Transnational business governance (TBG) initiatives and global south governments: lessons from palm oil producing community in West Sumatra, Indonesia

Abstract

ABSTRACT Based on interviews and participant observation in a community of small scale oil palm farmers in West Sumatra, Indonesia, this paper investigates to what extent the interaction between transnational business governance (TBG) initiatives and the governments in the Global South have influenced local producing societies. Responding to the growing influence of TBG initiatives on the palm oil supply chain, the Indonesian government founded its own sustainable standard, and also developed the biofuel industry to increase domestic demand for the product. The TBG initiatives and the responding policies of the Indonesian government had limited influence on the international vegetable oil market. But its responding policies had strong, often adverse impacts on local society. Being involved in the oil palm plantations, the local populations were able to raise their incomes, but experienced great, often conflict-ridden changes in the customary leadership and landownership systems, and vulnerability to price fluctuations.