Skip to content
ANNOUNCEMENT: Resilinc Announces Strategic Growth Investment from Vista Equity Partners Read More
Resilic Logo
  • Solutions
        • Solutions

          • EventWatchAI
          • RiskShield
          • Multi-Tier Mapping
          • CommodityWatchAI
          • Supplier Assessment Library
        • Data Marketplace

          • Autonomous AI Mapping
          • Resilinc Disruption Vulnerability Index
          • R Score
          • Supplier Screening
          • Application Programming Interface (API)
        • Services

          • Advisory Services
          • Data and Intelligence Services
        • Elevate your Supply Chain Risk and Resiliency Program

          Schedule Demo
  • Use Cases
        • By Industry

          • Aerospace, Defense, Government
          • Automotive and Industrial
          • Healthcare & Life Sciences
          • High-Tech & Semiconductor
        • By Role

          • Supply Chain Risk & Resiliency Program Managers
        • By Business Need

          • Business Continuity Planning
        • Elevate your Supply Chain Risk and Resiliency Program

          Schedule Demo
  • Resources
        • Learning Center

          • Blog
          • Case Studies
          • Event
          • On Demand Webinars
          • White Paper & Reports
        • Connect

          • Schedule Demo
          • Request Pricing
        • Special Reports

        • Special Report
        • Find valuable resources for managing supply chain disruptions in our Special Reports section.

        • Elevate your Supply Chain Risk and Resiliency Program

          Schedule Demo
  • Company
          • Who We Are
          • Partners
          • Careers
          • Resilinc In the News
          • Press Releases
          • Global Supply Chain Resiliency Council (GSCRC)
          • Healthcare Transparency Initiative (HTI)
          • The Risk Game
        • Elevate your Supply Chain Risk and Resiliency Program

          Schedule Demo
  • Pricing
  • Contact
Login
ANNOUNCEMENT: Resilinc Announces Strategic Growth Investment from Vista Equity Partners Read More
Resilic Logo
  • Solutions
    • Solutions
      • EventWatchAI
      • RiskShield
      • Multi-Tier Mapping
      • CommodityWatchAI
      • Supplier Assessment Library
    • Data Marketplace
      • Autonomous AI Mapping
      • Resilinc Disruption Vulnerability Index
      • R Score
      • Supplier Screening
      • Application Programming Interface (API)
    • Services
      • Advisory Services
      • Data and Intelligence Services
  • Use Cases
    • By Industry
      • Aerospace, Defense, Government
      • Automotive & Industrial
      • Healthcare & Life Sciences
      • High-Tech & Semiconductor
    • By Role
      • Supply Chain Risk & Resiliency Program Managers
    • By Business Need
      • Business Continuity Planning
  • Resources
    • Learning Center
      • Blog
      • Case Studies
      • Events
      • On Demand Webinars
      • White Papers & Reports
    • Connect
      • Schedule Demo
      • Request Pricing
    • Special Reports
  • Company
    • Who We Are
    • Partners
    • Careers
    • Resilinc In the News
    • Press Releases
    • Global Supply Chain Resiliency Council (GSCRC)
    • Healthcare Transparency Initiative (HTI)
    • The Risk Game
  • Pricing
  • Contact
  • Login
Menu
  • Solutions
    • Solutions
      • EventWatchAI
      • RiskShield
      • Multi-Tier Mapping
      • CommodityWatchAI
      • Supplier Assessment Library
    • Data Marketplace
      • Autonomous AI Mapping
      • Resilinc Disruption Vulnerability Index
      • R Score
      • Supplier Screening
      • Application Programming Interface (API)
    • Services
      • Advisory Services
      • Data and Intelligence Services
  • Use Cases
    • By Industry
      • Aerospace, Defense, Government
      • Automotive & Industrial
      • Healthcare & Life Sciences
      • High-Tech & Semiconductor
    • By Role
      • Supply Chain Risk & Resiliency Program Managers
    • By Business Need
      • Business Continuity Planning
  • Resources
    • Learning Center
      • Blog
      • Case Studies
      • Events
      • On Demand Webinars
      • White Papers & Reports
    • Connect
      • Schedule Demo
      • Request Pricing
    • Special Reports
  • Company
    • Who We Are
    • Partners
    • Careers
    • Resilinc In the News
    • Press Releases
    • Global Supply Chain Resiliency Council (GSCRC)
    • Healthcare Transparency Initiative (HTI)
    • The Risk Game
  • Pricing
  • Contact
  • Login
  • Solutions
    • EventWatchAI
    • RiskShield
      • Supplier Assessment Library
      • Business Continuity Planning
    • Multi-Tier Mapping
      • Resilinc Supplier Network
    • Autonomous AI Mapping
    • CommodityWatchAI
    • Data Products and Offerings
    • Supply Chain Risk and Resiliency
      • Advisory Services
      • Data and Intelligence Services
  • Industry
    • Aerospace and Defense
    • Automotive & Industrial
    • Healthcare & Life Sciences
    • High-Tech & Semiconductor
  • Pricing
  • Resources
    • Learning Center
    • Special Reports
    • Events
    • Developer API
  • Company
    • About
    • Partners
    • News
  • Contact
  • Blog
  • Careers
  • Demo
  • Login
  • Customer Hub

