GLOBAL
DEPENDENCE ANALYSIS ON INDONESIAN PALM OIL PRODUCTION AND ITS EFFECT ON
ENVIRONMENTAL SECURITY USING THE COPENHAGEN SCHOOL APPROACH
Ali Bogheiry1, M. Thaha2,
Laila Rahmah3 �
Faculty of
Law and Political Sciences, Ahlul Bayt International University, Tehran, Iran1,2
School of
Medicine, Tehran University of Medical Sciences, Tehran, Iran3
[email protected]1,
[email protected]2, [email protected]3
ABSTRACT
Increasing international demand is related to global dependency on
Indonesian palm oil, forcing Indonesia to increase its palm oil production,
resulting in environmental concern. A combination of quantitative and
qualitative methods with the Copenhagen School approach is used. On average
from 2010-2020, Indonesia exported palm oil to Asia (64.72%), the EU (16.29%),
Africa (13.59%), America (5.30%), and Oceania (0.07%). According to the
Copenhagen School perspective, there are potential environmental security
threats to the international world. One aspect of the environment that is
suffering is forested due to deforestation, related fires, damage to
ecosystems, and species that are essential contributors to global climate
change and loss of biodiversity, as well as poor local and regional air
quality. Involvement in the human rights sector, terrorist activities,
smuggling, and tax evasion are also evident. Indonesian palm oil production
provides economic benefits through international trade and at the same time
threatens global environmental security.
Keywords: copenhagen
school, environment, global dependency, indonesia, palm oil.
Corresponding Author: Ali
Bogheiry
E-mail: [email protected]
INTRODUCTION
Palm oil (in Latin, 'Elaeis guineensis') is one
of the world's most consumed and produced oils. The use of palm oil continues
to increase along with the growth of the world's population, the development of
production technology, and the increase in the population's consumption level,
so the use of palm oil will continue to increase globally. The use of palm oil
that continues to increase every year is related to the fact that palm oil is a
very productive commodity (Wulansari et al.,
2016); (Azizah, 2015). Palm oil is used mainly for cooking in developing
countries. It is commonly used in food products, detergents, cosmetics, and, to
a lesser extent, biodiesel, a trending topic for energy sustainability in the
future (Azizah, 2015).
It is noted that Indonesia and Malaysia are the
leading palm oil producers in the global market (Bentivoglio et al.,
2018). These two countries accounted for more than 85% of
the total global palm oil production in 2013 (Goggin & Murphy,
2018). For a decade, Indonesia was the world's largest
producer of crude palm oil (CPO), with an average contribution of production
amounting to 44.46% of the total world CPO production (Azizah, 2015). Indonesia will produce 51.3 million tons in 2021,
with a production area of 9 million hectares of the total global palm oil
production volume of 63.2 million tons and a global production area of 17
million hectares (Wulansari et al.,
2016); (Mahdi, 2021). This increase in production is in line with the increasing
international demand for vegetable oils and is supported through public
investment and subsidies in several Southeast Asian countries.
In Indonesia, of the total production, only 35% of
palm oil is consumed domestically. Meanwhile, 65% of it is exported abroad.
Exports of Indonesian palm oil products in 2021 in CPO, PKO, oleo chemicals,
and biodiesel reached 34.2 million tons with an export value of US$ 35 billion (Mahdi, 2021). Furthermore, successively the most CPO importing
countries from Indonesia are occupied by the European Union, India, Pakistan,
Africa, the United States (US), the Middle East, and Bangladesh (Nurhadi, 2022).
Increasing global demand for biofuels and other
non-food products (mainly from Europe) and food (mainly from India and China)
has been the main factor behind land conversion in Southeast Asia for oil palm
cultivation. Land conversion has been shown to increase deforestation, forest
fires and air pollution, carbon emissions, water abstraction, and land
conflicts. Deforestation is a major global problem with severe consequences.
These consequences negatively affect climate, biodiversity, and atmosphere and
threaten local indigenous peoples' cultural and physical survival (Lambin et al., 2018).
As demand continues to increase, global palm oil
production will likely continue to increase (Pirker et al., 2016). Given the high versatility of palm oil, it is also
necessary to track the upstream use of palm oil consumed by countries other
than producing countries to direct supply chain management towards sustainable
production and consumption as set out in the United Nations Sustainable
Development Goals.
The aim of this study is to the global dependence on
Indonesian palm oil and its effect on environmental security, analyze the trend
of Indonesian palm oil production and trade, describe environmental aspects
which are most affected by the large production of palm oil in Indonesia,
describe the environmental damage in Indonesia have an on the global
environment and the effect of palm oil production Indonesia on the
international political aspects.
