A Review of Key Sustainability Issues in Malaysian Palm Oil Industry

Abstract

The palm oil industry has contributed enormously to the economic growth of developing countries in the tropics, including Malaysia. Despite the industry being a development tool for emerging economies, the oil palm crop is inundated with allegations of its unsustainable plantation practices and viewed as environmentally detrimental and socially adverse. These negative perceptions are amplified through anti-palm oil campaigns and protectionist trade regulations in developed countries, particularly in the European Union (EU). This situation, if further exacerbated, could potentially affect the export of palm oil and the industry as a whole. As such, this article provides a critical review of the key sustainability issues faced by the Malaysian palm oil industry as the second biggest exporter of palm oil to the global market. The various insights and the interpretations of sustainability are contested according to the contexts and the interests of the countries involved. Hence, palm oil is constantly exposed to bias masked by non-tariff barriers from consumer countries to protect their domestically produced vegetable oils. This could constrain the commodity competitiveness in the international market. As issues on palm oil sustainability continue to evolve, policymakers at key stakeholder agencies need to devise strategies to manage global disruption in the palm oil trade.