BPMN 3123 MANAGEMENT ETHICS

SECOND SEMESTER 2020/2021 (A202)

GROUP C

GROUP ASSIGNMENT (GROUP 1)

ISSUE : MALAYSIAN PLANTATIONS GROUPS ENGAGE IN

UNETHICAL PRACTICES ABROAD

PREPARED FOR:
Dr. Amer bin Haji Darus

PREPARED BY:
Name Matric No.
Ye Songshuang 243734
Maizurah binti Abdullah 261400
Diana Fakira binti Makson 261849
Puteri Maya Alisa binti Samsudin 262342
Ageeleshwary a/p Arumugam 262939
 SUBMISSION DATE
22 APRIL 2021
Table of Contents

1.0 Executive Summary……………………………………………………………………….2

2.0 Case Summary……………………………………………………………………………..3

3.0 Discussion…………………………………………………………………………………4

3.1 Analyse the ethical issue………………………………………………………………4-6

3.2 Demonstrate the ability to apply with the ethical theories and concept……………...7-12

4.0 Conclusion………………………………………………………………………………..13

5.0 Ethical lesson learnt from case …………………………………………………………..14

6.0 References…………………………………………………………………………….16-17

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1.0 Executive Summary

This assessment maintains a key theme of legal and unethical practices abroad done by

Malaysian plantations group in foreign countries. The study outlined by Malaysian oil palm

plantations companies has brought negative impacts due to their practices for overseas

investment. This study is segmented into three major sections. The initial section of the study

lays emphasis on the case summary of related issue in the case. Following section of the

assessment highlights the ability to apply with the ethical theories or concept that is related to

the case and also to analyse the ethical issue. The third section would be the conclusion .The

fourth section would be the lesson that can learn from the case.

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2.0 Case Summary

This article basically tells us about major Malaysian plantations groups that are involved in a

variety of legal and unethical practices in their operations in foreign countries. As a result,

there are often intense conflicts between them and the stakeholders in the region. Sahabat

Alam Malaysia has addressed the issue of negative impact and practices of their overseas

investment.

This study identified 50 Malaysian companies that acquired over 200 plantation

companies, totalling 3.5 million hectares of overseas oil palm plantation land bank. Besides,

Malaysian firms have the largest land bank for oil palm in Indonesia, totalling 1.8 million

hectares, while Papua New Guinea has a total land bank of 1.06 million hectares. Malaysian

companies also own 389,000 hectares of oil palm property in Liberia, 180,000 hectares in the

Democratic Republic of Congo, 23,000 hectares in Cambodia, 6,000 hectares in the Soloman

Islands, and 1,000 hectares in the Philippines. Furthermore, Malaysian firms were engaged in

both legitimate and unethical activities, including unauthorised exploitation of protected

forestland and other types of illegal logging. However, land clearance and plantation

production without authorised Environmental Impact Assessments (EIAs) or other

appropriate approvals, as well as misinforming government officials about this, were also

identified as major negative issues in the report. Moreover, the companies also pursued legal

claims and occupied customary rights land without the free, prior, and informed consent of

indigenous communities, and allegedly paid local villagers and plantation workers to hunt for

protected species such as orang-utans. Malaysia should take a cue from Singapore, which has

introduced a "new and unique" law that will keep its residents and businesses legally

responsible for their role in the recurring transboundary haze crisis.

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3.0 Discussion

3.1 Analyse the Ethical Issue

The expansion of oil palm plantations in the tropics is one of the world's most contentious

sustainability debates. Biodiversity protection, climate change, human and indigenous

peoples' rights, effective sustainable development models, and global food and energy

consumption trends are addressed. In the 1950s, Malaysia was the first country to grow oil

palm plantations as a major source of revenue. The initiative has the support of the Malaysian

government. From the 1980s onwards, the Malaysian government encouraged its industries to

look for additional land bank in third countries

A study found that the heads of state in four of the six primary recipients of Malaysian

palm oil FDI, namely Indonesia, Papua New Guinea, Liberia, and the Republic of Congo,

have declared investment moratoria in order to control overseas investment in forestry and

agriculture development. Despite these moratorium measures, he said, many Malaysian

investors have attempted or succeeded in circumventing them. In essence, this does not bode

well for Malaysia's picture and credibility as a global leader in the palm oil market.

