STRATEGIC REVIEW KEY MARKET TRENDS SHAPING OUR BUSINESS PURSUING TECHNOLOGICAL ADVANCEMENT SUPPLY DISRUPTIONS DUE TO LABOUR SHORTAGE The progress of the industry hinges on embracing technology to boost mechanisation and automation, facilitating precise, resilient, and efficient palm oil production, ultimately reducing reliance on foreign labour. Technological advancements in oil palm cultivation are essential for enhancing operational effectiveness and efficiency, cutting production costs and time, and ensuring industry sustainability, granting producers a competitive edge. Foreign labour plays a pivotal role in the palm oil sector. While the labour shortage has been marginally alleviated since the restrictions on hiring foreign workers were lifted in 2022, production levels continue to be impacted by the industry’s reliance on foreign labour. • The challenge of consistently implementing the most advanced and suitable technology for our operations is heightened by the rapid and aggressive evolution in technology and digitalisation • Challenges in securing mechanisation and automation that are suitable for the specific infrastructure and profile of our plantation operations Potential Impact Labour shortage can result in a decrease in the harvesting of fresh fruit bunches (FFB), thereby impacting yields. Potential Impact • We are dedicated to exploring new technologies that are compatible with our core activities and facilitate higher levels of productivity and cost efficiency • We ensure our employees are kept well-informed on the latest IT advancements and we utilise effective methods to consistently enhance our operations • We refined our planning and monitoring strategies to ensure effectiveness and cost-efficiency when integrating machinery • As part of the Plantations Performance Programme 2.0 (PPIP 2.0), we continue to implement our mechanisation plan to increase productivity How We Responded • We streamlined the requirements and processes for recruiting foreign workers to ensure a sufficient workforce and uninterrupted operations • We increased mechanisation and automation in our operations to decrease our reliance on physical labour • We launched a strategic initiative to utilise our remaining quota for the recruitment of new Indonesian employees • Our Workforce Management Unit actively participated in the Foreign Worker Employment Relaxation Plan, a scheme by the Ministry of Human Resources, to secure adequate quota for additional workers to address our workforce shortage How We Responded Despite current challenges, the Fourth Industrial Revolution offers the potential to revolutionise palm oil operations, boosting productivity and efficiency with automated decision-making, networked machinery, and data analytics. Over time, this will reduce the carbon footprint of palm oil products and elevate industry sustainability. Outlook In view of the Foreign Worker Employment Relaxation Plan being implemented by the Malaysian Government, it is anticipated that procedures and policies involving the admission of foreign workers will continue to ease the labour shortage issues experienced by industries such as palm oil. Outlook Boustead Plantations Berhad 048
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