The effects of India and China on the sustainability of palm oil production in Indonesia: Towards a better understanding of the dynamics of regional sustainability governance

Abstract

AbstractThere is a growing awareness and interest among scholars of the important role China and India can play in governing globalisation of economy. Recent literature has tended to emphasise the divergent development outcomes of producer and supplier countries engaged in value chains led by China and India. The different market preferences and legitimacy of private‐driven governance of China and India from developed economies such as the European Union and the United States bring about unsustainable development of countries supplying for China and India. Taking empirical evidence from Indonesian palm oil industry, this paper argues, on the contrary, that Indonesian palm oil producers keep commitments to progress towards sustainable production despite the rising importance of India, China, and other Global South economies as buyers and consumers along with the European Union. The Government of Indonesia also takes initiatives to facilitate the palm oil producers to reach a socially optimum sustainability over time. Buyers of China and India tend to require less restrictive sustainability standards of palm oil production than the European Union, but this is a matter of a temporal dimension of their domestic public interest and government policy priority on sustainability governance. The implication for research on sustainability governance in the Global South‐driven regional value chain is that attention should be paid to the lead of producers and their nation‐state in driving the value chains towards sustainable production and supply.