While Malaysian oil palm investment does have a positive impact on recipient countries'

economies in some cases, this is not the case in all cases. There are studies concerning on the

core sustainability issues posed by civil society groups and government review committees in

the tropics about the legal, social, and economic aspects of environmental and social

injustices that come with it Malaysian foreign direct investment. Some of the issues that has

been raised is that Malaysia has allegedly involved in legal and unethical practices abroad

such as unauthorised occupation in protected forestland, and other forms of illegal logging.

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 Land clearing and plantation without the approval of Environmental Impact Assessments

(EIAs) or other appropriate permits is another major problem. Some Malaysian plantation

companies are accused of paying local villagers and plantation staff to search for endangered

species such as orang-utans, as well as pursuing legal claims and occupying customary land

without the free, prior, and informed consent of indigenous communities

According to Sahabat Alam Malaysia, businesses who break the rules and laws should be

punished so that it does not happen again. Malaysian companies own oil palm plantations on

389,000 hectares in Liberia, 180,000 hectares in the Republic of Congo, 23,000 hectares in

Cambodia, 6,000 hectares in the Soloman Islands, and 1,000 hectares in the Philippines. If

these wrongdoings continue, Malaysia's reputation as a global pioneer in the oil palm

industry will be tarnish. Malaysian academics and the media often applaud foreign

investment according to (http://www.foe-malaysia.org). Despite the fact that the haze issue

confronts nearly all Malaysians with the negative environmental effects of overseas. Even

though that plantation growth continues year after year, questions about the effect of these

investments on recipient countries and their people are rarely expressed or addressed.

One of the aggressively impact of Malaysian investment that were happened few years

back is the forest haze in 2013. Between June and August 2013, the people of Southeast Asia

living near the Malacca Straits were subjected to a serious bout of transboundary air pollution

known as haze. This recurring phenomenon is linked to the conversion of forest areas and

peatlands have been converted into plantations in Sumatra.

Many Southeast Asian communities depend on a product as in-demand and adaptable

as palm oil to survive, and it contributes significantly to developing economies' GDP (Lian

Pin Koh, 2008). These low-cost, multi-purpose oil has become indispensable to the world.

However, in recent years, the ethics of this widespread use have been called into question, as

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palm oil production has become a more prevalent factor in Southeast Asian rainforest

deforestation, resulting in major biodiversity losses ( (Lian Pin Koh, 2008). The industry has

progressed to the point that it can now bring whole species on the brink of extinction in a

matter of years.

Some argue that palm oil production is too harmful to the environment to be considered

ethical, and that governments should outright ban it. Others argue that palm oil is important

to our economies and way of life. Despite the benefits of palm oil, many environmental

organisations around the world have criticised the industry as a whole arguing that the

consequences are too severe to ignore. Palm oil production has wreaked havoc on the climate,

especially in recent decades. Illegal logging and deforestation, for example, devastate wildlife

habitat, leaving orang utan, rhinoceros, and tigers without a sanctuary.

The most damaging impacts, as well as other efforts made by local populations,

conservationists, and governments in FDI recipient countries, go largely unnoticed in

Malaysian media. As a result, many of the affected shareholders have become enraged with

Malaysia. Their rage often turns violent, resulting in the loss of human lives and company

property. Local stakeholders have expressed their displeasure in more regulated

circumstances by publicly burning the Malaysian flag or criticising Malaysian decision-

makers to take responsibility for the negative impact of plantation development.

However, some Malaysian investors have realised that their existence in FDI-receiving

countries cannot be taken granted. They have realised that a legal licence does not guarantee

their social licence to operate outside of Malaysia. These businesses value the interests of

others, and as a result, they are more likely to benefit from positive stakeholder relations even

when it comes at the expense of significant land bank access. Others, if not most, Malaysian

overseas investors will continue to enflame stakeholders affected by land grabbing.

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3.2 Demonstrate the Ability to Apply with the Ethical Theories and Concept

Justice theory is one of the ethical theories that can be applied to the issue of plantations, as

stated above. Justice theory is characterised as the concepts that equals should be treated

equally and unequal should be treated unequally, according to Manuel Velasquez, Claire

Andre, Thomas Shanks, S.J., and Michael J. Meyer (2014). So, this theory explains that

everyone has the equal in terms of no one will get more or less. As a result of this principle,

everyone has the same amount of money, and no one can get more or less. Furthermore,

everyone has the same right to fundamental liberty and will have the same opportunities and

chances in all. According to this theory, there are three forms of justice that citizens must

pursue in their daily lives: distributive justice, retributive justice, and compensatory justice.

