The Panel of Examiners declares that the thesis titled “INDONESIA AND MALAYSIA COOPERATE IN PROMOTING PALM OIL THROUGH THE COUNCIL OF PALM OIL PRODUCING COUNTRIES submitted by Fauziah Sandini Pulubuhu with a degree in International Relations and has been evaluated by the Faculty. Accessed February 27, 2019. Indonesia and Malaysia lead the palm oil industry with 85% of the world's total palm oil production. Palm oil will be recognized as a commodity for driving the economic development of Indonesia and Malaysia due to the global demand that increases every year.
INTRODUCTION
- Background of Study
- Statement of Problem
- Research Question
- Research Objectives
- Significance of Study
- Literature Review
- Theoretical Framework
- Neo-liberal Institutionalism
- Complex Interdependence
- Absolute Gain
- Conceptual Framework
- Outline of Chapter
How Indonesia and Malaysia have cooperated through the Council of Palm Oil Producing Countries to promote palm oil. This study aims to explain more about the cooperation between Indonesia and Malaysia in the promotion of palm oil through CPOPC.. Interdependence supports the example of Indonesia and Malaysia regarding the development of the palm oil industry.
PALM OIL INDUSTRY
Palm Oil History
Palm oil in Africa was initially a plant that was a local ingredient and was left by small farmers. However, the European trading system initiated the large-scale expansion of palm oil by bringing palm oil seeds to several regions (Greenpeace, 2010). In addition, the long journey of palm oil led European countries to expand the palm oil industry and start investing in coconut oil production.
Palm Oil in International Stage
- Leading the Agricultural Sector
- International Standard for Palm Oil Sustainability
Import performance of palm oil produced in consumer countries on several continents, which will be described below. This standard will be the benchmark for any company, government or smallholder who will plant palm oil. The first palm oil standard to be formulated is the RSPO (Roundtable on Sustainable Palm Oil). RSPO is known as a non-profit organization that works with several stakeholders of the palm oil industry, such as producers, traders, non-governmental organizations (social and environmental) and consumers. good producers, bank investors and retailers, who will later provide each other with information on the development of globally certified palm oil, and in November 2005, the RSPO was used (RSPO, 2007).
THE ESTABLISHMENT OF COUNCIL OF PALM OIL
The Importance of Palm Oil to Indonesia Economic Development
- Industrial Development of Palm Oil in Indonesia
- Support Indonesia Foreign Exchange by Export Performance
- Palm Oil contribution to Indonesia GDP
- Palm Oil Contrubution to the Local Economies and Small Holders
- The Export Performance of Indonesian Palm Oil
The Importance of Palm Oil to Malaysia Economic Development
- Industrial Development of Palm Oil in Malaysia
- Malaysia Palm Oil to Economic National Development
- Providing Employment in the Palm Oil Industry
- Increase the awareness of Palm Oil use
- The Export Performance of Malaysia Palm Oil
Indonesia and Malaysia Palm Oil Upstream & Downstream Development
The Cooperation of Indonesia and Malaysia in Maintaining the Palm Oil
- Established Council of Palm Oil Producing Countries
- Ratifying CPOPC by Indonesia and Malaysia
The governments of the two countries recognize that it will be more beneficial for Indonesia and Malaysia to cooperate on palm oil sustainability. Makhdzir, who as Chief Executive of the Malaysian Palm Oil Association said that producer countries should share the responsibility of defending the resource (Daily Express, 2016). This will further ensure that the palm oil industry contributes to the economic development and well-being of the entire community (Malaysia Palm Oil Board, 2015).
The ratification of palm oil carried out by the President of Indonesia, Jokowi in strengthening the organization is stated in the Presidential Regulation No. 42 of 2016 regarding the Ratification of the Charter of Establishment of the Council of Palm Oil Producing Countries or known as CPOPC. In the annex of the President's decree, the ratification of the Charter of Palm Oil Producing Countries is necessary to become a legal umbrella for the Government of Indonesia to recognize the existence and operation of the Council of Palm Oil Producers in Indonesia.
Because by ratifying this charter, the Government of Indonesia has a legal umbrella to recognize the existence and operation of the Council of Palm Oil Producing Countries in Indonesia. These two countries produce about 85% of the world production of crude palm oil (CPO) (Rizal Ramli, 2015). Establishment of the CPO Producing Council or Council of Palm Oil Producing Countries (CPOPC) aims to promote, develop and strengthen cooperation in the palm oil industry between the member countries.
This will ensure that the palm oil industry contributes to economic development and human well-being.
Council of Palm Oil Producing Countries
- What is CPOPC Stand For
CPOPC's functions include promoting the palm oil industry among palm oil stakeholders of producing countries, improving the welfare of palm oil farmers, developing and shaping a global principled framework for sustainable palm oil, promoting cooperation and investments in the development of a sustainable and friendly palm. environment of the palm oil industry area and overcoming trade barriers to CPO (CPOPC, 2016). Several producing countries have expressed their interest in joining the CPOPC as a member, countries that have been mentioned are Africa and also America to join the palm oil organization, which aims to provide assurance for the sustainability of oil palm. of their country (Indonesia Investment, 2016). The CPOPC Secretariat also touched upon some criteria that can be drawn up to be met by producing countries as members of some criteria, which are regulatory standards that any minimum palm oil producing country must have in order to be able to provide contributions for better development when supported by soil. which is quite extensive (CPOPC, 2016).