METHOD
The method used in
this study combines quantitative and qualitative methods with a descriptive
approach for both. All quantitative and qualitative data are extracted from
secondary data sources (FAOSTAT, OEC, Trade Map, Statista, etc.). The database
for palm oil production is primarily taken from FAOSTAT. The trade database
used for the Import and Export Trends of Palm Oil Worldwide includes all data
regarding palm oil's import and export value worldwide in the most recent year
available in Statista (2021). The trade database in Statista includes all food and
agricultural products imported/exported annually by all the countries in the
world. The trade database used for the Import and Export Trend of Palm Oil in
Indonesia includes all data averaged from 2010 to 2020 regarding palm oil in
Indonesia with the following variables: import quantity, import value, export
quantity, and export value. The trade database in FAOSTAT includes all food and
agricultural products imported/exported annually by all the countries in the
world.
RESULTS AND DISCUSSION
Copenhagen
School�
The
Copenhagen School is a school of academic thought that originates from the book
by the international relations theorist Barry Buzan entitled "People,
States, and Fear: The National Security Problem in International
Relations" the book was first published in 1983. The Copenhagen School
emphasizes non-military security, representing a shift away from traditional
security studies (Buzan, 1991). In addition, there is also the main Copenhagen
School book written by Buzan, W�ver, and De Wilde with the title
"Security: A New Framework for Analysis" (Buzan et al., 1998).
In the
study of international relations security, there are differences in
interpreting the concept of security, namely the concept of security with
traditional issues and the concept of security with non-traditional issues.
Traditional groups regard security as freedom from all military threats in an
anarchic international system (�ulović,
2010). Or security is more focused on the military
field and the problem of threats of war.
Meanwhile,
non-traditional groups (non-military threats) explain a more expanded
definition of security, security does not only talk about the military sector,
but other issues are also essential and can pose security threats, such as the
political sector (authority, status government, and recognition); social sector
(collective identity); economic sector (trade, production, and finance); and the
environmental sector (human activity and the planetary biosphere) (�ulović,
2010). Theorists associated with this group include
Barry Buzan, Lene Hansen, Huysmans, Jaap de Wilde, and Ole Waever of the
Copenhagen School.
In
addition, the actors involved are no longer just countries but also
international organizations (global and regional), non-governmental
organizations (global, regional, and local), interest groups, and pressure
groups (multinational and transnational companies, epistemic groups,
individuals, Political Parties, and others). The study conducted by the
Copenhagen school explains the shift in the referent object from the state as
an object and sovereignty as a value that is secured towards society as a
reference, while identity is a value that is secured. This idea became a major
change in the approach to the Copenhagen school. It was from this idea that the
concept of securitization emerged. According to the Copenhagen School, the
securitization process has two stages: the stage of raising the issue and the
stage of convincing the audience (public).
In the
first stage of securitization, state, or non-state actors such as trade unions
or people's movements describe specific issues, people, groups, or entities as
an existential threat to the target object or community. The second, more
critical stage concerns the success of securitization, which depends on whether
the audience is convinced to accept that a particular object of reference is
existentially threatened.
In the
environmental field, of course, it will be related to how to maintain the local
and planetary biosphere as an essential support system on which all living
things depend; from the definition above, it becomes one of the determining
factors whether an issue can enter into the theory of environmental security or
not, the issue of transboundary haze which is has become an annual cycle and
has been going on for a long time between Singapore and Indonesia can be
classified as an environmental security issue. The haze is carried by seasonal
winds to neighboring countries. Its spread is affected by factors such as El-Nino
storms and climate change (Gultom et al.,
2016).
Fires
are also considered a potential threat to the international world and
sustainable development because they directly impact ecosystems, carbon gas
emissions, and biodiversity (Liu et al.,
2013). Riau Province is one of the provinces whose
geographical location is close to neighboring countries such as Malaysia and
Singapore, a source of transboundary haze pollution for these two countries.
The haze problem has become a global problem because this case causes pollution
in neighboring countries which causes them to protest against Indonesia as the
country where the smoke is sourced (Liu et al.,
2013).
Palm Oil Production in Indonesia
It is presented in the chart that
within ten years back (2012-2022), the trend of palm oil production both in the
world and in Indonesia was increasing. In 2012, the world produced only 52.91
Mt/y; it will be 1.45-fold higher in 2022 with 77.215 Mt/y. At the same time,
production by Indonesia increased 0.57-fold, where it was 26.0 Mt/y in 2012 and
45 Mt/y in 2022. According to (Ritchie, H., Roser, 2020), the
rise of palm oil follows the rapid increase in demand for vegetable oils more
broadly. Global production of vegetable oils increased tenfold since the 1960s
� from 17 to 170 million tonnes in 2014 and in 2018 comes to 218 million
tonnes.
In Figure 5, there are two slight
decreases in palm oil production in 2016 and 2020 for both world and Indonesia.
The reason is that in 2016 palm oil production was impacted by El Nino, a
warming of the Eastern Pacific Ocean waters which brings dry weather across
Southeast Asia and lowers palm yields in top producers Indonesia and Malaysia.
While the reason for 2020 is that total palm oil output in top producers
Indonesia and Malaysia is expected to fall in that year, hampered by a labor
shortage during the COVID-19 pandemic, 2019's dry weather, and lower fertilizer
application (Reuter, 2020).
Figure 1. Palm Oil Production in The World and
Indonesia from 2012 - 2022.