In this subsection we will discuss the theories and related with the issues that we choosen as

below.

To begin, distributive justice necessitates a fair distribution of benefits and burdens. It

means that the distribution of benefits and burdens among citizens must be equal and

equitable. Benefits and obligations must be share equally by all nations, not just a few, as this

would be unjust. Malaysia has been charged for unethical activities such as unauthorised

occupation of protected forest land and illegal deforestation in the countries are happen in

many cases where they invest, according to Mohamed Idris, President of Sahabat Alam

Malaysia (SAM). As a result, Malaysian corporation earn profit from unethical activities,

such as deforestation, illegal logging and many more. Meanwhile, other countries such as

Indonesia and Papua New Guinea, for example, must bear the pressures, which is unjust

situation. It is because Malaysian firms allegedly paid local villagers and plantation staff in

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those countries to hunt orang utans which are a protected species. In those areas, they are also

involved in illegal logging.

Oversea investments have both positive and negative consequences for countries in

terms of the local population and the climate. It is not right, particularly since it is their

country, not ours. Local residents would be affected because, in most cases when one nation

invests in another, it brings its own labour to work. As a result, local residents would have

few opportunities to work in the industry. Furthermore, it would have an impact on local

actions because they could assist outsiders in engaging in immoral and illegal practises.

However, Malaysian businesses can gain additional revenue if they can convince locals to

assist them in illegal activities that worsen the situation.

It would also have detrimental environmental consequences. According to Greentumble

(2016), the country must deal with biodiversity loss, climate change, and pollution as a result

of illegal logging. When a large number of trees are cut down, the atmospheric temperature

rises due to increased carbon dioxide in the air and decreased oxygen. Wildlife will lose their

habitat, which will have an effect on the environment. As a result, it is unfair that other

countries receive more benefits while their country gets more burdens rather than benefits. It

is beneficial if the countries share the benefits and responsibilities equally in order to prevent

any potential conflicts and problems and to improve the economies of the countries. To

establish a good relationship with each nation, Malaysian companies must obey the rules of

that country.

The next is retributive justice, which described as the just imposition of penalties and

punishments. Typically, this form of justice entails judicial involvement to ensure that all

sentences and penalties are being applied equally and without prejudice to everyone. So, from

the plantation issue, Malaysian businesses are involved in illegal business practises that are

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punishable under Malaysian law. Idris said that the strict mandatory regulations are needed

for Malaysian overseas foreign direct investment (FDI). He also said that Malaysian

companies must adhere to the rule of law in the countries where they invest to ensure that

there are no problems with Malaysian investors. Of course, each nation has its own set of

laws that must be followed. It is important to ensure that our country reaps the benefits of

corporate investment. However, Malaysian corporations are sadly involved in illegal practises

that have directly violated the laws of that country by engaging in activities that violate

universal human rights principles and cause environmental degradation. So the company that

has violated the law must be penalised to ensure that the illegal activities can be stopped and

that no other company repeat after them. The punishment and fines must be proportionate to

the immoral activities they have engaged in, such as orang utan hunting and illegal mining in

their countries. The orang utan is an endangered animal that is on the verge of extinction, as

we all know. These are serious criminal activities that can cause many problems for nations,

which is why they must take serious action.

. As example, according to the National Forestry Act 1984 (Amendment 1993) in

Malaysia, the individual can be punished and penalties of maximum fine of RM 500,000 and

imprisonment of not less than 1 year and not more than 20 years under Section 15 for taking

Forest Products from Permanent Forest Reserves or Government Land without a valid

license, Section 40 for Transferring Forest Products without Pass Transferring from Owned

Land, TOL, Mines and Reserve Land and Section 86 –for Forging or damaging, or

Possession of tools for the purpose of forgery, marks on trees and logs and altering

boundaries (Jabatan Perhutanan Semenanjung Malaysia, 2016). Other countries may have

other punishments and penalties that can be charged to the individual that involve with the

activities.

