The advocacy roles of palm oil groups

Last week Bandung hosted the annual congress of the Association of Indonesian Palm Oil Companies (GAPKI). While this was routine for the association, it is imperative for the association to rethink its role as the vanguard of efforts to advance the country’s palm oil industry.

Palm oil is now Indonesia’s second-biggest export after coal. Despite its achievement, the industry is treated like a Cinderella, one that works hard beyond its means to satisfy its family, but is treated like a stepchild who is unrecognized and oppressed (The Jakarta Post, Jan. 12, 2011).

Looking at this Cinderella phenomenon, the new management of GAPKI should more actively voice its members’ interests, because there are perceptions that the association has not exercised its proper role as an industry association.

Policy-making and business interests have always been closely connected through lobbying. Lobbying is an act of “trying to influence the thinking of legislators or other public officials for or against a specific cause” (Accountability & UN Global Compact, 2005). 

In the business world, lobbying is part of “corporate political activity”, which certain interest groups engage in when they wish to influence political processes and decisions. In this sense, it covers a wide range of activities from advertising and other forms of public communication to stakeholder engagement, commissioning research, preparing position papers, launching legal action, or contributing to election campaign financing.

Interest groups, including corporations and associations representing corporations and the industry, have the political rights to influence public officials by voicing their interests. 

However, this right is legitimate only if it is balanced by the obligation to act responsibly, thus balancing rights and obligations. 

This can be referred to the notion of “corporate citizenship”, when companies involve themselves in the citizenship arena, exercising their rights to actively participate in societal decision-making.

Indonesia is bestowed with the right climate and a high availability of land, with appropriate rights to land, attractive enough for international and national investments. Also, we have a wide talent base for all levels of management, from top and operational, to manage an extensive palm oil industry.

With all these strengths, there are many development opportunities both in the upstream as well as down stream. Currently, we are the biggest oil palm exporter, servicing increasing demands for the world’s appetite for eco-efficient edible oil and energy.

We have a friendly investment law. The export orientation also induces sustainable palm oil-based management, with a growing adoption of international sustainable certification, servicing both established oil markets in Europe and now dominating markets in India and China.

The palm oil industry has been proudly contributing to Indonesian economy, providing a source of livelihood to about 3.3 million households and is increasingly important to Indonesian exports. However, when it is time to exercise its legitimate rights as a corporate citizen, there are many roadblocks that treat our palm oil industry like a Cinderella, as identified by a number of studies. 

First, there are lengthy and uncertain procedures to obtain necessary permits. There are various permits / licenses / approvals to be obtained from various government authorities on incorporation of the company, land ownership and plantation operational licensing. 

Investors, including farmers and smallholders may need a quite lengthy and costly process to obtain complete licenses. Therefore many companies and individual investors have been opting for acquiring local plantation companies or concessions to avoid the lengthy process, assuming the locals have already obtained the licenses.

Second, the governance challenges. The palm oil industry regulatory environment has been government-heavy with more revoking power and less dispute resolution. The regulatory regime gives government officials unprecedented power to revoke licenses, even for some trivial and unintentional ones. 

We have no system in place for typical notification, remedy, and appeal procedures. 

Therefore, palm oil companies and smallholders are reluctant to be seen as “activist companies”, actively voicing their complaints on unfair treatment. This is the role that should be taken over by the industry association, to avoid any repercussion towards a single company that files complaints.

Third, since May 2011, the President has instructed forest moratoriums, in which no licenses can be granted for about 64.2 million hectares for two years. GAPKI needs to work with the Forestry Ministry to get clarity on potential development areas outside designated no-go areas for oil palm plantation developments. 

Fourth, the palm oil industry also suffers from external threats without substantial help from the government, such as growing negative sentiments rising from foreign-based environment NGOs and also negative health campaigns from using palm-based vegetable oil. There’s been no substantial campaign supported by the government to counterattack the negative campaigns, like Malaysian government does for their industry. 

Fifth, on the supply of seeds, there is a limited supply of high quality seeds from the government’s palm seed institutions. Once again, our neighbor Malaysia provides more encouraging examples. 

Sixth, when the companies face difficulties with local communities, the government’s help is difficult to obtain and companies are left alone in the field. GAPKI needs to work with relevant government agencies formulate a new rule of engagement in dispute resolutions.

The challenge for GAPKI as an industry association is to establish a framework for responsible political lobbying, and rethink engagement practices that foster more collabo-rative approaches to public policy-making, such as igniting public debate to influence decision makers, so as to prevent an unnecessary and unfair regulatory environment. 

Lobbying should seek to affect public policy by providing key stakeholders, notably policymakers, with options in the policy-making process. GAPKI also needs to open and extend dialogue beyond the executive arm of government or legislators to civil society organizations and open a new chapter of relationships. 

Therefore, GAPKI can work together with all concerned parties and prove that lobbying can be a legitimate and valuable part of citizens’ rights in our democracy.

Lastly, GAPKI needs to spearhead efforts to create a comprehensive and visionary blueprint for the development of sustainable palm oil in Indonesia involving all arrays of stakeholders, particularly multi-government agencies, the private sector as well as civil society. This idea can materialize if GAPKI plays a facilitating role in bringing all stakeholders to work together in making the blueprint a reality.

It is imperative for GAPKI to build the industry’s resilience against internal and external challenges and threats and build capability to proactively influence policy making, and responsible lobbying as well as building public perceptions supportive to palm oil industry development.