The MSPO Scheme has also helped communities evolve and sustain themselves better.

CONVERSATIONS about Malaysian palm oil involving Borneo Malaysia – Sabah and Sarawak – can often veer into misinformation. The overarching narrative in these conversations usually focuses on illegal logging, foreign labour, and commercial profiteering.

This narrative persists despite concerted efforts from the collective Malaysian palm oil industry since the introduction of the Malaysian Sustainable Palm Oil Certification (MSPO) in 2015, which was the next step in the country’s efforts to improve the sustainability of Malaysian palm oil. It was a national scheme made mandatory unlike the voluntary Roundtable on Sustainable Palm Oil (RSPO)’s certification system, established in 2004 for the global market. Our MSPO certification scheme is meant for all oil palm plantations, independent and organised smallholdings, and palm oil processing facilities in the country.

However, there is more than meets the eye, and it is worthwhile to take a fresh look at the industry since those early days, and gain some insight into the country’s palm oil footprint in Borneo Malaysia.

Sawit Kenyalang

Amidst all the media attention on and narrative of Malaysian palm oil, it is easy to overlook the fact that the industry only began in earnest in Sarawak around the early 1990s, unlike the industry’s 100-year history in Peninsular Malaysia. However, the growth of the Sarawak palm oil industry has followed a similar path to that of Peninsular Malaysia, where oil palm cultivation grew through government schemes like FELDA and FELCRA and was supported by plantation companies such as Sime Darby, alongside independent smallholders’ associations, to drive rural development and progress.

Utilisation of idle lands – or conversion of existing ones – for oil palm cultivation has given rise to thousands of oil palm smallholders, growing the local economy and overall industry further. All in all, large-scale oil palm estates and smaller, more communal developments both work hand in hand to establish the industry’s footprint across the country. Large-scale estates bring in workers and investments which then lead to land preparations and infrastructure, while smaller developments leverage the newly-established infrastructure and access to establish new population centres.

This is the footprint profile of the Sarawak palm oil industry. These estates led to the development of the state’s rural areas and communities, with complementary businesses and secondary industries taking root to supplement this growth. These rural oil palm communities are the backbone of the Sarawak palm oil industry. The biggest state in Malaysia at 12.4 million hectares (ha), Sarawak has 3 million ha allocated for agriculture. The current plan is to increase its total oil palm area to 2 million ha, with the rest allocated to different agricultural products.

The MSPO Scheme has also helped communities evolve and sustain themselves better. A majority of these smaller rural oil palm developments in Sarawak consist of indigenous oil palm farmers, and most are of Dayak heritage, with 28,000 active oil palm farming families. These families, along with the Kelabits of the highland interiors and the Ibans in the lowlands, share a farming tradition. Their traditional crop was rice. They switched to rubber farms when rice ceased becoming sustainable, before migrating to larger towns and cities in search of work when global rubber prices dropped. When the state government introduced oil palm farming as a cash crop, these families slowly cultivated small, independent oil palm plantations by utilising incentives such as free seedlings and fertilisers.

Sawit di Bawah Bayu

For Sabah, balance is key. The state has taken the proactive approach of incorporating nature conservation initiatives as a main component in its efforts. This approach is representative of its vision to become a state that produces only certified ethical and green palm oil by 2025. This vision materialised in the Jurisdictional Certification of Sustainable Palm Oil (JCSPO) initiative launched in 2015, an initiative that has received the backing of WWF-Malaysia. The JCSPO is an example of how willing the state is to take ownership of its resources and economy. And now, with MSPO certification set for the entire country starting 2022, Sabah is already ahead of the other states. The state only needs to restructure by integrating the MSPO processes with the more criteria-extensive RSPO jurisdictional process.

Sabah has always been on top of its natural resources-based industries. They have pioneered Sustainable Forest Management (SFM) since 1997 to combat illegal deforestation and excessive logging which had plagued its timber industry. Similar efforts have been replicated in its palm oil industry. Sabah is one of the earliest states to implement RSPO certification across its plantations and smallholders. This is a long-term strategy with multiple benefits – present and long-term market access and returns, conservation of natural resources and heritage, and protection of the state’s economic health. Eventually, the state’s cabinet approved a multi-stakeholder proposal pushing for a 100% RSPO-certified sustainable palm oil (CSPO) production process, followed by the Jurisdiction Certification Steering Committee (JCSC) involving the government, industry, and civil society representation.

Like Sarawak, smallholder communities play a huge role in Sabah’s palm oil industry. There are an estimated 53,000 smallholders in the state. The organised smallholders’ lands account for 24% of the state’s total oil palm area while those of independent smallholders account for 14%. A majority of them are indigenous communities that receive plenty of certification assistance, such as WWF-Malaysia’s own Sabah Landscapes Programme, which supports the certification of 70,000 ha of middle-sized and small-holders in Tawau, Lower Sugut, and Tabin.

The challenge to meet the objectives set by JCSPO is real. To date, about 26% of Sabah’s palm oil is RSPO-certified. The COVID-19 pandemic definitely had a telling impact in the last two years, but it did not stop the state’s efforts to stay ahead of the market.

Smallholder communities play a huge role in the Malaysian palm oil industry.

A Borneo Situation

In Sabah and Sarawak, oil palm smallholdings comprise nearly one-quarter of accounted land areas in the state. Sabah currently has approximately 1.7 million ha of plantation land. 20-30% of this are smallholders. Sarawak on the other hand, has 1.56 million ha of oil palm plantation land – 27% of the state’s total agriculture area – with a total of 40,513 smallholders covering 234,812 ha.

Given the above, it goes to show how bans and disproportionate policies on Malaysian palm oil exports can significantly impact smallholders. 28% of Malaysian palm oil is produced by smallholders. As the world’s second-largest palm oil producer, the Malaysian palm oil provides for a large portion of the country’s smallholders and middle-income demographic. They are examples of rural indigenous communities who make their living using their ancestral lands by growing a profitable and healthy crop in a sustainable way, supported by various initiatives and efforts from both the government and private sectors. As the Malaysian palm oil industry pursues complete compliance of MSPO and voluntary standards, it is harsh to subject Malaysian palm oil to heavy handed treatments that disregard the progress of recent efforts to answer the global call for ethical and green palm oil.