Balancing and counterbalancing : the Indonesian state addressing pressures to improve palm oil sector sustainability

Pramudya, Eusebius Pantja


The thesis discusses the challenges of the Indonesian state in balancing economic development, social equity and environmental sustainability in addressing and responding to sustainable palm oil issues. The main objective of this research is to unravel the roles of the Indonesian state in balancing environmental sustainability and economic development in response to the different international and domestic demands. The thesis analyses four steering mechanisms of the state: finance, force, external coordination and internal coordination. The empirical cases of each governance mechanism are developed based on multiple case studies.

The first case study is about the different roles of the Indonesian state in arranging finance schemes for palm oil development. Based on the analysis of major change in the post-colonial history of the Indonesian political economy since 1945 until 2017, the study shows that the Indonesian state has adopted and combined different roles that reflected different political and economic regimes and their changes. Each role was used to promote economic development, albeit in varying ways.

The second case study is about the upsurge in the use of violence by the state to curb illegal plantations. There are five drivers identified from these disciplinary actions: security problems, pressure from non-state actors, state humiliation, contestation of the state’s legal authority and collective trauma. These drivers associate with the state to maintain its legitimacy. The outcomes of the disciplinary actions were constrained by a lack of policy coherence, challenges from powerful locals, violent resistance, and a lack of awareness of the development economics context of the Indonesian palm oil sector. The state employed repressive actions, which can be considered as an expression of eco-authoritarianism. However, in some cases non-state actors were also involved in planning and organising these actions, which can be seen as an expression of the green state.

The third case study is about various responses of the Indonesian state to the emergence of non-state initiatives promoting sustainability in the palm oil sector. As the world’s largest palm oil producing country, one would expect that the Indonesian state treats every non-state governance initiative as an interference. This was not the case. By 2015, the Indonesian state had given different responses to non-state initiatives: limited interaction with RSPO (Roundtable on Sustainable Palm Oil), confrontation with IPOP (Indonesia Palm Oil Pledge), and good collaboration with InPOP (Indonesia Palm Oil Platform). These responses of the state also depend on and differ much per actor constellation, the phases of development of the non-state initiative, and the governmental level involved.

The fourth case study explores the challenges of the Indonesian state to develop internal coordination for managing forest, land and plantation fire (FLPF). FLPF is a highly strategic and politically sensitive issue for Indonesia, which creates pressure from citizens, business, supranational and subnational NGOs, and neighbouring countries. The forestry and plantation authorities are involved in power bargaining and agency ideology competition. Generally speaking, the Indonesian state is struggling with financing an integrated action to manage FLPF. The presence of a national leadership willing to act decisively to develop internal coordination contributed significantly to the decrease of FLPF in 2016 and 2017.

Based on the findings of the four case studies, the conclusion is that the Indonesian state has been persistently supporting the palm oil sector, changing and adapting its roles under various political-economic regimes. A constant concern, though, has been the promotion of the palm oil sector for economic development. In the present situation of Indonesia, the state has been facing a two-fold challenge: modernising its economic development focus by addressing both social equity and environmental sustainability concerns, and managing the transition from an authoritarian regime to a democratic regime. Such a transition in political orientation demands the state be more sensitive to concerns of non-state actors. The state tries a new balance between an authoritarian and top-down approach with a participatory and bottom-up approach in governing the palm oil sector.