History

This small Malayan village, or kampong, photographed in the 1930s, is surrounded by newly planted oil palms. (Image © The National Archives)

Indonesia--The centre Palm oil production

Today, Southeast Asia is the centre of global palm oil production – with Indonesia and Malaysia producing around 85% of the world’s supply. But oil palms did not arrive there until 1848, when Dutch botanists planted four seedlings in the botanic gardens in Bogor (then Buitenzorg) on the Indonesian island of Java.

Before Palm Oil development

For about 50 years, before plantation development started in Indonesia, oil palms were popular ornamentals, planted along streets, in parks, and around administrative buildings and homesteads. Oil palm development made great and rapid strides in Southeast Asia at the start of the 20th century.

The gardens of the Palace of the Sultan of Johor in Johor Bahru, Malaysia. (Image: The New York Public Library / Alamy)

Adrien Hallet, a Belgian agro-economist, the pioneer of industrial palm oil in Indonesia. He arrived at 1909 with the Elaeis guineensis plant. In 1911, he got a business idea to create the first commercial plantation for a Palm tree in Asahan regency. The company name is Sucfindo

The Early Development of Southeast Asia's Plantation Economy

Much of the early development in Southeast Asia’s plantations is attributed to a Belgian entrepreneur, Adrien Hallet, who had acquired experience in industrial cultivation through the rubber trade in the Congo. Hallet noticed that Indonesia’s ornamental palms bore more fruit than those in Africa. Believing that conditions must be ideal for cultivation, he set out to establish his own plantations. He set up Indonesia’s first oil palm plantation at Poeloe Radja in Sumatra in 1911. Then in 1917, he helped two French planters develop Malaysia’s first commercial estate in Selangor. Foreign investors took advantage of the “open-door” policy and by 1936, Sumatra had surpassed Nigeria in palm oil exports.

(Image © The National Archives)

The Rise of Palm Oil Plantations in Southeast Asia Post-WWI

When demand for natural rubber – another major plantation crop in the region – declined after the First World War, palm oil provided an excellent option for diversification. Plantation companies, such as Guthrie, Barlow, and Hallet’s company Socfin, repurposed their existing rubber infrastructure for oil palm cultivation. Crucially, these companies laid the foundations for intensive oil palm agriculture in the colonial territories. By the time the Second World War broke out in 1939, there were over 100,000 hectares of plantation in Indonesia and Malaysia – with Socfin and Guthrie controlling over 50% of the global palm oil supply.

Impact of Colonialism and War on Southeast Asia's Palm Oil Industry

The region’s palm oil industry deteriorated during the Second World War. With major commerce hubs, such as Singapore and Malacca, under Japanese occupation, the infrastructure supporting palm oil supply faltered. Colonial administrators abandoned their posts or were detained, trade routes were blocked and plantations faced labor shortages. Exports dropped to a fraction of their pre-war volumes, and though Malaysian exports rallied in the post-war period, it was nearly two decades before Indonesia’s trade recovered.

Throughout the colonial expansion period in Southeast Asia, the cost to indigenous and local communities was high. People endured the imposition of the colonial system, including forced labor and the appropriation of their ancestral lands – exploitation that continues to this day.

Hundreds of thousands of immigrants from South China and India were also exploited, having been directed to foreign-owned plantations around Malaysia and Indonesia. The so-called “coolies” were put to work through indenture, a system of forced labor relying on debt bondage and violence

After President Sukarno proclaimed independence for Indonesia in 1945, there was a period of armed struggle between the new republic and the Dutch colonialists. Many Dutch-owned businesses were attacked, like this rubber plantation in Palembang, Sumatra, whose buildings were destroyed by the Indonesian army in 1947. (Image: The British Newspaper Archive / Alamy)

Other regions of Southeast Asia also experienced development for oil palm. In the 1970s, the International Development Association provided loans to Papua New Guinea to clear land for the development of agriculture, including oil palm concessions, cattle breeding and coconut plantations. (Image: Ray Witlin / World Bank, CC BY NC SA)

Expansion of Palm Oil Industry in the Mid Late-20th Century

Through the 1960s, the deteriorating political situation in postcolonial West Africa led to a decline in palm oil exports, while Southeast Asia’s palm oil industry continued to rapidly expand. Engineers and researchers who had worked in West Africa made their way to Southeast Asia to foster development and expand the smallholding sector.

After Indonesia’s transition to Suharto’s New Order in the mid-1960s, the government began fully supporting foreign companies and investment in oil palm development. By the 1970s, around 150,000 hectares of plantation had been developed in the country. With further investment from the World Bank and the Asian Development Bank, this number grew to 600,000 hectares by 1985.

Into the 21st Century

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