Source: FAO, USDA (Jan 4, 2023)
Indonesia's
largest palm oil-producing areas are located on the islands of Sumatra and
Kalimantan (the Indonesian name for Borneo, which is divided between Indonesia, Malaysia, and Brunei).
These two islands are supported by a tropical climate that supports oil palm cultivation.
In 2020, these were the six largest palm oil-producing provinces in Indonesia:
1) Riau (2,806,349
hectares, 9.5 Mt/y); 2) North Sumatra (1,773,049 hectares, 5.6 Mt/y); 3) Central Kalimantan (2,049,790
hectares, 7.6 Mt/y); 4) West Kalimantan (1,570,675 hectares, 5.2 Mt/y); 5) East
Kalimantan (1,500,000 hectares, 4 Mt/y); 6) and South Sumatra (1,215,476 hectares, 4 Mt/y).
The large production makes Indonesia
important in meeting the world's needs/demands for oil palm and its derivative
products. As an important country in the world's oil palm industry, many
parties (stakeholders), of course, play a role in influencing palm oil
production in Indonesia. One of these parties is the role of private
corporations as the driving force for Indonesian palm oil production. These are
the 5 Biggest Indonesian Oil Palm Companies in 2020: 1) Provident Agro, Tbk. (PALM),� 2) Smart Tbk. (SMAR), 3)
Astra Agro Lestari Tbk. (AALI), 4) Sawit Sumbermas Sarana Tbk. (SSMS), and
5) PP London Sumatra Indonesia Tbk. (LSIP), with profit and revenue
respectively, $0.13B/$0.016, $0.10B/$2.8B, $0.063B/$1.3B, $0.052B/$0.28B, and $0.049B/$0.28B.
The Impact of Indonesian Palm Oil Production on the Environmental
Security
Rapid
growth in the international demand for palm oil has triggered considerable
global concern because oil palm plantations deteriorate the environment where
they are developed, resulting in complex environmental impacts in the producer
nations. Forest biological diversity refers to all life forms found within
forested areas and their ecological roles. It encompasses not just trees, but
the multitude of plants, animals, and microorganisms that inhabit forest areas
and their associated genetic diversity. Forest biological diversity can be considered
at different levels, including ecosystem, landscape, species, population, and
genetics. Complex interactions can occur within and between these levels. This
complexity allows organisms to adapt to continually changing environmental
conditions and to maintain ecosystem functions.
Indonesia
is the world's largest palm oil exporter, accounting for 58% of globally traded
flows. In 2018, Indonesia's oil palm plantations covered more than 165,000 km2,
around four times as big as the Netherlands. The expansion of oil palm
plantations has been an essential driver of deforestation in Indonesia for the
past 20 years, accounting for one-third (3 million hectares) of Indonesia's
loss of old-growth forests. Indonesia had 1,450,382 ha of palm oil
deforestation in 2020, with a volume of 44,757,944 tonnes. In Figure 14, the
spread of palm oil plantations and associated deforestation in 2020 was
concentrated in Borneo Island (Kalimantan), Sumatra Island, Papua, and Riau.
Five of the Top 10 provinces with palm oil deforestation exposure are in
Kalimantan Island, including South Kalimantan, East Kalimantan, West
Kalimantan, North Kalimantan, and Center Kalimantan with a total exposure of
1,004,301 ha (69%). In 2015, with the production of only 0.53% (167,468 tonnes)
of Indonesia's palm oil, Papua was expected to be a possible new frontier of
oil palm plantation expansion and associated deforestation. It was proven that
in 2020, two provinces in Papua were included in The Top 10 province with total
deforestation exposure of 165,170 ha (11%).
The other Top 10 provinces with the most
deforestation exposure are Riau, North Sumatra, and Jambi with exposure
respectively 106,227 ha (0.07%), 53,280 ha (0.03%), and 29,181 ha (0.02%).
However, several provinces continue to see the significant conversion of
forests to oil palm plantations. In recent years, deforestation for palm oil
production has been concentrated in the forest-rich provinces of Indonesian
Borneo (Kalimantan) and Papua. Together, these two islands accounted for 80% of
all deforestation for palm oil in Indonesia in 2020.
Figure 2. Deforestation Exposure (ha) of
Indonesian Palm Oil
Production in 2020 by Region (Province).
Source: Trace Supply Chain (Jan 2, 2023)
Incomplete words: Kalimantan Barat (west),
Kalimantan Timur (east), Kalimantan Tengah (center), Papua, Kalimantan Utara
(north), Riau, Sumatera Utara (north), Papua Barat (west), Kalimantan Selatan
(south), and Jambi. Figure 2 shows Indonesian Palm Oil's most significant
export companies, ordered on palm oil deforestation exposure. Indonesia's
export market has been consistently dominated by five exporter groups: Royal
Golden Eagle, KPN Corp, Sinar Mas, Musim Mas Astra Agro Lestari, IFFCO, Wilmar,
First Resource, Louis Dreyfus, and unknown sources.
