Business News

Published: Tuesday March 19, 2013 MYT 12:00:00 AM
Updated: Wednesday April 24, 2013 MYT 1:34:15 PM

Indonesia leads in national palm oil certification

INDONESIA should be commended on its steady progress in awarding 10 plantation companies representing the first batch with the Indonesian Sustainable Palm Oil (ISPO) certification recently.

By mid-2014, all plantation companies, local and foreign owned, will need to obtain the mandatory certification to operate in the republic, which in turn is the world's largest crude palm oil (CPO) producer.

Failure in securing the ISPO within the stipulated period would likely see planters' licence revoked by the Indonesian authorities.

The ISPO also signifies the second such certified sustainable palm oil certification, after the introduction of the voluntary Roundtable on Sustainable Palm Oil (RSPO) certification initiated by a grouping of palm oil multi-stakeholders back in mid-2000.

To recap, GAKPI or the Indonesian Palm Oil Association which represents 500 member companies decided to pull out of the RSPO in October 2011 to show their support for Indonesia's own certified sustainable palm oil (CSPO) certification.

Apart from taking over Malaysia's traditional top spot in oil palm hectarage and CPO production, Indonesia has even moved ahead of Malaysia in terms of having its national palm oil certification. An industry observer said Indonesia even introduced an additional sustainable palm oil certification instead of being monopolised by the RSPO grouping.

Therefore given Indonesia's steady progress on the CSPO front, will Malaysia jump on the bandwagon soon? Apparently Malaysia is torn between choosing the right national collective certifications the earlier proposed Malaysian Sustainable Palm Oil (MSPO) certification under the purview of Malaysian Palm Oil Board (MPOB) or the latest Malaysian Responsible Palm Oil (Marespo) certification championed by the Malaysian Palm Oil Council (MPOC).

With only 14% of the local palm oil industry under the voluntary RSPO certification, Malaysia would seriously need to explore whether MSPO or Marespo should be made mandato ry.

Even at the MSPO formulation stage, many controversial issues were raised by industry players.

Some felt that the MSPO certification should be made voluntary given the stringent standards dictated by its custodian, the MPOB.

Such stringent standards could translate into high er costs whereby many planters do not not want to venture into especially when some of them had to endure the rigorous process of certifying their palm oil for RSPO certification.

At one point, major planters had to fork out about RM100 to produce just one tonne of certified sustainable palm oil under the RSPO.

Some quarters also hold the view that the MSPO or ISPO certifications could never be “credible” in the export market particularly if one were to benchmark with the existing dismal offtake of the RSPO certified sustainable palm oil to the Western countries.

To make a success out of MSPO or Marespo, the Plantation Industries and Commodities Ministry and its agencies, the MPOB and MPOC, should seriously review the various options and make a decision soon.

On the bright side, should the MSPO be implemented, industry sources said there were at least 10 local plantation companies that were producing over 2 million tonnes of CPO that can be certified immediately.

This is via tapping into the CSPO already produced by the Malaysian plantation companies that have secured the RSPO certification.

Tags / Keywords: News, Business

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