The ambiguities of Indonesian Sustainable Palm Oil certification: internal incoherence, governance rescaling and state transformation

Abstract

There are persistent tensions of both a technical and political nature between Southeast Asia’s two major palm oil producers, Indonesia and Malaysia, and the sustainability governance mechanisms shaping global environmental and trade standards emerging from Europe. The establishment of the national Indonesian Sustainable Palm Oil (ISPO) certification standard in 2011 is a sign of discontent with the transnational Roundtable on Sustainable Palm Oil (RSPO) regime, sparking debate about the legitimacy of private governance models initiated by non-governmental organizations and companies in Europe. This article questions whether the adoption of sustainability norms by Indonesia signals normative convergence or the emergence of rival governance structures that challenge the state. Evidence suggests that elements of norm adoption and rival governance coexist in Indonesia and that ISPO certification is an ambiguous policy with degrees of internal incoherence. The ambiguous nature of ISPO certification gives rise to unresolved disputes over power and authority between various actors. This article shows how these disputes came into being by framing these dynamics as part of a long historical process. Novel insights are gained by employing the state transformation framework and the concept of governance rescaling. Within this framework, we argue that the ambiguous nature of the ISPO results from complex interrelated processes of fragmentation, decentralization and the internationalization of the Indonesian state.

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“…After the independence of Indonesia in 1945, however, palm oil lost its paramount status for the Indonesian economy. It had a renaissance as a national commodity under the Suharto regime that took power in Indonesia in 1966 and first ramped up public investment in palm oil plantations and then, aided by the IMF, channeled private investments into the sector (Choiruzzad et al 2021).…”

“…The real boost for the Indonesian palm oil sector, however, only came with the fall of the Suharto regime in 1998 and the subsequent democratization. Choiruzzad et al (2021) identify three reasons for this: liberalization (i.e., foreign investments), state decentralization, and rising international demand led to Indonesia's current dominant position in the global palm oil sector. This, however, came not only with a lot of local corruption and mismanagement, but also with severe environmental destruction.…”

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“…According to the RSPO standard, oil palm production must collaborate to prevent deforestation. Meanwhile, the ISPO standard has received domestic and international criticism (Choiruzzad, Tyson and Varkkey, 2021). The European Union is concerned not only with environmental issues but also with the social consequences of oil palm production, such as poverty, land conflicts, and the erosion of indigenous peoples' social rights (Delabre and Okereke, 2020).…”

“…The other two studies address the issue of oil palm problems due to state policy. The first study chastised the Indonesian Standard Palm Oil (ISPO) certification for failing to adhere to the Roundtable on Sustainable Palm Oil (Choiruzzad, Tyson and Varkkey, 2021).…”

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“…Lin Che Wei is directly affiliated and allegedly received wages or funds from the three companies involved in this case after the successful export approval (PE) of CPO and its derivatives, including cooking oil. This irresponsible action certainly causes losses in various aspects with a quite fantastic amount (Choiruzzad et al, 2021). The Indonesian Anti-Corruption Society said that if it was calculated from the total direct cash assistance for cooking oil disbursed by the government for the community, it was estimated that the loss could potentially reach Rp5.9 trillion.…”