Figure 3. Deforestation Exposure (ha) by
Indonesian Palm Oil Exporting Company in 2020. Source: Trace Supply Chain (Jan 2, 2023)
Incomplete
words: Royal Golden Eagle, Astra Agro Lestari, First Resources, and Louis
Dreyfus. However, the top ten exporter groups, all with NDPE commitments, were
still exposed to significant deforestation risk associated with their exports
in 2020: Sinar Mas (49,498 ha), Wilmar (27,202 ha) Musim Mas (40,038 ha), Royal
Golden Eagle (96,944 ha), KPN Corp (60,785 ha), Astra Agro Lestari (30,147 ha),
First Resources (23,164 ha), Louis Dreyfus (22,693 ha) and unknown sources
(96,525 ha). In some groups, these risks were concentrated within a subset of
subsidiary traders. For example, 48% of Sinar Mas's deforestation risk exposure
is associated with its subsidiary Sinar Mas Agro Resources and Technology.
However, this company only trades 26% of Sinar Mas's total exports, indicating that
it contributes a disproportionate share to Sinar Mas's total deforestation
risk. In contrast, another Sinar Mas subsidiary, Sumber Indah Perkasa, was
responsible for 17% of Sinar Mas's deforestation risk while exporting 32% of
the group's total exports.
Oil palm
plantations have a particularly negative net effect on ecosystem function
compared to primary and secondary tropical forests (Dislich et
al., 2017).
Trends of Palm Oil Trade Worldwide and in Indonesia
The map
in Figure 4 visualizes the Indonesian Palm Oil Import Value on Average from
2010 to 2020. Countries shown in
the map are origins of palm oil imported to Indonesia, colored with gradation
based on the difference in import value. The data and maps were extracted from
FAOSTAT. On average from 2010 to 2020, Indonesia imported Palm Oil primarily
from: Malaysia ($8.65M), India ($3.214M), Papua New Guinea ($2.30M),
Philippines ($1.29M),� Thailand ($1.12M),
and Sri Lanka ($196K). Indonesia also used its palm oil for domestic use with
an average (2010-2020) value of $568K.
Indonesia imports Palm
Oil primarily from: Malaysia
($4.49M), Sri Lanka ($180k), Singapore
($162k), Ethiopia ($87.1k), and
the
Netherlands ($23.3k). The fastest-growing import markets
in Palm
Oil for Indonesia between 2019
and 2020 were Sri
Lanka ($180k), Ethiopia ($87.1k),
and the
Netherlands ($18.3k) (OEC, 2020).
Figure 4. Map of Indonesian Palm Oil Import
Value, Average 2010- 2020.
Source: FAOSTAT (Dec 28, 2022)
Figure 4 visualizes that the average trend of
Indonesian Palm Oil Export Quantity from 2010 to 2020 increased 1.59-fold, with
16.3 Mt/y in 2010 and 25.93 Mt/y in 2020. The highest export quantity was found
in 2018, with 27.89 Mt/y. There were two declines in export quantity in 2016
(from 26.46 Mt/y to 22.75 Mt/y) and 2020 (from 27.48 Mt/y to 25.93 Mt/y). This
was because Palm Oil production had decreased in the same 2 years as shown in
Figure 1, due to El Nino and COVID-19. Here, the export value of Indonesian palm
oil was influenced by the amount of palm oil produced each year.
Figure 5.
Indonesia�s Export Quantity of Palm Oil, Average 2010 - 2020.
Source: FAOSTAT (Jan 2, 2023)
The map in Figure 5 shows the Indonesian Palm
Oil Export Value on Average from 2010 to 2020. Countries shown in the map are
Indonesian palm oil export destinations colored with gradation based on the
difference in import value. The data and maps are extracted from FAOSTAT. On
average from 2010 to 2020, Indonesia exported
$16.37B in Palm
Oil which primarily to: Asia (export value: $10.59B, 64.72%)
[India ($3.88B), China
(N/A), Pakistan ($1.05B), Malaysia ($768M), Bangladesh
($711.9), Myanmar ($336.4M), Vietnam ($161.1M), Philippines ($163.5), United
Arab Emirates ($150.6M), Saudi Arabia ($132M), Iran (Islamic Republic of)
($125.9M), Republic of Korea ($103.1M), and Japan ($97.9M)]; European Union
(export value: $2.66B, 16.29%) [Netherlands ($784M), Italy ($637.6M), Spain
($564M), Greece ($329.7M), Russian Federation ($343.1M), Germany ($156M), and
Turkey ($120M)]; Africa (export value: $2.22B, 13.59%) [Egypt ($627.9M), South
Africa ($184.5M), United Republic of Tanzania ($173.2M), Djibouti ($153.5M),
Kenya (149.7M), and Benin ($104.3M)]; America (export value: $868M, 5.30%) [USA
($342M) and Brazil ($109M)]; Oceania (export value: $11.49M, 0.07%)[Papua New
Guinea ($11M)].
