COMMUNITY ENGAGEMENT: AN INTEGRAL COMPONENT OF CSR FOR LOCAL DEVELOPMENT AND SUSTAINABILITY OF PALM OIL INDUSTRY.

Author:Radyi, Siti Amaliya Mohd
 
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INTRODUCTION

Palm oil is consistently outperforms all other substitute vegetable oils on price, it is also becoming an important feedstock globally. It has a huge range of uses including in foods--particularly biscuits, margarine, frying oil, sauces, ice cream, mayonnaise, chips, chocolate and livestock feed--and in other derivative products such as soaps, shampoo, cosmetics, paints, detergents, and grease in the metal and leather industries. Malaysia Palm Oil Industry (MPOI) has competitive advantages since Malaysia has over 100 years of experience in this industry as well a strong market leadership in terms of productivity and R&D. Today, Malaysia has become one of the largest producers and exporters of palm oil and palm oil products in the world with 44% of world export and 39% of world palm oil production. The industry provides more than half a million of employment. The MPOI has since undergone two further phases; from 1970 with the expansion of large scale planting had moved Malaysia to involve in extended upstream operations off-shore, particularly to Indonesia where adequate supply of workers, availability of land for plantation development and cost of production is lower than in Malaysia. But nevertheless, in order the companies to gain more business profit through the palm oil industry internationally, there are adverse effects on the element of CSR which involve natural environment, community or society, stakeholder relations and also origin country image. Whereby, in the management perspective, CSR seems to refer only to additional input to social charities and due to the social progression and evolution, now CSR is gradually considered as a manifestation of 'corporate citizenship' (Shiu & Yang, 2017).

LITERATURE REVIEW

Issues in Palm Oil Industry

Many scholars and activists have widely addressed the issues from production and plantation of palm oil which is deforestation, forest fire and haze, social conflicts and also the extinction of many species of animals (Gunarso et al., 2013; UNEP, 2007; World Bank Group, 2011; Zahari et al., 2005; and NGO's-RAN, FOE, SAWIT Watch, WENGO), which is later on will affect the quality of life of community surrounding the plantation. And there is also will incur inequitable of benefit sharing between the organization and local communities and adverse impacts to the indigenous people (World Bank Group, 2011).

The statistic shows that the palm oil industry is the main cause of rainforest destruction in Malaysia and Indonesia (UNEP, 2007). Whereby, Indonesia has third highest rate of deforestation in the world and the first highest rate of deforestation in the world goes to Brazil (Weisse & Goldman, 2017). However, this industry is still the most important industry for those countries since it becomes the main contributor for national economic. The intention to increase the national economic through this industry needs the palm oil companies to ensure that their business activities must sustain over the time in the global market. Yet, sustainability cannot be achieved without a good management strategic. Most of the palm oil companies take into consideration of doing CSR programme as one of their business sustainability strategic management programmes. Because of this reason, palm oil companies are expected to resolve many social, environmental and economic issues such as poverty, climate change and many more. Hence, the CSR becomes one of the strategic initiatives by the...

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