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Palm oil intensification and expansion in Indonesia and Malaysia: Environmental and socio-political factors influencing policy


  • Varkkey, Helena
  • Tyson, Adam
  • Choiruzzad, Shofwan Al Banna


Intensification and expansion are two essential tenets of commercial agriculture. This paper analyses trends of intensification and expansion at the national level, particularly in the oil palm sector in Indonesia and Malaysia. Despite similar starting points and also comparable rates of increasing productivity and profit in this sector, both countries have developed almost opposite trajectories of land use. While both intensification and expansion has occurred in these countries, national indicators show that Malaysia has largely pursued intensification while Indonesia has overwhelmingly favoured expansion. Using the framework of the Jevons paradox, this paper contributes to the existing literature by arguing how and why political and social factors, rather than technology and market incentives, can better account for the differences between yield and land use efficiency in Indonesia and Malaysia today. The paper argues that expansion in Malaysia has been curtailed by the Malaysian government's pledge to maintain at least 50% forest cover in the late 1990s, coupled with a government supported corporate strategy of establishing plantations in Indonesia. Indonesia has made no such pledge, leading to expansionist policies focused on market creation and production goals with limited incentives for technology-driven intensification. It also notes however that in recent years, new socio-political developments in both countries may yet change this clear dichotomy of opposing land use strategies between these two countries, namely Sarawak's recent autonomous tendencies over land use and Indonesia's new leadership and international No Deforestation Peat and Exploitation (NDPE) commitments.

Suggested Citation

  • Varkkey, Helena & Tyson, Adam & Choiruzzad, Shofwan Al Banna, 2018. "Palm oil intensification and expansion in Indonesia and Malaysia: Environmental and socio-political factors influencing policy," Forest Policy and Economics, Elsevier, vol. 92(C), pages 148-159.
  • Handle: RePEc:eee:forpol:v:92:y:2018:i:c:p:148-159
    DOI: 10.1016/j.forpol.2018.05.002

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    References listed on IDEAS

    1. Robert Lipsey & Fredrik Sjoholm, 2011. "Foreign direct investment and growth in East Asia: lessons for Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 47(1), pages 35-63.
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    5. Larson, Donald F., 1996. "Indonesia's palm oil subsector," Policy Research Working Paper Series 1654, The World Bank.
    6. Brockhaus, Maria & Obidzinski, Krystof & Dermawan, Ahmad & Laumonier, Yves & Luttrell, Cecilia, 2012. "An overview of forest and land allocation policies in Indonesia: Is the current framework sufficient to meet the needs of REDD+?," Forest Policy and Economics, Elsevier, vol. 18(C), pages 30-37.
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    10. Zahari Zen & Colin Barlow & Ria Gondowarsito, 2005. "Oil Palm in Indonesian Socio-Economic Improvement A Review of Options," Departmental Working Papers 2005-11, The Australian National University, Arndt-Corden Department of Economics.
    11. Nelson B. Villoria & Alla Golub & Derek Byerlee & James Stevenson, 2013. "Will Yield Improvements on the Forest Frontier Reduce Greenhouse Gas Emissions? A Global Analysis of Oil Palm," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(5), pages 1301-1308.
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    13. Prabowo, Doni & Maryudi, Ahmad & Senawi, & Imron, Muhammad A., 2017. "Conversion of forests into oil palm plantations in West Kalimantan, Indonesia: Insights from actors' power and its dynamics," Forest Policy and Economics, Elsevier, vol. 78(C), pages 32-39.
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    Cited by:

    1. Irawan, Silvia & Widiastomo, Triyoga & Tacconi, Luca & Watts, John D. & Steni, Bernadinus, 2019. "Exploring the design of jurisdictional REDD+: The case of Central Kalimantan, Indonesia," Forest Policy and Economics, Elsevier, vol. 108(C), pages 1-1.
    2. Yuliani, E.L. & de Groot, W.T. & Knippenberg, Luuk & Bakara, D.O., 2020. "Forest or oil palm plantation? Interpretation of local responses to the oil palm promises in Kalimantan, Indonesia," Land Use Policy, Elsevier, vol. 96(C).
    3. Jaza Folefack, Achille Jean & Ngo Njiki, Marie Gaelle & Darr, Dietrich, 2019. "Safeguarding forests from smallholder oil palm expansion by more intensive production? The case of Ngwei forest (Cameroon)," Forest Policy and Economics, Elsevier, vol. 101(C), pages 45-61.
    4. Tacconi, Luca & Rodrigues, Rafael J. & Maryudi, Ahmad, 2019. "Law enforcement and deforestation: Lessons for Indonesia from Brazil," Forest Policy and Economics, Elsevier, vol. 108(C), pages 1-1.
    5. Cadman, Tim & Sarker, Tapan & Muttaqin, Zahrul & Nurfatriani, Fitri & Salminah, Mimi & Maraseni, Tek, 2019. "The role of fiscal instruments in encouraging the private sector and smallholders to reduce emissions from deforestation and forest degradation: Evidence from Indonesia," Forest Policy and Economics, Elsevier, vol. 108(C), pages 1-1.


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