EU resolution: Preventing a palm oil war
Call me naïve, not “nationalist” enough, or both for not joining the cacophony of mainstream condemnation of what is perceived as deliberate moves to hamper Indonesian economic growth by restricting the consumption of a major export commodity.
I am referring to the recent and still ongoing uproar about the European Parliament’s resolution to reduce the use of palm oil that is not produced according to sustainability principles.
In my view, calling it a “trade war” may be an oversimplification and calling for retaliation may not be that easy nor practical because some of the items that would be included in the retaliatory measures may not be readily substituted.
It would be far more useful and productive to use modern means to resolve the issues, by conducting an analysis of stakeholders in Europe of palm oil and what issues are relevant to each of them. Then, based on the findings of the stakeholder and issues analysis, we may come up with a strategy to resolve whatever may be the underlying source of contention by conducting a well-thought-through and targeted campaign that includes lobbying and any other legitimate means to counter the threat against our palm oil industry.
There may be people out there who do not like us and are deviously trying to make life difficult for us as some of the palm oil stakeholders in Indonesia suspect, but evidence may be lacking. The culprits that have caused the current turmoil are parliament members. They act according to what they perceive to be in the best interest – or reflect the view – of their constituents.
The fact that the overwhelming majority of the European Union voted for the resolution goes to show that this is what the majority of Europeans want and they are not industrialists that instigated the movement against palm oil because their businesses were threatened.
The resolution was drafted by Kateřina Konečná, a member of the European Parliament from the Czech Republic, who is rapporteur for the Committee on the Environment, Public Health and Food Safety. Far from being a capitalist, she began her political career as member of the Communist Party of Bohemia and Moravia and rose to become a member of the central committee of the party.
By conducting s stakeholder and issues analysis – there are public affairs companies in Europe that have the capability for doing just that – we may draw up a map of the main issues concerning palm oil and who the stakeholders related to the specific issues are.
Only then can we come up with a strategy to diffuse the issues through engagement with these stakeholders. Conducting a proxy war by asking the government to fight the resolution is not the most productive and effective way and may not necessarily produce the desired results.
Considering that almost 20 percent of our palm oil exports end up in Europe, this study is worth doing and we may well consider teaming up with Malaysia to share the costs. Since the two countries combined account for 85 percent of global palm oil production, we have a common interest here.
It is time for us to become more market-oriented. We need to know what the markets want and what they don’t. The European Parliament resolution cited deforestation, breaches of human rights and a lack of social standards as influencing the resolution. Remember that this is a resolution by the legislative body that will have to be enacted by the European Commission as the executive branch.
A strategy to counter the above issues may be to negotiate with the European Parliament on standards for the subjects claimed to be in breach and then carry out studies to verify or refute these claims using the same quantitative measures.
Where we may be in breach we should negotiate a time frame for remedial action, a very legitimate thing to do. The European Parliament not only criticizes, but offers a way out by means of a certification scheme to promote sustainable cultivation of palm oil. These are all subjects that public affairs companies can deal with. By doing so, we prevent an unproductive war of words and even more inflamed emotions in the process.
The palm oil industries of both Malaysia and Indonesia should sit together and come up with a modern solution instead of unleashing a torrent of emotional outbursts that escalate negativity without contributing any solutions.
There are monetary costs, but protecting a significant portion of the market is worth the cost that the industry should be willing to bear and share among all players. This may be the way to deal with other similar issues in the future as well.
Noke Kiroyan is the president director and chief consultant of PT Komunikasi Kinerja (Kiroyan Partners). Among his other current positions, he is president commissioner (non-executive chairman) of PT Bis Industries, chairman of Indonesia National Committee at the International Chamber of Commerce, commissioner (non-executive director) of G-Resources Martabe (previously know as Agincourt Resources) and several others.
Source: The Jakarta Post, April 22, 2017