OUTLOOK AND PROSPECTS The oil palm plantation industry is expected to face continued workforce and cost pressures. Migrant worker quota restrictions introduced in mid-2024 may slow new recruitments, maintaining some labour constraints. Additionally, the planned minimum wage increase to RM1,700 in February 2025 is set to raise operating costs, posing challenges for the sector. Despite these factors, FGV has made progress in securing a more stable workforce, leading to improved labour availability compared to previous years. This, combined with better weather conditions, is expected to support FFB output growth of up to 8% in 2025. CPO prices are projected to remain firm in early 2025 due to seasonal production declines, Indonesia’s expanded biodiesel mandate, and tighter global vegetable oil supplies. To strengthen resilience, FGV will continue enhancing estate productivity, increase mechanisation, and improving the OER to optimise operational efficiency. ESTATES AND MILLS Business Review: Plantation Division CHALLENGES AND MITIGATION CHALLENGES MITIGATION ACTIONS RESULTS • Price volatility driven by shifting demand, tax structures, and competition from other vegetable oils, could affect profitability and market stability. • Unpredictable weather from global warming and seasonal monsoons, disrupting palm oil output. • Optimised yields and enhanced operational efficiency to mitigate external uncertainties and improve profitability. • Increased yield by 14%, from 13.60 MT per Ha in 2023 to 15.56 MT per Ha in 2024. • Stringent labour regulations, including Akta 446, Akta Kerja 1955, and the International Labour Organisation (ILO)’s 11 indicators of forced labour, create workforce constraints. • Initiated efforts to improve the wellbeing, health, and safety of plantation workers by enhancing living conditions, including housing, amenities, and community development initiatives. • Invested around RM127 million to improve workers’ living standards in compliance with regulatory requirements. By implementing effective maintenance systems, we boost efficiency and achieve better results. 84 FGV Holdings Berhad | Annual Integrated Report 2024
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