24th November 2018
More information about the iterview can refer to the Harvard Business School Website. Read the full interview details here.
Our Senior Advisor, Mavath R. Chandran is interviewed by Valeria Giacomin in Paris, France on 25th June 2018. The topic is “Creating Emerging Markets Oral History Collection“.
In this interview, Mavath R. Chandran narrates his career in the Malaysian palm oil industry, in the process offering a nuanced and valuable picture of how the industry has evolved since it began under the aegis of the British Empire. His story begins in the late nineteenth century, when his father migrated to Malaysia from the Indian state of Kerala, seeking work with one of the biggest British plantation companies, Harrisons & Crosfield.
Chandran describes in detail the complex relationships between typically European managers and local staff, as well as how this relationship evolved over time up until—and even after—the region gained independence from British rule. He also reflects on the historical and ongoing struggle of race relations in Malaysia, between the majority Malay people, and the smaller—but very influential—Indian and Chinese minorities.
Against this backdrop, the Malaysian rubber industry was undergoing a major transformation, as commodity prices collapsed after the Korean War and the invention of synthetic rubber. In response, the government launched a crop diversification program, and palm oil emerged as best suited to both consumer demands and regional growing conditions.
However, the new crop was less labor-intensive and more cost-intensive than rubber, meaning that many former plantation workers were suddenly without a job, and without the means to cultivate their own palm oil. As a result, the government, in partnership with many major plantation companies, launched FELDA (the Federal Land Development Authority) to help organize poor, rural famers into smallholders growing cash crops. In the interview, Chandran—who assisted with the development of FELDA schemes while working in the private sector—explains why this program was so important, to both smallholders and private companies alike.
Chandran goes on to discuss the wave of nationalization—or, as he calls it, “Malaysianization”—that swept the region after the end of European colonialism in the 1970s and ’80s. He describes some of the downsides of favoring Malaysian interests at the expense of foreign investors, explaining the ramifications from the perspective of management and foreign markets. He also talks about the long-term consequences of that policy, in terms of the legacy of increased government-intervention in the economy and the presence of corruption.
Chandran concludes the interview by discussing recent developments in the palm oil industry, focusing specifically on how it has responded to increasing concerns about sustainability and environmental responsibility. Here he talks at length about how new standards for sustainable agriculture were negotiated and adopted, and about the ultimate formation of the RSPO, or Roundtable of Sustainable Palm oil, in 2003.
Although founders carefully worked with the legal codes of each grower country, Chandran admits that the implementation and enforcement of new sustainable growing measures through, what he calls “social audits,” remains challenging. Chandran also discusses the consequences of these new measures from an economic standpoint—how the industry is struggling to remain competitive and profitable.