The world's most consumed cooking oil,
international purchases of imported palm oil cost an estimated US$50.8 billion
in 2021. Overall, the value of palm oil imports accelerated by 51% for all
importing countries since 2017. Five years earlier, international purchases of
palm oil cost $33.6 billion. Year over year, globally imported palm oil increased
by 50% from $33.8 billion in 2020.
Figure 6. Map of Indonesian Palm Oil Export
Value, Average 2010 - 2020.
Source: FAOSTAT (Dec 28, 2022)
Statistics in Figure 6 show the import value
of the leading importer countries of palm oil worldwide in 2021. That year,
India was the leading importer of palm oil worldwide, with an import value of
about 9.56 billion U.S. dollars. Malaysia and Indonesia are the leading suppliers.
India imports palm oil with the highest dollar value during 2021, US$4.1
billion (up 166.5% from 2020) and $3.9 billion (up 22.%
from 2020). Followed by China ($5.94B, with a value of $4.3 billion imported
from Indonesia); Pakistan ($3.40B, with a value of US$3 billion imported from
Indonesia); Netherlands ($2.1B, with a value of US$703.4M, $352.9M, and $267.7M
imported from Malaysia, Papua New Guinea, and Indonesia respectively); US
($1.80B), Spain ($1.52B), Italy (1.48B), Russia ($1.27B), Malaysia ($1.14B),
Vietnam ($1.04B), and Kenya ($0.99 B).
The five most prominent importers of palm oil
are India, China, Pakistan, the Netherlands, and the United States of America.
Collectively, that quintet of major palm oil buyers imported 45% of total palm
oil purchased via international markets in 2021. From a continental
perspective, Asian countries imported the highest dollar worth of palm oil in
2021, with purchases valued at $29.6 billion or almost three-fifths (58.4%) of
the global total. In second place were European importers at 20.9%, while 13.3%
of palm oil imported worldwide was delivered to African buyers. Smaller
percentages went to customers in North America (4.5%), Latin America (2.5%),
excluding Mexico but including the Caribbean, and Oceania (0.4%), led by
Australia, Papua New Guinea, and New Zealand.
Figure 7. Leading importers of palm oil
worldwide in 2021.
Source: Statista (Jan 2, 2023)
The statistics in Figure 7 show the export
value of palm oil worldwide in 2021 by leading countries. In that year,
Indonesia was the leading exporter of palm oil, with an export value of about
26.7 billion U.S. dollars, followed by Malaysia ($14.2B), Netherlands ($1.2B),
Papua New Guinea ($793.9M), Thailand ($713.5M), Guatemala ($709.6M), Colombia
($467.8M), Germany ($363.9M), Nepal ($236.4M), and Honduras ($236M). They were
also followed by five other countries (not mentioned in the diagram) Estonia
($222.6M), Costa Rica ($217.7M), Turkey ($209.8M), Italy ($193.8M), Djibouti
($182M). The listed 15 countries shipped 95.7% of global palm oil exports by
value in 2021.
Figure 8. Leading exporters of palm oil
worldwide in 2021.
Source: Statista (Jan 2, 2023)
Global palm oil suppliers are
intensely concentrated in Indonesia and Malaysia, accounting for 83.9% of the
value of all palm oil exported in 2021. Asian countries attracted the highest
dollar worth of sales from exported palm oil during 2021, with shipments valued
at $42.4 billion or 87.1% of the global total. In second place were European
exporters at 5.2%. In comparison, another 4.2% of worldwide palm oil shipments
originated from Latin American countries, excluding Mexico but including the
Caribbean. Tinier percentages came from Oceanian countries (1.7) led by Papua
New Guinea and the Solomon Islands, Africa (1.6%), and North America (0.3%).
Effect of Palm Oil Export on Political International Aspect
Tax Evasion in Oil Palm Plantations
Indonesian
lawmakers have demanded an accounting of the illegal palm oil plantations that
continue to operate in the country after the government revealed it had missed
out on at least $3 billion in taxes from these companies in 2021. According to
data from the environment ministry, there are 1.42 million hectares (3.51
million acres) of illegal plantations in Riau and 806,400 hectares (2 million
acres) in Central Kalimantan. That is two-thirds of the total 3.37 million
hectares (8.33 million acres) of illegal plantations in Indonesia. Indonesia
has identified 505 illegal plantations inside forest areas that are supposed to
be off-limits to plantation activity. Based on their size and output, these
plantations should have paid taxes amounting to 44 trillion rupiahs ($3.05
billion) in 2021, a figure that is a quarter of Indonesia's COVID-19 budget in
2020. An audit by local lawmakers in Sumatra's Riau province, one of
Indonesia's central oil palm-growing regions, found that Riau alone is deprived
of at least 107 trillion rupiahs ($7.4 billion) in potential revenue every year
from the illegal plantations operating there.
The
findings obtained from the study of the influence of oil palm plantations in
Indonesia on human security are genuinely concerning. Human rights violations
related to oil palm plantations are rife in production areas. Implementation of
international human rights obligations by the government is less effective.
While national laws uphold many human rights, not only are critical elements of
national law not enforced, but there are systemic problems in issuing
concessions. The way companies operate (Komnas, 2015).
