The local impacts of oil palm expansion in Malaysia; An assessment based on a case study in Sabah State

Abstract

This study is part of a broader research process assessing the local economic, social and environmental impacts from feedstock expansion for the growing biofuel sector (see German et al. 2011). Nonetheless, in the Malaysian context, biofuel production volumes are negligible despite government interest in promoting sector expansion. Since Malaysia is the second largest palm oil producer in the world, palm oil is slated to become the primary feedstock for biofuel production in the country. Since palm oil consistently outperforms all other substitute vegetable oils on price, it is also becoming an important feedstock globally. While a rapidly growing global biofuel sector could develop into an important new market outlet for Malaysia, it does carry a number of risks. This paper aims to reflect on these risks by exploring the local social and land-use impacts of oil palm in the Beluran District of Sabah State. This is based on household surveys to discover the perception of impacts among relevant local stakeholder groups, and remote-sensing analysis. While the impacts of oil palm in the study site cannot be attributed to the biodiesel industry per se, lessons learnt will be directly applicable to the biodiesel sector in Malaysia, and relevant for the whole Southeast Asia region.