Therefore, Indonesia and Malaysia that control 85% of oil palm should be a benchmark for some countries to set the price of oil palm because developed countries that consume palm oil import from Indonesia and Malaysia that when the production level drops or Indonesia and Malaysia determine policies nationally for palm oil it will also affect the export and import activities interwoven between the consuming and producing countries. The functions of CPOPC include promoting the oil palm industry among the oil palm stakeholders of the producing countries, increasing the well-being of oil palm farmers, developing and shaping a global principled framework for sustainable palm oil, promoting cooperation and investment in the development of the coconut. operating zone sustainable and friendly palm oil environment, and overcoming obstacles CPO trade (Indonesia Investment, 2016). As an intergovernmental organization focusing on Palm Oil sustainability, CPOPC has its goals that devote its attention to cooperation and economic development.
The Council intends to promote, develop and strengthen cooperation in the oil palm cultivation and industry between the member countries. This is to ensure long-term benefits of such palm oil efforts for the economic development and well-being of the people of the member countries” (CPOPC, 2016). CPOPC has scope to realize the sustainable and profitable of Palm Oil for the world and the member of the countries, In CPOPC the function is to promote Consultation on the development of the Palm Oil industry among the stakeholders, the well-being of the Palm Improve oil smallholders, Try to develop and establish a global framework of principles for sustainable palm oil, Promote cooperation and investment in the development of the environmentally friendly oil palm, cooperation in research and development as well as addressing obstacles to palm oil trade (CPOPC, 2016 ).
Encourage cooperation and investment in the development of sustainable and environmentally friendly palm oil areas, including green economic zones.
THE COOPERATION OF INDONESIA & MALAYSIA IN
Harmonizing ISPO & MSPO (Indonesia and Malaysia Palm Oil Standard)
Through the CPOPC, the two can easily combine the regulatory standards to determine oil palm development for the same goal of maintaining the sustainability of oil palm, which has become a commodity to help the economies of both countries. Previously, they still had a standard known as ISPO (Indonesia Sustainable Palm Oil) and MSPO (Malaysia Sustainable Palm Oil), both of which were in the regulations to set standards for palm oil, especially for palm oil companies. ISPO is known as Indonesia's mandatory palm oil standard, which aims to ensure that all producers meet the requirements to sustain production practices (Indonesia Sustainable Palm Oil Standard, 2016.
While MSPO is a voluntary organization that assists the Malaysian palm oil industry, it is officially certified, but MSPO is expected to be mandatory in the future (MALAYSIAN STANDARD, 2013). Both standards focus on system management, environmental protection, social welfare and economic progress, which Indonesia and Malaysia then realize through the CPOPC. The Indonesian government held an IPOC (Indonesian Palm Oil Conference) meeting in 2015 to discuss the future of palm oil, leading to a partnership with Malaysia that is expected to work on palm oil export tax structures that are mutually beneficial for the competitiveness of countries.
The government believes that this will be a mutually beneficial collaboration in adding value to the global palm oil supply chain (GAPKI, 2015). During the conference, the Indonesian government with several stakeholders attended the conference to jointly give an opinion on how the sustainability of palm oil in Indonesia and Malaysia can be recognized when the standard is met, and by establishing some of these principles, an agreement can be reached on they provide certainty for the palm oil industry, which indirectly encourages Indonesia and Malaysia to achieve mutual benefits in the supply chain (GAPKI, 2015). To ensure that the palm oil produced by the two largest countries is able to follow the rules of international standards that are binding and do not create the socio-environmental chaos that the industry accuses.
At CPOPC, harmonization of the national standard will support the implementation of sustainable practices through the two countries that have their power in managing 85-90% of palm oil in the world.
Palm Oil Green Economic Zone
- POGEZ in Riau
- POGEZ in Kalimantan
- POGEZ in North Sumatera
- POGEZ in Malaysia
- POGEZ effecting the increasing number of Productivity (Land and
The strategies begin with researching and developing land availability and observing production in each country's areas. Indonesia is one of the largest countries with a lot of palm oil land separated into different areas in the province of Indonesia and then take the initiative in providing the areas for Palm Oil Green Economic Zone and both have their responsible and different intentions to cooperate on the project. On the Indonesian side, the government wants to develop a green economic zone for palm oil in the industrial areas where palm oil is already being developed, i.e. Dumai Industrial Area, Riau, Bontang Industrial Area, East Kalimantan and the Sei Mangkei Industrial Zone, North Sumatra selected by the Indonesian government. As palm oil becomes one of the industries in which an advantage can be created in the areas, this shows great potential for Palm Oil Green Zone.
Dumai was chosen for an agreement between Indonesia and Malaysia in the CPOPC, the Indonesian government visited the regional government of Riau and private oil palm plantations to further discuss the development of the Palm Oil Green Economic Zone. Sei Mangkei is an area in North Sumatra that is ready to develop the Palm Oil Green Economic Zone. The local authorities, who see great potential when the Palm Oil Green Economic Zone is developed, then taking steps to cooperate with the company through promotion at home and abroad to attract investment in these areas.
It was then revealed how the two are approaching all palm oil stakeholders in the launch of the Palm Oil Green Economic Zone (Aubert et all, 2017). Lahad Datu, Bintalu and Tanjung Manis was identified as Palm Oil Green Economic Zone as those regions complement the Palm Oil Sustainability zone. The performance of palm oil Downstream Industries is increasing rapidly with the support of facilitation and Business Model through Industrial Clusternc Concept.
Development also started with land expansion and increased production supported by adequate infrastructure and then strengthening palm seed research and development to develop palm oil products for food or biogas (POIC Lahad Datu, 2018).
Good Agricultural Practice
- The Increasing Number of Palm Oil Labour / Worker
Stablizing CPO price in the global market by B20
Participated in The Global Forum
- World Trade Organization Public Forum
- CPOPC Joint Research with UNCTAD
