The cost of hesitation: lessons from Asian national strategies on oil palm

In his memoirs, Lee Kuan Yew described Ceylon as Britain’s model Commonwealth country, and took note of the significant lead that then Ceylon had in terms of its resources, infrastructure and institutions when compared to the Singapore he had inherited, or to his immediate neighbours, Malaysia and Indonesia.

Where Singapore compensated for a lack of natural resources with a strategic expansion of its services sector, Indonesia and Malaysia aggressively leveraged natural resources to fuel their development.

Sri Lanka, blessed with the potential of all three, pursued neither strategy with any consistency. This country has repeatedly identified a commercial opportunity early, built a credible position in it, and then hesitated at precisely the point where scale was the only remaining task. Decisiveness, when it eventually arrives, tends to be applied to halting and banning initiatives rather than building them. The history of oil palm cultivation here is the clearest illustration of that dynamic, and the most recent.

Charting the rise of Asian oil palm

India’s Cabinet approved the National Mission on Edible Oils, Oil Palm, committing Rs 11,040 crore to bring an additional 6.5 lakh hectares under the crop by 2025-26. Both countries were net importers of edible oil under foreign exchange pressure, reading the same crop, the same market and the same body of international evidence.

Malaysia entered oil palm because rubber was failing. By the early 1960s the economy was dangerously over-exposed to natural rubber, facing falling world prices and rising competition from synthetics. A World Bank mission had recommended diversification in 1955, and the government acted on it.

The instrument was the Federal Land Development Authority, established in 1956 with a mandate to eliminate rural poverty. FELDA opened its first oil palm scheme in 1961 on 375 hectares, sited by soil mapping that kept settlements off steep terrain and deep peat. The state supplied planting material and guaranteed the purchase of fresh fruit bunches through central mills, removing the capital barrier that ordinarily keeps smallholders out of tree crops.

The results compounded. Malaysia overtook Nigeria as the world's leading exporter of crude palm oil in 1966, and oil palm passed rubber as the principal economic crop in 1989. Planted extent rose from roughly 55,000 hectares to 5.74 million, while national poverty fell from 49.3 per cent in 1970 to 5.6 per cent in 2019. No single Malaysian government built this. It was built by the absence of reversal across many of them.

Indonesia went further, using the crop from 1986 to settle transmigrant families around corporate estates that supplied inputs and milling capacity, and taking planted area from 1.1 million hectares in 1990 to over 15 million by 2021.

Expansion in both countries, at the outset led to extensive deforestation. That record is why palm oil carries the reputation it does, and why any country entering the crop today inherits that reputation whether or not it repeats the conduct. Which is precisely why what Sri Lanka did next deserves more attention than it has received.

Sri Lanka chose the harder model

Commercial oil palm began here in 1968, when a European planter established 68 palms on half a hectare at Nakiyadeniya Estate in Galle, which has expanded as of now. The Regional Plantation Companies sought an alternative to increasingly unprofitable rubber on ageing extents that no longer return a viable yield.

The agronomy is equally specific to this island. Sri Lanka's oil palm sits within a wet zone receiving 3,500 to over 5,000 millimetres of rain a year, against a mature palm's requirement of roughly 1,300. Rubber's difficulty is the mirror image, since that same rainfall limits tapping days and erodes returns. Nakiyadeniya was certified by the Roundtable on Sustainable Palm Oil in 2020, the first such certification in South Asia, placing Sri Lanka decades early at the position international certification frameworks are now pushing the entire region toward.

The Government endorsed expansion to 20,000 hectares in 2016. But unlike Malaysia, Indonesia and India, where smallholders were given a central place in the crop, cultivation here was restricted to Regional Plantation Companies. Tea, rubber, coconut and spices all allow smallholder participation and generate earnings at the grassroots. Oil palm did not, and that exclusion became the foundation on which resistance to the crop was built.

Diverging paths

Economic exclusion surfaced as grassroots protest, and the reasons offered centred on the environmental damage caused by expansion in Southeast Asia. By 2018 the Central Environmental Authority had formalised those claims in a report attributing groundwater depletion, altered weather patterns, soil compaction and biodiversity loss to the crop. No localised scientific study was conducted to substantiate them. An economic question had become a political one.

Industry and academic experts have noted that the report drew substantially on secondary material from other geographies and ignoring local research. Long-running observation at Nakiyadeniya, in continuous cultivation for more than fifty years, shows no evidence of water table depletion.  In April 2021 the Government nonetheless gazetted a ban on cultivation and ordered the phased uprooting of existing plantings, stranding roughly Rs 350 million in nursery investment alone.

India met the crop as a botanical specimen in Calcutta in 1886 and took nearly a century to act on it. Then it moved. Between 2021-22 and 2025-26 it added 273,000 hectares, taking the total to 640,000 hectares by 31 March 2026 and producing 2.01 million tonnes of crude palm oil across 27 mills.

That was 42% of its target, yet a programme that fell well short of its own ambitions still brought more land under oil palm in five years than Sri Lanka has in fifty-eight, and its shortfall alone is more than thirty times our entire planted extent.

What the debate continues to ignore

Nobody seriously disputes the agronomy. Oil palm takes about 5.5 per cent of the world's oilseed land and produces over 32% of its oils and fats, which is why substituting it with any alternative increases the land under cultivation rather than reducing it. Indonesia, Malaysia and India each treated the crop as a food security problem with a technical answer. Their responses were imperfect in different ways, but policy and science were the basis on which each steered. Sri Lanka converted the question into a contest of sentiment, and has presented that as environmental principle while draining foreign exchange to remain dependent on imported edible oil.

An expert committee has now recommended removal of the ban. Doing it properly means cultivation confined by a defined national extent, and published local research so the next review is settled on evidence.

None of that is novel. It is what the countries in this comparison learned at considerable cost, and it is available to us without repeating it. What has been missing is the willingness to act decisively, and to leave the decision standing long enough for its benefits to compound.