China’s palm oil business in Indonesia: Foreign investor driven transitions, sustainability tensions and local negotiation

Project led by Monica Tan & Karin Qiao-Franco from the University of Melbourne

Driven in part by Beijing’s “going out” strategy and the Belt and Road Initiative, Chinese companies have significantly expanded their overseas footprint. This includes surcharged Chinese outbound investment in Indonesia’s palm oil sector, reaching a total of USD 53.8 billion between 2013 and 2020. In recent years, Chinese palm oil companies have become increasingly committed to reducing adverse environmental and social impacts. However, these companies are confronted with persistent challenges given the highly controversial nature of these businesses. Previous studies have identified unsustainable palm oil production as a key source of climate change and biodiversity loss. Moreover, the conversion of tropical forests and peatlands to palm oil plantations risks depriving the rights of Indigenous peoples and rural communities to forests, livelihood and culture.

This research project contributes to the place-based approach to sustainability transitions by highlighting the interaction and negotiation between foreign (Chinese) investors and the local environment and actors in the contentious palm oil industry. Despite their importance, foreign investors in place-based transitions have received limited attention. We intend to address this critical gap by examining the practice of Chinese palm oil companies in Indonesia. China is the world’s second-largest importer of palm oil, and its palm oil business is overwhelmingly concentrated in Indonesia – the world’s largest palm oil producer and exporter. Research findings from this context will thus inform approaches to achieve sustainability in global palm oil production.

Two hands reach out holding seends from fruit on the ground

Image: Hernowo (55 years) of workers of palm fruit plantations, harvesting oil palm fruit onto trucks to be taken to a processing plant in Bintan, Sumatra, Indonesia. [Photo/IC]

Relevant resources:

The socio-environmental challenges for China’s palm oil business in Indonesia. (2022, September 4). Melbourne Asia Review.