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ATA IMS denies allegation of forced labour as share price tumbles

KUALA LUMPUR (May 21): Electronics manufacturing services (EMS) provider ATA IMS Bhd was bogged down by heavy selling on Thursday. Its share price tumbled nearly 18% or 51 sen to close at RM2.33 — the lowest since Feb 3 when it traded at RM2.27.

This resulted in some RM614 million market capitalisation being wiped off from ATA IMS in a single day. Trading volume swelled to 11.93 million shares, over three times its 200-day average trading volume of 3.76 million shares.

Some quarters attributed the heavy selldown to the US Customs and Border Protection's (CBP) decision to initiate an investigation into the company, which has been accused of using forced labour.

Migrant worker rights specialist Andy Hall has filed a petition to the CBP to investigate ATA IMS, and provided what he claimed was information on alleged forced labour conditions, including but not limited to, unethical recruitment practices and inadequate working/living conditions at ATA Industrial (M) Sdn Bhd — a unit of ATA IMS in Johor.

When contacted, Hall shared the reply letter he received from the CBP. The letter noted that the US authorities would open an investigation to review if there was any forced labour involved in ATA Industrial's activities.

"CBP reviewed the petition and determined the information is sufficient to investigate the merits of this allegation.

"The length of time needed to review an allegation depends on a variety of factors, some of which are beyond CBP's control. If CBP finds the information meets the threshold, CBP will issue a Withhold Release Order," said CBP in the letter dated April 19.

Nonetheless, ATA IMS' executive chairman Datuk Seri James Foo told The Edge that the company has not received any communication from CBP regarding the issue.

He also refuted claims that the company is using forced labour in its manufacturing process.

"None of our employees are subject to forced labour. As a contract manufacturer, we are bound to apply the international labour standards adopted by our main customer. We are audited by our main customer and the global retailers of our main customers' products regularly to ensure strict compliance," said ATA IMS when contacted by The Edge.

"Our recruitment practice is fully compliant with international best practices. In particular, we pay for all recruitment costs so that our workers do not pay any recruitment fees on their part. Also, our workers keep their own passports," it added.

The company believes that it provides good living conditions for its workers. "We believe our dormitories are the best in class with a gym, safe deposit boxes, Wi-Fi, cafeteria and other amenities within our compound," it said.

On Bursa Malaysia, the selling spilled over to ATA IMS peers — SKP Resources Bhd and VS Industry Bhd — both of whose share prices also headed south.

SKP Resources slid 13.42% or 20 sen to settle at an eight-month-low RM1.29, valuing it at RM2.02 billion. VS Industry dropped 6.5% or eight sen to close at RM1.15, giving it a market value of RM4.34 billion. The stock was also nearly at its eight-month low from when it was trading at RM1.14 on Sept 29, 2020.

The trading volume for both SKP Resources and VS Industry stood at 9.83 million and 25.73 million shares respectively, both exceeding their respective 200-day average trading volumes of 5.35 million and 14.75 million shares.

http://www.theedgemarkets.com/article/ata-ims-denies-allegation-forced-labour-share-price-tumbles

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