Community
rights to their lands, territories, and natural resources are not protected or
recognized. Compensation payments for expropriated land were minimal and only for
agricultural land, not more expansive community areas. Legally mandated plasma
plantations are generally not provided. Workers' rights to freedom of
association and free collective bargaining are not enforced. Most local workers
are employed as casual daily wage laborers and are paid below the statutory
minimum wage. There are many areas for improvement in providing primary
education and health services, exacerbated by inadequate transport. Then in
some exceptional cases, restrictions on people crossing plantations to access
sources of livelihood. Most residents reported problems voicing complaints
about the treatment they experienced, including intimidation and
criminalization of those who voiced complaints. Residents complained that
dispute resolution was not working effectively. Several protesters and
complainants experienced intimidation and harassment (Firdaus, et al., 2012).
The Effect of Palm Oil Production on Terrorism Activities
The
consequences of soaring demand for palm oil for biodiesel are becoming
increasingly brutal. In Jambi Province, Sumatra Island, 1,500 armed men
demolished four indigenous settlements in Indonesia and displaced inhabitants
unwilling to surrender their land to a palm oil company. In another case,
Indonesian authorities said they were investigating whether Jemaah Islamiyah
(JI), which carried out the 2002 Bali bombings that killed 202 people 17 years
ago and other terrorist attacks in the country, was involved in establishing
palm oil plantations and other enterprises as funding sources for its
operations.
The
latest arrest revealed that JI was using a palm oil plantation business to fund
its terrorist activities. JI has found new financial stability with steady
income generated from the palm oil industry (Palansamy, 2019). According to
Indonesian police, the JI leader, Para Wijayanto, conducted the plantation
business while recruiting more members to the group and enabling the terror
organization to pay its "officers" a monthly wage of between 10 and
15 million rupiah (Laksmi, 2019). The plantations are also usually in remote
locations, which makes them ideal for shelters and military training. Owning a
plantation allows one to purchase large amounts of chemical products, such as
fertilizer, which can be used to craft bombs (Palansamy, 2019).
Smuggling of Palm Oil in Indonesia
Smuggling
becomes inevitable whenever there is a differential between domestic and world
prices (McBeth, 2022). The palm oil export ban came into force in Indonesia on
Apr 28, 2022, driving food prices higher amid global inflationary pressures. As
a result of the ban, CPO smuggling has been rife in Indonesia (TVRI, 2022).
The
Indonesian navy arrested seven foreign-flagged tankers attempting to smuggle
crude palm oil or CPO. The navy arrested an MT World tanker, MT Annabelle, TB
Ever Sunrise, MV World Progress (Liberia), MT W. Blossom (Tuvalu), MV Annabelle
(China), and the Indonesian-flagged MV Toto XVI, all detained by the Navy's
Koarmada I that secures western Indonesian waters (Tan, 2022; The Star, 2022).
Smuggling and illegal shipping of cooking oil and its raw materials abroad are
alleged to be one of the causes of the recent cooking oil scarcity and abnormal
price hikes in Indonesia that the Indonesian government is trying to stop.
Indonesian Palm Oil Tycoons
Most Indonesian Palm Oil Industry is controlled by tycoons - or taipan
in Bahasa. This word stems from the Japanese word taken (大君), which means "Great Lord."It
is now commonly used to
refer to wealthy business magnates who - often together with their families -
control groups of companies that are active in various business sectors, such
as plantations, mining, energy, real estate, finance, and services. Fourteen of
the 32 Indonesian billionaires identified by Forbes
magazine are
palm oil tycoons, having accumulated their wealth at least in part through the
industry.
The palm oil industry's expansion has continued into the 2010s, driving
economic growth but also crippling the archipelago country's rainforests,
fueling a land-grabbing epidemic and desiccating Indonesia's vast peat swamp
zones in such a way as to fuel the disastrous fires that each year blanket the
region in a choking haze. The nation's wealthiest have not completely
monopolized the spoils of palm oil, used in around half the goods one finds on
supermarket shelves, from chocolate and cooking oil to soap and makeup. The
total wealth of the 29 tycoon families is estimated at USD 69.1 billion on
average. Even when compared to Indonesia's Gross Domestic Product - US$ 878
billion in 2012 - these tycoons control enormous wealth, especially when
compared to the 2014 State Budget of 1,800 trillion, their net worth is
equivalent to 45% of Indonesia's State Budget; according to the exchange rate
in effect in July 2014 (TuK Indonesia, 2015).
Analysis of Global Dependence on Indonesian Palm Oil Production����
Global dependence on Indonesian palm oil production occurs because
global demand for palm oil continues to increase along with world population
growth, developments in production technology, and increasing levels of
population consumption, so demand palm oil will continue to increase globally.
The demand for palm oil, which continues to increase every year, is inseparable
from the fact that palm oil is a very productive commodity (Wulansari
et al., 2016) (Azizah,
2015) because the main advantage of palm oil
as a vegetable oil is its low price and high usefulness compared to other
vegetable oils.
