly, foreign workers may face unexcused confiscation of passports by employers, sending out signals of intimidation for deportation without consequences. In Malaysia, employers are allowed to keep their workers’ passports for safekeeping reasons and with the workers’ consent, yet the employers could still exploit the clause by coercing consent from the workers, or defend their confiscation of the workers’ passports for preventing escape of workers.^{^[38]} The workers are defenseless as “going out without a passport entails the risk of being apprehended by the authorities, imprisoned, and deported.”^{^[39]} Therefore, if any documented plantation workers decided to leave the job without the employers’ consent, they would have to abandon their documents and secretly work in the undocumented, informal sectors.

Thirdly, illicit recruitment agencies and sub-agents are key actors in creating the precarity and the exploitation of migrant workers. Due to the overcharging of licensed recruiting agents, unlicensed recruiters are more attractive to migrant workers since they can provide necessary immigration documents for half as much payment.^{^[40]} However, these agents often use illegal channels to obtain the documents; in extreme cases, the sub-agents may even arrange a fake birth certificate, national identification card and passport for workers who are underage or did not fulfill immigration requirements.^{^[41]^[42]} Others who do obtain a visa might still be obtaining non-working visas, usually temporary family visit or tourist visas.^{^[43]} Moreover, some of the migrant workers may receive documents and contracts in a language they do not understand, which means they are prone to being exploited without even noticing.^{^[44]} Therefore, these agencies have the upper hand in the workers’ immigration requirements, and are complicit in creating the mass supply of undocumented workers in Malaysia.^{^[45]}

Lastly, and more importantly, the undocumented workers lacked support from labour unions that could protect their social provisions. Given their lack of status in Malaysia, most of the undocumented workers are not represented in the regime of their industries’ unions.^{^[46]} These workers “don’t want to risk getting in trouble…if the management decides to terminate me because of the complaints” that the workers made.^{^[47]} As a result, they prefer to remain silent if they are being exploited, or at best find their workers’ representative to voice the concerns as a group.^{^[48]} Even so,

Conclusion: State Position in Creating Illicit Workers

From the above, we can observe the cruelty behind the rapidly growing Malaysian palm plantation economy. Not only were the plantations constructed at the expense of removing farmers’ rights to land, these plantations also built on the exploitation of workers economically and socially through constant threats of deportation or incarceration. This essay has demonstrated the power imbalance between indentured migrant workers and the plantation owners: while the employers could confiscate their workers’ passports or immigration documents with little legal consequences, their illicit workers could risk being reported to the police for not having legal documents on their hands. Other stakeholders, such as the village money lenders or the recruiting agencies, are also the exploiters of these workers to advance their financial interests.

Moreover, the Malaysian state has also taken part in making sure the national palm industry is supported by a strong base of cheap, indentured migrant workers through its network of cronyism with plantation owners and organizations. The state’s erratic migration policies, as well as complicated and corrupt bureaucracies, have protected against trafficking recruiters conniving with government officials, in turn brushing aside the rights of laborers.^{^[49]} The state has aligned with development models and extractivism and justified them as for the greater “national interests,” sacrificing the national and international workers’ well-being.^{^[50]} Therefore, we can expect a continuous trend of state-business exploitation and invisibilization of undocumented palm plantation workers in Malaysia because the undocumented status of workers aligns with the interest of profit maximization and evasion of liability.

Alvin is a second-year majoring in International Relations and Contemporary Asian Studies. Originally from Hong Kong, Alvin is inspired by geopolitics about East and Southeast Asia, specifically grassroots mobilization and state oppression, economic and urban development, and cultural diversity. On top of Synergy, Alvin is a student affiliate at the Centre for the Study of Global Japan (CSGJ), and the president of UofT’s Cantonese Debate Club. Here in Synergy, Alvin is determined to unravel issues like self-determination, diplomatic policy, and global investments revolving around Southeast Asia.

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