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 According to Bernama (2020), the Head Director of the Department of Wildlife Protection

and National Parks, Datuk Abdul Kadir Abu Hassan, proposed a maximum fine of RM1

million and imprisonment for up to 15 years for illegal hunting. Illegal hunters must be aware

that accessing a forest reserve, which is a restricted area, is illegal. As a result, other countries

will modify their penalties for individuals who engage in illegal hunting and logging,

including international investors, to ensure that they do not engage in unethical practises. If

these acts are taken seriously, there would be a reasonable balance between the criminal

activity they have engaged in and the sanctions and penalties that must be carried out. To be

consistent with this principle of justice, the penalty and punishments must be proportional to

the action. It is because everybody has the same right and there are no exceptions. They must

be disciplined and given fines in accordance with their mistakes, especially if they committed

crimes.

The concept of rights is also related to the issue of Malaysian companies engaging in

unethical practices abroad. A person's right is their claim to something. The definition of a

right can be divided into two types: legal and moral rights, but only the moral right can be

applied to these issues. Moral rights are rights that copyrighted work authors have that are

widely accepted in civil law jurisdictions. The moral rights of attribution, possession of a

work, and dignity are all included in the moral right. It serves as a foundation for justifying

one's acts and enlisting the support or assistance of others.

Negative right, positive right, and contractual right or special right are the three types of

moral rights, but only negative and contractual rights are applicable to this issue. Negative

rights, first and foremost, demand that others leave us alone. It means that no one can

challenge a person's or a citizen's right to privacy and freedom from anything. . It is a kind of

rights which is impose on others a negative duty, a duty not to do anything and a duty of non-

interference Constitutional and political rights such as freedom of expression, private

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property, freedom from violent crime, freedom of religion, a fair hearing, freedom from

slavery, and the right to bear arms can be considered negative rights. Negative rights also

prohibit individuals from interfering with the rights of others, implying that they cannot be

beaten or stolen from. It is regarded as good by the majority of people and as more important.

Based on the issue, Idris the president of Sahabat Alam Malaysia said that the companies

also pursued legal claims and occupation of customary rights land without free, prior and

informed consent of indigenous communities and allegedly paid local villagers and plantation

workers to hunt for protected species such as orang utans. This means that local villagers and

employees of the plantation company has the right to do anything they want to the land as

long as they are a citizen of the country itself. They have a right to act and freedom to built

something if they buy a land but it is unethical but legal if they built a building at will without

permission from the government because they have a right as citizen.

Second, contractual or special rights compel others to honour their commitments. Unique

agreements provided contractual rights that were only bestowed on the parties involved.

Publicly agreed rules on what constitutes an agreement and what obligations an agreement

imposes are required. Contractual rights also ensure that the parties understand what they are

agreeing to, that there is no misrepresentation, that there is no duress or coercion, and that the

parties do not intend to commit an unethical act.

According to the MBA Skool Team, a contractual right is a collection of rights that are

granted to all parties that enter into a binding contract, which can be made by two or more

parties. To prevent future conflicts, it is explicitly specified in the contract, and all parties

concerned must adhere to it. For example, an employment contract is a contract under which

the employer specifies all of the terms of employment, which are then agreed by the

employee along with the acceptance of the job offer. In the contract may provide the hours or

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working, salary per day, other incentives that the company are going to clain. It aids in the

avoidance of potential conflicts from both party due to any kind of misunderstanding or

arguments. In other words, it can easily state as, saviour for each organization.

There are many contract rights, including the right to sell a product or service, the right to

repairs and refunds, and the right to timely payment and delivery, among others. In this case

study made by (www.foe-malaysia.org) has listed land clearing and plantation development

without approved Environmental Impact Assessments (EIAs) or other required permits,

whilst misleading government authorities about this, as major negative issues. It is because

the deforestation or any business related to forest are actually are under the central and

federal government. So, any action against the rules and regulations will be punish severely

by government. Based on the article that we discussed, deforestation illegally, logging and

hunting for animal’s body parts can be take action by the government because there are

already stated clearly in the contract.

Building trust is a critical factor in fostering quality business relationships. People prefer

to do business with those they can trust to act in furtherance of or at least not opposed to,

their best interests. Once that trust breaks down, it can be difficult to salvage a relationship.

Ethic of care are so important in preserving and nurturing concrete valuable relationships. It

emphasizes that we should care for those depended and related to us. As for the related issue,

Malaysian plantations group should avoid in doing such malpractices so that there will no

conflicts among the investors and local stakeholders there. They should respect the rules and

regulations they operate in, refrain from engaging in activities that are against universal

human rights and if they fail to do, a punishment should be imposed on them.

