The cost of hesitation: Lessons from Asian national strategies on oil palm

By Lalith Obeyesekere, Secretary General, Planters’ Association of Ceylon

In his memoirs, Lee Kuan Yew described Ceylon as Britain’s model Commonwealth country, and took
note of the significant lead that then Ceylon had in terms of its resources, infrastructure and institutions when compared to the Singapore he had inherited, or to his immediate neighbours, Malaysia and Indonesia.

Where Singapore compensated for a lack of natural resources with a strategic expansion of its
services sector, Indonesia and Malaysia aggressively leveraged natural resources to fuel their
development.

Sri Lanka, blessed with the potential of all three, pursued neither strategy with any consistency. This
country has repeatedly identified a commercial opportunity early, built a credible position in it, and
then hesitated at precisely the point where scale was the only remaining task. Decisiveness, when it
eventually arrives, tends to be applied to halting and banning initiatives rather than building them.
The history of oil palm cultivation here is the clearest illustration of that dynamic, and the most
recent.

Charting the rise of Asian oil palm

India’s Cabinet approved the National Mission on Edible Oils, Oil Palm, committing Rs 11,040 crore
to bring an additional 6.5 lakh hectares under the crop by 2025-26. Both countries were net
importers of edible oil under foreign exchange pressure, reading the same crop, the same market
and the same body of international evidence.

Malaysia entered oil palm because rubber was failing. By the early 1960s the economy was
dangerously over-exposed to natural rubber, facing falling world prices and rising competition from
synthetics. A World Bank mission had recommended diversification in 1955, and the government
acted on it.

The instrument was the Federal Land Development Authority, established in 1956 with a mandate to
eliminate rural poverty. FELDA opened its first oil palm scheme in 1961 on 375 hectares, sited by soil
mapping that kept settlements off steep terrain and deep peat. The state supplied planting material
and guaranteed the purchase of fresh fruit bunches through central mills, removing the capital
barrier that ordinarily keeps smallholders out of tree crops.

The results compounded. Malaysia overtook Nigeria as the world’s leading exporter of crude palm
oil in 1966, and oil palm passed rubber as the principal economic crop in 1989. Planted extent rose
from roughly 55,000 hectares to 5.74 million, while national poverty fell from 49.3 per cent in 1970
to 5.6 per cent in 2019. No single Malaysian government built this. It was built by the absence of
reversal across many of them.

Indonesia went further, using the crop from 1986 to settle transmigrant families around corporate
estates that supplied inputs and milling capacity, and taking planted area from 1.1 million hectares in
1990 to over 15 million by 2021.

Expansion in both countries, at the outset led to extensive deforestation. That record is why palm oil
carries the reputation it does, and why any country entering the crop today inherits that reputation

whether or not it repeats the conduct. Which is precisely why what Sri Lanka did next deserves more
attention than it has received.

Sri Lanka chose the harder model

Commercial oil palm began here in 1968, when a European planter established 68 palms on half a
hectare at Nakiyadeniya Estate in Galle, which has expanded as of now. The Regional Plantation
Companies sought an alternative to increasingly unprofitable rubber on ageing extents that no
longer return a viable yield.

The agronomy is equally specific to this island. Sri Lanka’s oil palm sits within a wet zone receiving
3,500 to over 5,000 millimetres of rain a year, against a mature palm’s requirement of roughly 1,300.
Rubber’s difficulty is the mirror image, since that same rainfall limits tapping days and erodes
returns. Nakiyadeniya was certified by the Roundtable on Sustainable Palm Oil in 2020, the first such
certification in South Asia, placing Sri Lanka decades early at the position international certification
frameworks are now pushing the entire region toward.

The Government endorsed expansion to 20,000 hectares in 2016. But unlike Malaysia, Indonesia and
India, where smallholders were given a central place in the crop, cultivation here was restricted to
Regional Plantation Companies. Tea, rubber, coconut and spices all allow smallholder participation
and generate earnings at the grassroots. Oil palm did not, and that exclusion became the foundation
on which resistance to the crop was built.

Diverging paths

Economic exclusion surfaced as grassroots protest, and the reasons offered centred on the
environmental damage caused by expansion in Southeast Asia. By 2018 the Central Environmental
Authority had formalised those claims in a report attributing groundwater depletion, altered
weather patterns, soil compaction and biodiversity loss to the crop. No localised scientific study was
conducted to substantiate them. An economic question had become a political one.

Industry and academic experts have noted that the report drew substantially on secondary material
from other geographies and ignoring local research. Long-running observation at Nakiyadeniya, in
continuous cultivation for more than fifty years, shows no evidence of water table depletion. In
April 2021 the Government nonetheless gazetted a ban on cultivation and ordered the phased
uprooting of existing plantings, stranding roughly Rs 350 million in nursery investment alone.

India met the crop as a botanical specimen in Calcutta in 1886 and took nearly a century to act on it.
Then it moved. Between 2021-22 and 2025-26 it added 273,000 hectares, taking the total to 640,000
hectares by 31 March 2026 and producing 2.01 million tonnes of crude palm oil across 27 mills.
That was 42% of its target, yet a programme that fell well short of its own ambitions still brought
more land under oil palm in five years than Sri Lanka has in fifty-eight, and its shortfall alone is more
than thirty times our entire planted extent.

What the debate continues to ignore

Nobody seriously disputes the agronomy. Oil palm takes about 5.5 per cent of the world’s oilseed
land and produces over 32% of its oils and fats, which is why substituting it with any alternative
increases the land under cultivation rather than reducing it. Indonesia, Malaysia and India each
treated the crop as a food security problem with a technical answer. Their responses were imperfect

in different ways, but policy and science were the basis on which each steered. Sri Lanka converted
the question into a contest of sentiment, and has presented that as environmental principle while
draining foreign exchange to remain dependent on imported edible oil.

An expert committee has now recommended removal of the ban. Doing it properly means
cultivation confined by a defined national extent, and published local research so the next review is
settled on evidence.

None of that is novel. It is what the countries in this comparison learned at considerable cost, and it
is available to us without repeating it. What has been missing is the willingness to act decisively, and
to leave the decision standing long enough for its benefits to compound.