ASEAN: Regional Trends in Economic Integration, Export ... - USITC

population. These actions have affected the amounts available for export in less- and
more-processed forms, from crude palm oil to health care products. 39
Increased productivity
The production of biodiesel is one area in which companies in ASEAN countries may be
able to create great value by using palm oil for nonfood purposes. Indonesia and
Malaysia already have well-established and growing biodiesel industries resulting from
government plans to increase revenue streams from palm oil production, but even smaller
palm oil-producing countries, such as the Philippines and Thailand, have biodiesel
policies and production facilities that use those countries’ much smaller palm oil supplies
to much higher value effect than for food consumption. Increases in demand for biodiesel
within ASEAN countries, among other industrial and oleochemical products, 40 would
result in more production facilities and similar increases in demand for palm oil supplies
throughout ASEAN from ASEAN palm oil-producing countries.
Improved crop maintenance and species cultivation, better soil management techniques,
conversion of existing land from other agricultural purposes, reclamation of degraded
lands, and creation of new plantations from uncultivated forestland have all contributed
to higher levels and lower costs of palm oil production, increasing the amounts available
for export. 41 The government of Malaysia, along with several multinational corporations,
has led the effort to improve yields and shares the results of those attempts with
Indonesian producers in which Malaysian producers have invested. 42 Indonesia and
Malaysia have each increased the amount of cultivated land devoted to growing oil
palm—Indonesia through the expansion of new planting areas and Malaysia through the
conversion of existing agricultural land to palm oil production. 43
Roundtable on Sustainable Palm Oil (RSPO)
In the absence of ASEAN policies noticeably affecting the palm oil industry and in
tandem with the influence of multinational corporations, 44 the RSPO is the single most
identifiable organizational influence on the ASEAN palm oil production and marketing
chain and will likely grow steadily from its comparatively small volume and low
company-participation numbers. 45 The RSPO includes representatives of banks, social
and environmental nongovernmental organizations, and all levels of the palm oil value
39 To encourage palm oil consumer price stability, the Indonesian government launched the Minyak Kita
program (literally translated as “Our Oil”) in March 2009. Large Indonesian crude palm oil producers can
provide cheaper oil as part of their initiative to help low-income households. Bromokusumo, “Indonesia:
Oilseeds and Products Annual,” May 5, 2009, 3; Bromokusumo and Slette, “Indonesia: Oilseeds and
Products Annual,” March 18, 2010, 12. It is unclear whether this program is an Indonesian government
mandate or a government initiative, although the government and the industry maintain a close relationship
because of palm oil’s importance in the Indonesian agricultural sector and to the economy overall.
40 See Chandran, “Commodity Sector Overview,” March 2010, 161.
41 USITC, hearing transcript, February 3, 2010, 13, 15 (testimony of Mohd Salleh Kassim, American
Palm Oil Council); Sime Darby Plantation, “Overview,” 2008; IOI Group, “Agronomy Support,” 2009. See
Basiron, “Palm Oil Production through Sustainable Plantations,” 2007, 290.
42 USITC, hearing transcript, February 3, 2010, 36, 52 (testimony of Rosidah Radzian, Embassy of
Malaysia).
43 Industry representatives, interview by USITC staff, Kuala Lumpur, Malaysia, March 12, 2010.
44 Ibid.
45 In May 2010, six Malaysian and Indonesian palm oil producer associations reportedly created the
Indonesia-Malaysia Palm Oil Group to address concerns over the sustainability of palm oil production.
International Centre for Trade and Sustainable Development, “Malaysia Sees Possible WTO Case against EU
Palm Oil Limits,” May 19, 2010.
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