Fighting the Good Fight

Defending the Palm Oil Sector and Promoting Industry Sustainability

Contributing 4 percent to the national GDP, palm oil is the real liquid gold of Malaysia, and one of the leaders in the palm oil industry is IOI Corporation, which has extensive interests in upstream, midstream and downstream palm oil activities. It is therefore apt that Group Managing Director, Datuk Lee Yeow Chor, is recognised as a Captain of the Industry. This is further reinforced by him being a past Chairman of the Malaysian Palm Oil Council (MPOC) and the current Chairman of the Malaysian Palm Oil Association (MPOA).

International Business Review sat down with Datuk Lee Yeow Chor to find out his aspirations for IOI and the palm oil industry as a whole. Particularly, how he aims to counter that anti-palm oil campaign and enhance the sector’s reputation for sustainability.

Countering the Propaganda 

For Datuk Lee Yeow Chor, tackling the anti-palm oil agenda is vital especially since constant negative publicity has become heavily ingrained in the minds of Western consumers. There are two parallel ways of doing so. One is for industry players to ramp up effort to prove their sustainability credentials. The other is to counter the anti-palm oil rhetoric with facts and figures.

Datuk Lee is able to do just that, in a cool and collected manner which recalls his early days working in the Judiciary. As he tells IBR in a matter of fact way, “The main allegations against palm oil are that it causes deforestation and the loss of wildlife habitat. However, when you look at it on a global scale, oil palm plantations account for just 1.7 percent of agriculture land globally. And that is not significant when you look at the global picture.”

At the same time, Datuk Lee believes that those who criticise and condemn palm oil should consider the alternatives. “If we rely on other vegetable oils to fulfil global demand, we will need to use six to 10 times more land area, because oil palm has a yield that is six to 10 times more than alternatives such as soybean and sunflower.”

The Importance of Sustainability 

While dismissing much of the criticism against palm oil as unfounded and shallow, Datuk Lee Yeow Chor also believes that the sector should embrace sustainability. In fact, IOI Corporation as an industry leader is pushing for that, being one of the founding members of the Roundtable on Sustainable Palm Oil (RSPO) in 2005.

This global organisation, he explains, brings together all stakeholders – palm oil companies, food manufacturers, retailers and even NGOs – to come up with the principles and criteria to certify the sustainability of palm oil production. It was and still is the only established global sustainability certification body among 17 different types of vegetable oils.

RSPO certification has definitely paid off for IOI Corporation. As Datuk Lee reveals, “We have put a lot of focus on producing certified sustainable palm oil (CSPO) since we joined RSPO and our sales of CSPO accounts for 80 percent of our palm oil production. We have long-term sales agreements with multinational food companies that value sustainability and pay us a healthy premium for our sustainable palm oil.”

Speaking from the wider industry point of view, Datuk Lee highlights that the MPOA, of which he is the Chairman, has been actively encouraging members to practise sustainability and observe environmental, social and governance (ESG) principles, and part of this includes being certified under the RSPO or MSPO (Malaysian Sustainable Palm Oil) certification schemes.

The MPOA, incidentally, is the industry association which comprises palm oil upstream players with a combined 1.8 million hectares of plantations. “This,” he says, “is about half the total area of planted hectares in the country, excluding smallholders.”

If we rely on other vegetable oils to fulfil global demand, we will need to use six to 10 times more land area, because oil palm has a yield that is six to 10 times more than alternatives such as soybean and sunflower."

Datuk Lee Yeow Chor, Group Managing Director, IOI Corporation Tweet

Facing Challenges

While MPOA is encouraging the larger palm oil companies in Malaysia to join the RSPO, Datuk Lee is cognisant that there are certain challenges. As he explains, “Being a global organisation, the certification process for RSPO tends to be quite onerous and expensive, as it involves a lot of cost and is rather bureaucratic. Nevertheless, it is important that members of the palm oil industry show their sustainability standards.”

Aside from the RSPO, there is also the Malaysian Sustainable Palm Oil (MSPO) standard, which was introduced by the Malaysian government several years ago. Datuk Lee highlights that the goal was to certify all Malaysian growers, including smallholders – totalling 5.8 million hectares of planted land – by the end of last year. He is pleased to note that this has almost been achieved, at around 90%, although there are still some challenges for smallholders, he points out.

Datuk Lee Yeow Chor also cannot help but see the discrepancy in the Western world’s much publicised attitudes and their actual behaviour. As he tells IBR, “It is very ironic that, In spite of all the rhetoric about the importance of sustainability, only 50 to 60 percent of RSPO certified palm oil, totalling about 18 million tonnes, have been bought by food companies for Western consumers.”

The palm oil sector – upstream, mid-stream and downstream – has been a key contributor to Malaysia’s economic health. It is, as Datuk Lee Yeow Chor reveals, the third single-largest contributor to the GDP. It is responsible for 1 million jobs in the country, and brings in more than RM60 billion in export revenue annually, making it the fifth largest export. The efforts of industry leaders such as Datuk Lee Yeow Chor in battling the vast anti-palm oil interests should be lauded as a real national service.