Environmental and social impacts of oil palm plantations in Malaysia

The main environmental and social impacts in Malaysia are a result of expansion of oil palm into forests and peatlands and into community lands especially customary lands of Indigenous peoples. There are more than 3 million indigenous people in Malaysia comprising 15% of the population. Due to lack of clear recognition of indigenous and customary rights – it is these populations that frequently are impacted by plantation expansion.

As of 2012, Malaysia has cultivated 5.1 million hectares for palm oil (15% of the country). This represents an increase of 26% in area since 2005, a period in which demand for biofuel has been part of driving this expansion.

The majority of this expansion has taken place in the state of Sarawak where 50% of the population comprises indigenous peoples. For example the area of oil palm developed on Peat in Sarawak in the year 2000 was 111,374 ha, while in 2007 it had increased to 329,552 ha and by 2010 was 532,931 ha or an increase of 383% in 10 years or average of 38% per year.

Increases in oil palm areas have also taken place in the Malaysian Borneo State of Sabah in the last 5 years. Sabah currently has 19% of its landmass under palm oil cultivation and is the number one producer for palm oil in Malaysia with 30% of the production originating here. It is also recognised as an area of rich biodiversity. It is the stronghold of the Malaysian orang-utan population with an estimated 80% of the nation’s orang-utan. Unfortunately, up to 40% of the orang-utans live in areas that are not fully protected and are desirable places for palm oil cultivation.

Although the Malaysian Palm Oil sector has often claimed that it does not contribute to deforestation, many studies have shown that in fact large areas of forest and peatland have been recently converted to oil palm. In Sarawak, for example, the area of oil palm developed in areas which were formerly peat swamp forest has increased from almost none 20 years ago to 437,174ha in 2009 comprising 37.5% of the area of oil palm in the state ( see Table 2). Numerous studies have confirmed that the development of oil palm plantations in former peat swamp forests leads to a massive carbon debt due to the high emissions of carbon dioxide from decomposition of the peat layer. Danielsen et al 2008 showed that cultivation of oil palm for biofuel on peatlands would only become carbon neutral after 600-1000 years. However, in practice due to subsidence and increased flooding – oil palm cultivation on peat may not be feasible beyond 100 years. Therefore encouragement of further oil palm cultivation on peat will lead to overall increased GHG emissions.

It has been argued that the demand for biofuel in Europe associated with the Renewable Energy Directive (RED) does not impact forests and peatlands because oil palm cultivated in such areas since 2008 are not eligible for subsidies. However, the reality is that increased demand for biofuel has diverted 45% of the European vegetable oil production for use as biofuels which in turn has driven similar increases in demand for palm oil to substitute the European grown oil for the food industry. In addition, purchases of palm oil directly by biofuel producers such as Neste oil has directly increased demand for oil palm and so has led to expansion of plantations.

Even though the European Union traces the origin of the biofuel it purchases and ensures it comes from well-established plantations on mineral soils – it is having the impact to increase demand from the sector leading to indirect land use change and conversion of forests, peatland and community land. This is already leading to significant impacts on climate change, biodiversity as well as on local communities/indigenous peoples.

In addition to impacts from expansion of plantations – ongoing operations of oil palm plantations and mills have major negative impacts on the environment and local communities through pollution of the air and water sources, high use of pesticides and poor standards of worker’s safety and welfare.

On social impacts, the need for land for palm oil expansion has caused indigenous communities to lose their native customary lands or live under the threat of losing it. Indigenous Peoples count among the most poor in Malaysia, due to marginalisation from the mainstream society on account of the non-recognition of our rights as contained in both national and international customary law.

This conflict between communities and the industry is well documented and is especially evidenced by a long list of court cases most of which are still pending.3 Indigenous Peoples are also forced into schemes that have no regard to their customary right to their land, territories and resources.


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