Malaysia: Driving Palm Oil Sustainability

Malaysia has succeeded in uplifting the lives of people in rural communities through oil palm cultivation. It has also put in place legal, financial, environmental and social measures to ensure that production of its palm oil meets the principles and criteria of sustainable palm oil, under the framework of a national certification scheme.

The Malaysian Sustainable Palm Oil (MSPO) standard was developed for certification of oil palm plantations; independent and organised smallholdings; and palm oil processing facilities. The Malaysian Palm Oil Certification Council (MPOCC) is the owner and governing body of the MSPO scheme.

The MSPO framework includes seven principles that, among others, addresses cultivation and processing methods, protects forests and wildlife, safeguards workers’ welfare and safety; and provides a minimum living wage.

To date, MSPO has achieved a total certification rate of 86.5% that covers 5.1 million ha of the nationwide planted area of 5.9 million ha. It is worth noting that organised smallholders have achieved 100% certification rate of the planted area of 672,019 ha.

Independent certification has ensured that the auditing of all field practices and milling operations is verified against a set of standards, established as MS 2530:2013 under the auspices of the Department of Standards Malaysia.

It remains a challenge to ensure that the whole industry attains full certification (see Box), especially among independent smallholders. This is because the industry has been the pillar of the government’s socio-economic development and poverty eradication programmes since the 1960s. Oil palm cultivation in Malaysia also dates back more than 100 years.

Nevertheless, Malaysia is committed to ensuring industry compliance to meet the global demand for sustainably produced palm oil, with the collaboration and support of both the federal and state governments. This needs both a top-down and bottom-up approach to place the necessary procedures and requirements for certification at the heart of daily operations in the industry.

In line with good practice, the MSPO standard is currently being reviewed by relevant Malaysian stakeholders in the economic, environmental and social fields. They include government agencies; both the upstream and downstream industries; smallholders’ organisations; environmental NGOs; civil society groups; indigenous people’s organisations; workers’ unions; and academia and research and development institutions.

Productivity and the environment
The oil palm planted area in Malaysia stands at 5.9 million ha or 17.9% of the total land area; this accounts for only 0.2% of the global agricultural area. In 2019, the government announced that the oil palm planted area would be capped at 6.5 million ha, reiterating Malaysia’s pledge at the 1992 Earth Summit to keep at least 50% of its land area as permanent forests. Currently, 54.6% of the land area is under forest cover.

The Malaysian palm oil industry has consequently committed to increasing output by improving productivity and yield. Replanting programmes will focus on R&D on genetics, better cultivars and good agricultural practices (GAP) to avoid deforestation and direct or indirect land use change.

Malaysia has been pioneering GAP since the 1980s. Zero burning, recycling of waste, biological control and inter-cropping are norms in its oil palm plantations. Since open burning is illegal, old stands of oil palm are mechanically felled, chipped and left to decompose in the fields, thereby recycling organic nutrients back to the soil. This long-established practice keeps the environment free of smoke pollution.

Plantations also act as an efficient ‘carbon sink’, as the trees have a long economic lifecycle of 25-30 years and a lush evergreen canopy. This is crucial in mitigating global warming. With the adoption of sustainable management practices on plantations, the efficiency of carbon or greenhouse gas sequestration of the oil palm is further improved.

According to a study by the Forestry and Forest Product Research Institute of Japan, an oil palm plantation absorbs CO2 more effectively than natural forests by a ratio of about 4:1 – this means that the oil palm absorbs 25 tonnes/ha/year against 6 tonnes/ha/year by natural forests.

The Malaysian oil palm sector is proactive in wildlife conservation as well, through initiatives under the Malaysian Palm Oil Green Conservation Foundation (previously the Wildlife Conservation Fund). It has financed landmark projects such as the Borneo elephant sanctuary, orang utan aerial survey and the establishment of Sabah Wildlife Department’s Wildlife Rescue Unit.

Highly-regulated industry
The Malaysian palm oil industry is highly regulated, being governed by more than 60 national laws and regulations. These include the Land Acquisition Act 1960; National Land Code 1965; Environmental Land Conservation Act 1960 revised in 1989; Environment Quality Act 1974; Pesticides Rules 1988; Occupational Safety and Health Act 1977; and Wildlife Conservation Act 2010. In addition, there are 25 licensing categories throughout the industry’s supply chain to ensure that it meets the strict requirements set out under the Malaysian Palm Oil Board’s (MPOB) rules and regulations.

With close cooperation between MPOCC and MPOB, the right ingredients are in place to develop confidence in the MSPO certification scheme. MPOCC will strive for wider acceptance of the scheme at the national and international levels.

Implementation will be enhanced through broad stakeholder consultations; capacity building of Accredited Certification Bodies and peer reviewers; engagement with smallholders, the industry and financial institutions; and inspection and enforcement agencies at the national and state level. The supply chain and traceability requirements will be improved to provide a guarantee of legality and sustainability implementation nationwide.

In addition to the MSPO, many industry players participate voluntarily in other certification schemes, such as that of the Roundtable on Sustainable Palm Oil and International Sustainability and Carbon Certification. Approaches will be made to seek cross-recognition or mutual recognition between the MSPO and relevant sustainability schemes, to encourage acceptance and recognition by buyers and consumers around the world.

MPOCC