By Morten Rønning
Scansia's factory in the state Kedah was established in 1978 as the company's first establishment in the region. In 1996, the factory moved the furniture production from Kulim industrial area to a palm oil plantation close by. The factory, which earlier employed up to 400 workers, had - when NorWatch visited in 1996 - around 50 employees in addition to subcontractors. Today the number is eight; the reductions have resulted from the high wage level in Malaysia, according to Varleite, who owns 70% of the company. Today the factory is mainly doing test production, while the actual production has been moved to the company's factories in Burma and Vietnam. (See NW newsletter 9/96, 6/97 and 1/98.)
A local organisation working with environmental and social issues has been contacted by the local population in the area. When they visited the factory in Kedah in the autumn of 1997, they observed several employees below the legal minimum age of 16 years; this is a violation of the "Children and Young Persons Employment Act" of 1996. The situation has been documented by photographs from the production site. Scansia later reduced the workforce, and today all the eight employees are above the minimum age. At the same time, the factory dismissed all the foreign workers.
Arve Varleite denies that he has ever employed anyone below the age of 16 in his factory in Malaysia, and he emphasizes the strict legislation and registration routines concerning employment conditions.
Incineration of waste
The local population also criticize Scansia for burning their waste in the open air. The waste consists of, among other things, empty plastic cans and tin buckets used for storing chemicals. According to our sources, the incineration has exposed the local people and the pupils of Pagar Museh National School to health hazards. The incineration has now seemingly almost stopped.
Varleite rejects that Scansia burns all its waste in the open air. This may have happened in the early days of the production, he says, but today the company has an agreement with a waste disposal company which has placed a container at the site.
Illegal industrial premises
The third accusation the local population has made against Scansia's factory, concerns the new premises used by the company. The factory, which is situated outside the industrial area, came into use without permit for such operations. Illegal establishment of industries is a constantly growing problem in Malaysia, and the authorities try to interfere when production is started on illegal premises.
As late as in March this year, the Kulim District Council confirmed that Scansia's premises did not have approval for industry. The issue has been discussed in the Council's committee for illegal buildings, but the outcome is still not clear. Parts of the area have later been approved for industrial use.
Arve Varleite says that this is not his problem, as Scansia is only renting the premises. Still, he knows that there has been discord over the use of the building, but he claims that this, which he refers to as a mere bureaucratic trifle, has now been solved.
When NorWatch visited the factory in November 1996, we, among other issues, raised the question of use of rainforest timber with the factory management (see Folkevett 5/97). We were given a list of 13 types of wood used by the company in its production. At the time, the company claimed that their use of rainforest timber was friendly to the environment.
The problem with Scansia's list is that the company is unable to document that any of the 13 types of wood are felled in a proper way. None of the species of wood have certification from the Forest Stewardship Council, and several of the species are classified by the International Tropical Timber Organisation as overlogged or threatened with extinction in Malaysia and several of the neighbouring countries.
"The factory has also recruited underage employees"
(children below 14 and youths below 16 years of age, according to the Children and Young Persons Employment Act 1996).
Local source in Kulim, January 1998
Scansia SDN BHD in Malaysia is controlled 70% by the Norwegian Arve Varleite, the remaining 30% by a Scottish businessman. Varleite owns Scansia A/S in Norway, a "sleeping" company according to Varleite. The company is also involved in furniture production in Burma, Vietnam, and Indonesia. The furniture is exported mainly to Europe.
Norwatch Newsletter 14/98