Official Address By Mr Tharman Shanmugaratnam, Deputy Prime Minister And Minister For Finance, At The 10th Annual Roundtable Meeting On Sustainable Palm Oil

Dr Jan Kees Vis, President of Roundtable on Sustainable Palm Oil (RSPO)

Mr Darrel Webber, Secretary-General, RSPO

Professor Tommy Koh, Ambassador-At-Large,

Distinguished Guests, Ladies and Gentlemen,

Introduction

1. A very good morning and a warm welcome to friends and business leaders from Singapore and those who have come from abroad.  It is my pleasure to join you this morning at the 10th Annual Roundtable Meeting on Sustainable Palm Oil.

2. I hope you have had fruitful discussions during the various preparatory cluster meetings on current issues in sustainable palm oil and the challenges facing the sector.

3. Singapore’s role lies not in the growing or production of this important commodity or its by-products. Our role is essentially in the palm oil trade. 

4. We have the infrastructure, and the location next to the world’s top palm oil producers, that makes us a convenient and attractive base for major resource and commodity trading companies.

5. There are currently around 20 trading companies based in Singapore involved in palm oil trading activities, with other corporate functions based here too. Their turnover has grown rapidly in recent years.

6. Sustainability is gathering pace. Buyers are increasingly requiring palm oil products that come from sustainable sources.

7. As a result, palm oil industry players such as Wilmar have been getting their plantations audited so that they can sell their palm oil products to the European markets. 

8. RSPO’s certification will allow for a uniform global standard in ensuring that palm oil is produced in a sustainable way and that there is integrity of the trade in sustainable palm oil.

Increasing demand for Palm Oil as Food and Renewable Energy Source

9. The demand for renewable energy sources will increase.

10. While there are many sources of renewable energy, such as solar, wind and hydroelectric power to name a few, market assessments indicate great potential in biofuel. In particular, in palm oil as a source of renewable energy.

11. Palm oil is in fact the world’s highest yielding oil crop, with an output 5 to10 times greater per hectare than other leading vegetable oil.
 
12. Given its high yield and versatile application in a range of products from fuel to food, palm oil is gaining widespread adoption in favour of other crops.

13. A trade publication, Oil World, has forecasted that in 2020, world demand for palm oil will be 89.1 billion pounds, which is almost double the amount produced in 2001.

Importance of sustainable palm oil production – environmental and social impact

14. This rapid future growth makes all the more important that we address the environmental and social problems created in the course of palm oil production.
 
15. The key issue concerns the potential role of palm oil plantations in deforestation, leading to carbon dioxide emissions and haze pollution, as well as increased vulnerability to floods and droughts in the region. This is besides the loss of biodiversity and problems affecting the livelihoods of the local community and indigenous peoples .

16.  Deforestation as we all know removes “carbon sinks”, leading to increased greenhouse gas emissions.  In Southeast Asia, the major source of deforestation has been the clearing of forests to create land to grow palm oil.

17. A new study by researchers at Stanford and Yale universities has highlighted the potentially massive rainforest destruction and carbon dioxide emissions that could result from the expansion of palm oil plantations within this decade . 

18. There is also a real risk that we will reach tipping points in forest conversion where critical biophysical functions are disrupted, leaving the region increasingly vulnerable to droughts, fires and floods. 

Haze impact on ASEAN

19. The other major problem is haze pollution.
 
20. Forests in the region continue to be cleared using slash-and-burn methods.  Fires that arise from such practices give rise to the perennial transboundary haze pollution. ASEAN has been grappling with this issue for many years.

21. The haze affects the air quality in the region, especially in neighbouring countries, quite apart from the effects in the areas where burning occurs. It affects people’s health, and inevitably livelihoods.

22. The Singapore Government has been working with local governments in Indonesia, such as in Jambi Province, to implement action programmes to prevent the occurrence of land and forest fires.  These action programmes include capacity building and training in fire-fighting, and initiatives that seek to establish alternative livelihoods for the local people. We hope that our contributions help augment the Indonesian government’s efforts in combating the transboundary haze problem.

23. However, this is not enough. It was noted at the recent 8th Meeting of the Conference of the Parties to the ASEAN Agreement on Transboundary Haze Pollution held on 26 September in Bangkok that the total number of hotspots that have been recorded in Sumatra so far this year were at its highest level in many years.
 
