Canada Bans Malaysian PPE over Forced Labour Claim

Canada has suspended deliveries from Malaysian personal protective equipment (PPE) maker Supermax, weeks after the US barred the company over allegations the company uses forced labour.

“In light of the current situation, Canada has engaged with the company to seek assurances that Supermax is not engaging in forced labour practices,” Public Services and Procurement Canada, a government department, said in a statement.

Supermax Healthcare said it had hired an independent firm to conduct a comprehensive audit of its operations in accordance with the indicators of forced labour of the International Labour Organization.

The resulting report is expected this week. Canadian officials said they would review the report once it is received and would determine the next steps.

“In the interim, additional deliveries from Supermax to the government are being held,” the department statement said.

Imports Held at Ports

In March, US authorities ordered imports from Supermax be held at ports over suspicion of using forced labour in its manufacturing operations. Another ban was issued in October.

About 20% of Supermax’s sales are to the US. “The ban would no doubt have an impact on its profitability, as the will need to lower its average selling prices in other markets to fill the void,” said Ng Chi Hoong, equity analyst at Daiwa Capital Markets.

“As we believe it would take [Supermax] at least a year to resolve the issue, we have cut our earnings forecasts for fiscal 2022-23 by 22-54%, and also downgraded the stock to a sell.”

Malaysian factories making everything from PPE to palm oil have increasingly come under scrutiny over allegations they abuse foreign workers, who form a significant part of the manufacturing workforce.