�In the modern life system, no
country can meet its own needs, there needs to be interaction with other
countries and in the end, it creates dependence on one another (Suryanegara,
2014). At the beginning of the interaction process, there must be an impression
of a pattern of mutualism or a mutually beneficial relationship between the two
parties.
�This can be seen from the pattern
of interaction between countries which then creates dependence, namely the
relationship between Indonesian palm oil production and importing countries.
Following are some of the importing continents for Indonesian palm oil that are
spread worldwide: Asia, the European Union, Africa, America, and Oceania.
�FAO says the world's primary
vegetable oil production is highly concentrated in a handful of countries. The
highest concentration is with palm oil, as 84% of global
production came from two countries in 2019, Indonesia (58%) and Malaysia (26%);
while 61% of the world's oil palm fruit production comes from Indonesia. Such
concentrations can significantly impact prices when crop yields are positively
or negatively affected in major producing countries that export a portion of
their production (Wang et
al., 2021).
�It is not surprising that palm
oil is one of Indonesia's primary export commodities. The share of the market
for Indonesian palm oil production has an average export value from 2010 to
2020; Indonesia exported CPO of $ 16.37 billion, which was mainly destined for
the Asian continent of $ 11.23 billion (68.6%), the European Union $ 2.83 billion
(17.3%), Africa $2.36 billion (14.41%), America $922 million (0.92%) and
Oceania $13 million (0.073%). So, Indonesia's biggest palm oil exports are on
the Asian continent, which on average exceeds 50%, 68.6% of the whole
continent, followed by the European Union as second place.
�Consumer-driven needs or demands
cause global dependence on Indonesian palm oil production. The largest
consuming countries during the 2013-2020 period, making Indonesia the world's
largest export market were India, China, and the European Union, with a total
of 49%.
�However, the relative importance
of each of these markets has changed. In 2020, exports to India decreased by
13% and the EU by 5%, however, it was different from China which increased its
market share from 11% in 2013 to 16% in 2020 or increased by 5% and became the
largest importer of palm oil�Indonesia in the world. At the end of the 2020
period, international palm oil sales jumped 49.2% from $32.7 billion. These
sales can be used for food, cosmetics, and biofuel, generating strong demand
for palm oil worldwide. Moreover, Indonesia remains the market leader in
supplying palm oil to international customers.
�Thus, this dependence can be seen
positively. An Indonesian palm oil production system spread worldwide is vital
for the Indonesian and global economies. As well as having many other uses for
the global community or companies in each country. Thus, providing a
significant source of exports through food and for industrial use.
�In addition, it is also used for
domestic food, beauty products, biodiesel, and biofuels. Due to the advantages
of palm oil, it is easier to stabilize and maintain the quality and consistency
of taste in processed foods, so food manufacturers often prefer it. In 2015 it
was seen that, on average globally, humans consumed 7.7 kg (17 lb) of palm oil
per person (Meijaard et al., 2018). It can be indicated that the global
community depends on palm oil production or creates more supply-demand that
drives Indonesia's economic growth.
�However, on the other hand, it
shows that global dependence on Indonesia in the oil palm plantation sector has
unknowingly led to more extraordinary interaction efforts between Indonesia and
other countries. Thus, indirectly opening the door for Indonesia to interact
with other countries as a mirror of the industrialization of Indonesian palm
oil.
�Thus, efforts to open broader
interactions will be carried out based on Indonesia's national interest to make
all countries in the world one of the targets for expanding the base of the
Indonesian palm oil industry, particularly in terms of expanding market access
for Indonesian palm oil production.
The
Global Response to Indonesian Palm Oil
Indonesia's
palm oil industry provides many economic benefits, especially economically, and
reduces poverty (Rifin, 2020). However, the industry is under global
pressure, such as the Black Campaign and the European Union with the Renewable
Energy Directive II (RED II) policy in the palm oil resolution by the European
Union Parliament issued on Apr 4, 2017, in Strasbourg, France, because the
industry is often associated with environmental security issues, social, human
rights, and health
This
resolution policy aims to reduce the negative impacts of unsustainable palm oil
production because it can lead to deforestation, human rights violations, and
so on. According to (Dolle, 2017), this is the first resolution made by the
European Union parliament on the issue of deforestation because it threatens
the global agreement on climate change COP21 under the United Nations Framework
Convention on Climate Change (UNFCCC) (2015) and the United Nations Sustainable
Development Goals (SDGs).
It is
well known that the European Union is one of the producers of renewable energy,
which is quite advanced in its development technology. Until now, the European
Union is the largest biodiesel producer in the world. Biodiesel production
increased more than 20 times between 1994 and 2005. Germany is the leading
biodiesel producer, accounting for almost half of the total biodiesel
production produced by the European Union. Germany can produce 2.5 million
tonnes of biodiesel. Apart from Germany, France is also the largest biodiesel
producer in the European Union after Germany. France produced 2 million tonnes
of biodiesel that year.