Home / Blogs / Malaysia offers sourcing opportunities but with ESG concerns

Malaysia offers sourcing opportunities but with ESG concerns

Malaysia offers sourcing opportunities but with ESG concerns

May 31, 2022

Resilinc Editorial Team

ESG, Regulatory compliance, Supply Chain Visibility

As environmental, social and governance (ESG) ratings become more important to global companies (see recent Resilinc blogs on ESG for apparel and supply chain greenhouse gas emissions), supply chain managers will be expected to exert more diligence to avoid procuring items that are tainted by forced labor, deforestation, excessive greenhouse gas (GHG) emissions, and other ESG issues.

Among the countries flagged for high ESG concerns is Malaysia, which in 2021 exported $280 billion worth of goods and commodities, according to the Malaysian trade ministry. Electrical machinery and electronics is Malaysia’s largest export category, and the nation of 33 million people is an important source of assembly, test, and packaging (ATP) for the semiconductor industry. In the wake of semiconductor shortages, Malaysia’s chip industry is growing, with a major ATP expansion by Intel and diversified investments from Nexperia, Infineon, AT&S and others, according to AsiaTimes.

Malaysian employers in semiconductors and other segments of electrical machinery and electronics have not been publicly linked to ESG problems. But the country’s fourth and fifth largest export industries—palm oil ($15.4 billion in 2021) and rubber products ($13.9 billion)—have made headlines and triggered enforcement actions.

In January, U.S. Customs and Border Protection (CBP) detained shipments of disposable gloves from Malaysia’s YTY Group and palm oil products from Sime Darby after the agency determined that the companies engaged in forced labor. And that was just the latest enforcement action by CBP against Malaysia exporters. One exporter, Top Glove, was found by CBP to be subjecting employees to “debt bondage, excessive overtime, abusive working and living conditions, as well as the retention of identity documents.” In the UK, the National Health Service faced a scandal early in the pandemic after purchasing about $500 million worth of PPE from Supermax, a Malaysian firm identified as using forced labor.

The UK, EU and U.S. have laws against importing goods made with forced labor, and these are getting tougher—with lawmakers targeting supply chain practices. “Germany’s Supply Chain Due Diligence Act will subject companies who fail in their duties to complete human rights and environmental due diligence to fines of up to eight million euros,” writes Oliver Holland with human rights law firm Leigh Day. Norway’s Transparency Act and The Netherlands’ Child Labour Due Diligence Law will impose similar penalties, according to Holland.

Malaysia is also challenged with a reputation for corruption. Transparency International reports that Malaysia has reduced petty bribe seeking by government employees, but the country still faces the “more complex challenge” of eliminating high-level “grand corruption … which can destroy whole sectors, create recessions, and end democracies.”

It was “grand corruption,” in the form of billions of dollars in payoffs over many years by the 1MDB investment fund, that led to the ouster of Prime Minister Najib Razak in 2018 and an historic election loss for his Barisan Nasional party, which had ruled for 61 years. But successor governments haven’t reformed “a system embedded in an old political culture of patronage,” according to the Brookings Institute.

Malaysia will likely hold its next general election in the second half of 2022, and the outcome is highly uncertain. “Long characterised by ‘stability’ and excessive concentration of power, Malaysia’s politics have become fluid and unpredictable,” wrote Francis Hutchinson, Malaysia coordinator for the Singapore-based geopolitics think tank ISEAS. “With elite compacts and agreements hammered out behind closed doors, the country now has public plot twists worthy of a Netflix series.”

That Netflix series could include geopolitical tensions as an exciting plot element. The U.S. wants to strengthen its relationship with Malaysia as a balance to China, and Malaysian exports to the U.S. grew by more than 30% in 2021. But China has been Malaysia’s largest trading partner for more than a decade, and the two countries are tightening trade ties through the Regional Comprehensive Economic Partnership (RCEP) that also includes Japan, Vietnam, Australia and 10 other Asian nations.

