Transnational Private Governance as a Developmental Driver in Southeast Asia: The Case of Sustainable Palm Oil Standards in Indonesia and Malaysia

Abstract

This paper explores why and how voluntary private sustainability governance initiated by corporations and non-governmental organisations (NGOs) extends its regulatory purview to incorporate developmental strategies aimed at upgrading smallholder practices. Using the case of palm oil in Indonesia and Malaysia and by extending insights from club theory, global production networks, and developmental states, the paper identifies the conditions under which private regulatory standards catalyse private developmental interventions that are nevertheless analogous to the industrial policies, financial incentives, and institutions of the classic developmental states. It was when the credibility of private sustainability standards was challenged by the low-yielding and environmentally-unsustainable cultivation practices of smallholder growers of palm oil that private governors and globally-oriented palm oil corporations who depend on smallholder suppliers worked with NGOs to support smallholder agricultural upgrading, in turn enhancing productivity, sustainable cultivation practices, and livelihoods. Such private developmental interventions involve supply chain mapping, knowledge service partnerships, and brokered overarching meta-partnerships that may be regarded as functional analogues of classic developmental state practices and institutions, namely performance monitoring, technological support, and coordination of multiple actors to form wider innovation networks.

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