24. It stood at 12,750 as of September this year, a little higher than the previous peak year of 2006.

25. We have to do more, through joint efforts by the public and the private sectors to resolve this problem. 

26. The RSPO coalition is therefore important. You play a crucial role in enhancing corporate social responsibility within the community of oil palm plantation operators.

Practices for Sustainable Palm Oil Production

27. How do we balance the growing demand for palm oil against the impact of producing it?

28. Eliminating palm oil production is not viable. It will simply divert the demand to alternative edible oil crops which are of lower yield, and likely cause more harm to the environment in the long run. It is thus important to ensure that the palm oil is produced and sourced sustainably.

29. RSPO has gone about its mission systematically. It has established a set of standards known as the Principles and Criteria (P&C)  that defines the practices for sustainable palm oil production.

30. For example, the P&C include ensuring that new plantings since November 2005 have not replaced primary forest (or any area) required to maintain or enhance one or more High Conservation Values.

31. I understand that this set of Principles and Criteria approved in 2007 is undergoing its inaugural review. We all look forward to an enhanced and even more robust Principles and Criteria for sustainable palm oil production.

32. P&C does not mean Private and Confidential. On the contrary.

Every stakeholder must play a role in sustainable palm oil 

33. All of us have a role to play, be it palm oil growers, oil processors, consumer goods manufacturers, retailers, Non-Government Organisations (NGOs), investors and even consumers.
 
34. I encourage RSPO to intensify its work with buyers and consumers so that they better recognise the value of sustainable palm oil. We are not yet there, but must aim to create a “virtuous cycle” of demand and supply - ie a virtuous cycle of consumers, intermediaries and producers across the value chain with an interest in ensuring sustainable palm oil.

WWF’s Role

35. I also want to highlight and recognise the work of the NGOs who have worked hard to promote sustainability. 

36. The World Wide Fund for Nature (WWF) has made use of satellite technology to help identify companies responsible for forest burning. [http://www.eyesontheforest.or.id/?page=news&action=view&id=239] This will enable all stakeholders to apply pressure on  companies to enhance fire surveillance in their concession areas and eliminate illegal burning practices.

37. WWF and an NGO coalition called “Eyes on the Forest” which comprise WWF Indonesia, Jikalahari, and Wahli Riau have jointly developed a tool using the Google Maps Engine that can illustrate the impact of degraded forests and shrinking habitats for wildlife such as rhinos, tigers, elephants and orang-utan.  [http://maps.eyesontheforest.or.id/]

38. To better visualise the impacts over time, users of this tool can easily overlay layers of data - such as forest loss, species distribution, restoration priority areas, degraded lands and government protected areas, over satellite imagery.

39. WWF has also been supporting the work of RSPO, encouraging companies to use CSPO in the products they make and sell, and eliminating incentives for palm oil production that lead to the conversion of natural habitats. WWF came up with a Palm Oil buyer’s scorecard to score the palm oil purchasing practices of major European companies that make and sell everyday consumer products. Recommendations were also made to prompt consumers along, encouraging them to purchase from companies that have committed to sustainable palm oil production.

40. Investors matter can play a key role too.  WWF’s first-of-its-kind Palm Oil Investor Review 2012 has outlined how investors can play their role more effectively in promoting the development of a sustainable palm oil industry. I encourage investors to actively engage your investee companies to adopt sustainable practices.

41. If all stakeholders work together, we would be able to achieve RSPO’s aim of a global supply of palm oil that is produced in a socially and environmentally responsible way.

Perspective on RSPO’s progress

42. I am heartened to note that 61 RSPO trademark licenses  across 13 countries have been registered within a year and that many established companies within the industry -  food manufactures, traders and processors and retailers  -  have pledged commitment towards 100% Certified Sustainable Palm Oil by 2015.

43. Nonetheless, there is still a long way to go to achieve the virtuous cycle that I mentioned earlier. RSPO remains the most suitable platform for all stakeholders to work together to tackle the environmental and social challenges surrounding palm oil production.

44. With that, I hope that all of you will have meaningful discussions for the upcoming sessions this evening and tomorrow which would yield insights useful to your areas of interest.