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4.0 Conclusion

Businesses ethical standards are critical to the achievement of corporate success. Employee

engagement, loyalty, and happiness are more likely to be achieved by a business enterprise

that promotes ethical forms of conducting business relations than by an immoral one, which

leads to higher quality of work and improved efficiency. In the view of the stakeholders, such

a company would also represent good organisational value. It was also discovered that

embracing good ethical behaviour improves competitiveness, company revenue, benefit,

customer engagement and loyalty, and investment, to name a few.

Since the importance of corporate ethics cannot be overstated in today's business climate,

it is strongly advised that businesses adopt ethical practises. Discrimination and equal

opportunity in the workplace should be deal with as ethically as possible by businesses.

Obviously, company function in a vacuum however, environmental concerns such as energy

efficiency, waste minimization, and recycling should be adequately handled so that

stakeholders do not adversely affect business operations. Malaysia companies which operate

in foreign countries should take environmental degradation into account as to avoid conflicts

with local stakeholders there.

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5.0 Lesson Learnt from the Case

Malaysian plantation groups either domestic of foreign developer are actually involved in

legal and also unethical practices in this sector. This may disturb the biodiversity of the

nature especially the forest where the forest is actually shelter for animals and every country

are aware of the importance of nature. However, in the case study they discussed about the

approach that undertaken by the Malaysia government towards those who are behaving

unethical. For example, Sahabat Alam Malaysia stated the government should punish

severely the companies involves as a lesson so others would not repeat the same mistakes

again.

Besides that, Sahabat Alam Malaysia also stated that they need tightens to the Acts on

the illegal deforestation or any other illegal activities involved the forest such as hunting and

many more. On the other hand, the lesson that we get is to behave genuinely and avoid

cheating or other inappropriate activities when it comes to business. This is because

malpractices can actually lead to misunderstanding between Malaysia’s investors and

stakeholders. It actually can damage the reputation of our country itself.

Lastly, Malaysia government must look at Singapore’s legislation in the way Singapore

hold their citizens and business in the haze problem. According to the particular situation, we

14
can learn that this Malaysia trying to learn and find many alternatives in order to solve this

problem.

6.0 References

Bernama. (2020, 8 19). Pemburu haram: Cadangan hukuman denda RM1 juta, penjara 15 tahun.

Retrieved from astroAWANI: https://www.astroawani.com/berita-malaysia/pemburu-haram-

cadangan-hukuman-denda-rm1-juta-penjara-15-tahun-255916

Capone, S. F. (2011). Negative Rights. Encyclopedia of Global Justice, 1.

GREENTUMBLE. (2016, 6 25). The Negative Effects of Green Tumble. Retrieved from Greentumble:

https://greentumble.com/the-negative-effects-of-illegal-logging/

Kahalani, A. (2020, 1 8). The importance of selecting the right employees for your business. Retrieved

from BlackHawkIntelligence: https://www.blackhawkintelligence.com/importance-selecting-

right-employee-business/

Lian Pin Koh, D. S. (2008). Is oil palm agriculture really destroying tropical biodiversity? A journal

of the society for the conservation biology, 60-64.

Malaysia, J. (2016). Kesalahan Hutan. Retrieved from Jabatan Perhutanan Semenanjung Malaysia:

https://www.forestry.gov.my/my/perkhidmatan/info-perhutanan/kesalahan-hutan

Manuel Velasquez, Claire Andre, Thomas Shanks, S.J.. J. Meyer. (2014, 8 1). Justice and Fairness.

Retrieved from Markkula Centre for Applied Ethics: https://www.scu.edu/ethics/ethics-

resources/ethical-decision-making/justice-and-fairness/

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Mohan, V. (2016, 12 15). Government fast-tracks permission process to build homes. Retrieved from

The Economic Times:

https://economictimes.indiatimes.com/news/economy/policy/government-fast-tracks-

permission-process-to-build-homes/articleshow/55995003.cms?from=mdr

Team, M. S. (2018, 1 22). Contractual Rights. Retrieved from mba sKooL.com:

https://www.mbaskool.com/business-concepts/human-resources-hr-terms/15364-contractual-

rights.html

TheEdge. (2014, 6 21). Malaysian plantation groups engage in unethical practices abroad’.

Retrieved from theedgemarkets:

https://www.theedgemarkets.com/article/%E2%80%98malaysian-plantation-groups-engage-

unethical-practices-abroad%E2%80%99

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