In line with the central theme of this publication, the focus of this chapter is on palm oil as a transnational economic space. It will address the transnational changes in the industry in Southeast Asia, the relevance to the palm oil controversy, and how Malaysian corporations could become strategic players in ensuring sustainable palm oil production.

In the introductory chapter, Pye stated that “one of the key issues linking — and dividing — Europe and Southeast Asia is the controversy around palm oil”. An implied premise was that there has been a “transnational turn” in the oil palm industry since the mid 1990s and this coincided with the “rise of transnational activism” (Pye, this volume, Chapter 9), and perhaps this had brought Europe and Southeast Asia to a collision course in respect to the sustainability dimensions of the industry. In reality, the palm oil industry had undergone three major turns since the early twentieth century. The major developments with regard to the transnational context will be discussed.

Although the palm oil controversy has been analysed by Pye in this publication, this chapter provides some insight into the origins of the controversy and the changing emphasis of the campaigns by civil society over time. While the Roundtable on Sustainable Palm Oil (RSPO) has been established to address many of the issues surrounding the controversy collectively by various players in the supply chain, including civil society, this chapter will examine some strategic roles Malaysian corporations could take to ensure sustainable production of palm oil.

THE PALM OIL CONTROVERSY

The global production of palm oil has increased significantly over the past three to four decades, the major producers being Malaysia and Indonesia. The expansion in planted area and production in recent years was particularly rapid in Indonesia, which overtook Malaysia as the world's largest producer in 2007. In 2008 the total production of palm oil was 42.90 million tonnes, of which 19.10 million tonnes (44.5 per cent) was produced by Indonesia and 17.74 million tonnes (41.3 per cent) by Malaysia. The combined production of these two countries was 88 per cent of the global annual production (MPOB 2009). The world's largest users of palm oil are China, India, and Europe. In 2008 the European Union imported about 15.6 per cent of the world's total imports of palm oil.