According to Reuters, Malaysia’s trade minister recently discounted the value of the Biden Administration’s proposed Indo-Pacific Economic Framework—which would focus on labor standards, carbon emissions, governance and digital trade, but not reduce tariffs or offer other benefits that RCEP does.

At the same time, Malaysian agricultural officials and palm oil companies want to take advantage of global edible oil shortages—caused by the Russian war on Ukraine—and recapture market share that was lost due to ESG concerns. They’re pushing back against what they call “adverse propaganda” and bringing discrimination cases to the World Trade Organization.

For supply chain managers seeking to balance ESG concerns with business drivers like quality, price and reliability of supply, Malaysia represents great opportunity and difficult-to-quantify perils. ESG supply chain failures can lead to delays, fines, erosion of brand reputation and loss of supplies if shipments are detained by customs officers. But losing economical sources of palm oil and rubber products could have serious impacts on revenue and margins. For Malaysia sourcing and other challenges of the modern supply chain, thorough supply chain mapping and a robust risk intelligence and management system are essential.

 

White Paper

3M Chip Coolant Plant Shutdown and ESG Regulations

Be Prepared with the Latest Trends and Exclusive EventWatchAI Data to Step Up Your SCRM

Download Now

Recent Posts

Critical Cancer Drugs, Other Life-Saving Medications Face Severe Shortages

Forced Labor in the Automotive Supply Chain: What Car Companies Can Do

4 Crucial Commodities to Watch in 2023

CHIPS Update: New Vision for a National Semiconductor Technology Center

Which Industries Have Been Impacted by UFLPA?

5 Ways to Mitigate ESG Risks in Your Supply Chain

Resilinc’s Q1 2023 Supply Chain Disruption Data

Introducing EventWatchAI 5.0: 100M New Sources, Near Real-Time Reporting

About Resilinc

We’re the world’s leading supply chain monitoring, mapping, and resiliency solution. Over 100k organizations partner with us to take their SCRM programs from reactive to resilient.
Request Demo

Recent Blogs

Loading...
Cancer Drug Shortages in the US
May 30, 2023
4 MIN READ
Resilinc Editorial Team

Critical Cancer Drugs, Other Life-Sav...

Cancer drugs have once again become one of the top five drugs in short supply....
Healthcare, Human Health, Supply Chain Disruptions
Forced Labor in the Automotive Supply Chain: What Car Companies Can Do
May 23, 2023
5 MIN READ
Resilinc Editorial Team

Forced Labor in the Automotive Supply...

Believe it or not, the car you’re driving around likely has parts made with forced...
Automotive, Automotive Industry
A cobalt quarry with dust clearing.
May 16, 2023
5 MIN READ
Resilinc Editorial Team

4 Crucial Commodities to Watch in 2023

Your business likely relies on raw materials experiencing significant price fluctuations or shortages. Many industries...
Commodity management, Rare earth minerals
Read All Blogs

Who's in your supply chain?

Better visibility starts now

Email Now|Call Now|Chat Now

Receive our monthly NewsWatch digest

Subscribe
Resilinc Transparent Logo

Most Trusted, Cognitive Supply Chain Risk Management Platform

Solutions

Blog

Careers

Company

  • About
  • News
  • Events
  • About
  • News
  • Events

Resources

  • White Papers & Reports
  • Case Studies
  • On-Demand Webinars
  • White Papers & Reports
  • Case Studies
  • On-Demand Webinars

Follows Us

Facebook-f Twitter Linkedin

Sales: [email protected]
Support: [email protected]
Partnerships: [email protected]

Resilinc Transparent Logo

Most Trusted, Cognitive Supply Chain Risk Management Platform

Company

  • About
  • News
  • Events
  • About
  • News
  • Events

Resources

  • White Papers & Reports
  • Case Studies
  • On-Demand Webinars
  • White Papers & Reports
  • Case Studies
  • On-Demand Webinars
  • Solutions
  • Blog
  • Careers
  • Solutions
  • Blog
  • Careers

Follows Us

Facebook-f Twitter Linkedin

Sales: [email protected]
Support: [email protected]
Partnerships: [email protected]

© 2023 Resilinc Corporation. All rights reserved.

Data Security

Privacy Policy

Unlock the Secrets of Building a World-Class Supply Chain Resiliency Program

Discover Best Practices and Proven Strategies with Our 2023 Ultimate Guide to SCRM

           Download Guide