Biodiesel
and bioethanol do not occupy a vital position in biodiesel. It is noted that
bioethanol only fulfills 20% of the total production of biofuels in the
European Union. Germany and France are European Union member countries that are
the leading bioethanol producers. Biodiesel is a very important biofuel for the
European Union. 80% of the European Union's biofuel consumption is biodiesel,
and the rest is bioethanol. According to a European Biodiesel Board (EBB)
report, EU biodiesel production increased 16.8% to 5.7 million tonnes in 2007
compared to the previous year of only 4.9 million tonnes.
However,
the legal use of palm oil biodiesel in the European Union is not considered
renewable energy. It will be limited until 2021, as stated in EU RED II (Sitepu et al.,
2018). This resolution is suspected not only to
affect environmental sustainability. However, it will also affect the trade in
the Palm Oil sector and other vegetable oils.
Indonesia,
the world's largest palm oil producer, criticized this resolution because it
was seen as triggering disputes. The impact of this resolution leads to the
economic welfare of oil palm smallholders. If you look at the Figure (Leading
exporters of palm oil worldwide in 2021), Asia has become Indonesia's largest
palm oil export market region, with purchases of 64.72% of exports in
2010-2020.
Since
2010, the European Union has been the world's second-largest palm oil importing
country. The European Union takes a lot of palm oil from Indonesia, with 16.29%
of exports. However, in 2020, exports to the European Union decreased by a
total of 12%. In 2015, oil palm plantations in Indonesia covered an area of
11.4 million ha, consisting of private companies (52%), smallholders (41%), and
state-owned companies (7%) (Purnomo et al., 2018). With the adoption of this
resolution, it is evident that Indonesia has experienced reduced exports from
the European Union and losses in large quantities.
The
implementation of RED II by the European Union can be an obstacle to the entry
of Indonesian palm oil products into the European Union because the palm oil
produced by Indonesia is not "green" palm oil. This Green
Protectionist is not only related to the environmental policy itself but also
to various policies not related to the environment that affect environmental
policies resulting in discrimination or trade bans. This form of green
protectionism is often seen as a Technical Barrier Trade or TBT (part of the
non-tariff barrier/NTB) as well as Sanitary and Phytosanitary Measures (SPS).
NTB and SPS are often used by the European Union and the United States for several
agricultural products and the food industry. For example, when the United
States, on Jan 28, 2012, sent an official letter of rejection of CPO exports
from Indonesia.
Apart
from that, there is also an anti-palm oil movement using the Palm Oil Free
Label Regulation. This labeling is already at the level of a palm oil boycott
and even "forbidding" the use of palm oil. This palm oil-free
labeling is aimed at industrial consumers of such products, which do not only
apply to the European market but sooner or later spread to the rest of the
world. Transnational NGO networks worldwide have become a global monitoring network
to ensure that the palm oil-free label is implemented. Such a structured,
systematic, and massive ban on the use of palm oil by the global food and
non-food industry leads to the "Dying for palm oil" scenario often
voiced by international NGOs and their supporters.
In
addition to the obstacles in the entry of Indonesian palm oil, which are
considered unsustainable by the European Union, the United States, and
international NGOs, there is also support for the Indonesian palm oil industry.
One of the supports came from the largest biodiesel-producing country in the
European Union, Germany. The Ambassador Extraordinary and Plenipotentiary of
the Federal Republic of Germany conveyed the support to Indonesia, Timor Leste,
and Asean, namely Michael Freiherr von Ungern-Sternberg, during a visit to the
oil palm plantation of PT. Paya Pinang in North Sumatra (Sari, 2018).
Apart
from supporting the sustainable palm oil industry, Germany, through the German
Development Institute, has also contributed directly to developing technology
for palm oil certification in Indonesia (Brandi et al.,
2013). The German government expects global palm
oil production to grow and calls for globally coordinated steps to implement
deforestation-free planting, according to responses to a parliamentary inquiry
first reported by Germany's press office. The German government notes that it
is not fundamentally against using or importing palm oil. The aim is
"sustainable palm oil production without negative impact on the
environment and climate while respecting residents' rights" (Xinhua, 2019).
CONCLUSION
In the past ten years, there has been an
increase in palm oil production globally and in Indonesia, with Indonesia being
one of the world's largest palm oil producers. The five largest Indonesian palm
oil companies are Provident Agro, Tbk., Smart Tbk., Astra Agro Lestari Tbk.,
Sawit Sumbermas Sarana Tbk., and PP London Sumatra Indonesia Tbk. Indonesia's
largest palm oil-producing areas are located on the islands of Sumatra and Kalimantan.
On average, Indonesia imports palm oil mainly from Malaysia, India, Papua New
Guinea, the Philippines, Thailand, and Sri Lanka. At the same time, India, the
European Union, and China were the largest importers of Indonesian palm oil.
The negative impact of palm oil production on the environment and local
communities has been well documented, leading to concerns about national
security and human rights violations. Despite these concerns, palm oil remains
a significant source of exports. It is used in various industries, including
food, beauty products, biodiesel, and biofuels.
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