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Businesses rely heavily on nature to supply goods and services. Recognizing those dependencies is the first step toward managing nature risks and opportunities.
CLIENT
VS Industry
INDUSTRY
Electronics manufacturing
OUR ROLE
A forensic approach to enhancing VS Industry's labour practices
VS Industry Berhad (VS) is a leading provider of electronics manufacturing services. The group, which manufactures electrical and electronic products for many global brands, employs more than 12,000 workers across Malaysia, China, Indonesia and Vietnam. VS has a widespread client base including those in Europe, Japan and the United States.
VS prioritises corporate responsibility and is committed to sustainable and ethical operations. Its Code of Conduct ensures all suppliers are working under a minimum set of internationally acceptable conditions that reflect policies set out by the International Labour Organisation (ILO).
Interview with:
Mr Chong Chin Siong,
Group Financial Controller,
VS Industry Berhad
“In 2021, Malaysia launched an important National Action Plan that aimed to eliminate forced labour across the country by 2030. Our Malaysian operations employ foreign workers from nine countries including Sri Lanka, Nepal, Bangladesh, Pakistan, India, Myanmar, Vietnam, Philippines and Indonesia. This is the first time we have been involved in a full scale forced labour review that compared our practices against the ILO’s 11 forced labour indicators. However, language barriers and cultural differences across our employee base posed a lack of clarity and visibility around these issues.”
“We engaged PwC to review our labour practices and assess our compliance with Malaysia’s Labour Recalibration Programme (RTK). PwC visited 19 VS factories and hostels and held interviews and discussions with approximately 7% of VS’s foreign workforce.”
“PwC found that VS is compliant with the RTK programme and no longer employs workers hired through third-party subcontractors. It discovered that some foreign workers had paid recruitment fees in their home countries that we immediately reimbursed with interest and an ex-gratia payment. PwC also made recommendations for improving risk management, paving the way for an ethical culture that revolves around workers’ rights.”
“PwC undertook its work using a forensic mindset, which is a novel and highly effective approach. Importantly, it collaborated with an independent labour rights specialist who provided civil society expertise. PwC also used trained interviewers to thoroughly drill down into our operations and engaged translators to ensure that discussions were conducted in the workers’ native language. All interviews were carried out without the presence of VS staff, ensuring that workers felt safe to share stories honestly. Ultimately, this meant that PwC was able to both swiftly identify issues, offer practical solutions and highlight the ways in which we were excelling.”
“PwC and the labour rights specialist conducted a half day focused review for our board and management on forced labour and the crisis afflicting Malaysia, heightening our awareness around this crucial issue. PwC’s work, along with the swift response of our board and management team, has helped instil trust and confidence in investors – especially in relation to VS Industry’s recent successful issuance of sukuk bonds (Islamic financing). This proves that for VS, undertaking such an engagement with a credible firm such as PwC, can have significant business benefits. It can also lay the foundation for ethical labour practices now and into the future.”