Bio-economy for sustainable growth in developing countries: The case of oil palm in Malaysia and Indonesia

Abstract

Malaysia and Indonesia are two vivid examples of economic development built upon land exploitation. The concept of ‘bio-economy’ illustrates a pathway for countries to move on to a more sustainable course of development by creating added value downstream and diversifying away from primary production. Growing a local oleochemical industry was naturally the first step for Malaysia and Indonesia as the world's largest palm-oil producers. This was extended to biofuel production, which first aimed for export revenues. The biofuel sector later became an important buffer for the palm-oil industry to absorb excessive stock with domestic blending targets during low price periods. Meanwhile, the utilization of biomass for power generation has grown significantly for both exports and local use. Converting biomass into second-generation biofuels and other advanced bio-based materials has also attracted great interest from foreign investors. However, the high cost of biomass mobilization has limited the deployment of advanced biorefineries. One interesting option is to integrate waste management with the production of high-value bioenergy and biomaterials, adopting the model of a multi-feedstock biorefinery. While several bio-based industrial clusters were set up to attract investment with the consolidation of infrastructure surrounding major ports, more effort is still needed to explore and identify feasible business models with optimized supply chains. Cross-border cooperation may open new doors for building regional bio-based value chains. The ongoing digital revolution may provide breakthroughs in chain integration and technology deployment. © 2022 Society of Chemical Industry and John Wiley & Sons, Ltd.