When the State Brings Itself Back into GVC:The Case of the Indonesian Palm Oil Pledge

In the past decades, there has been an increasing fragmentation of governance, authority, and
institutions in the global value chain (GVC). The change from state to non-state forms of
authority can be seen from the emergence of many business regulations coming from outside
of the traditional state and interstate bodies. A number of scholars have highlighted a pattern
from state-led towards less state-led, market-based approaches and emphasized the inclining
substantial role of private governance (Pattberg, 2012). The overlapping regulations can create
confusion among the actors in the industry of whom to follow. From the government’s
perspective, to a certain extent the commitment of some GVCs initiatives can be deemed as
ignoring or bypassing their rules and rule-making authority. As a result, one party might be
undermined and excluded. Different stream of governance can undermine each other and result
in unsustainable governance. The exclusion of the state in addressing the sustainability issues
can have negative impacts on the industry as a whole.

Dermawan & Hospes (2018) underline the growing importance of standards. We will take a
closer look at how domestic private governance initiatives within GVCs can result in the power
dynamics between state and non-state actors through an in-depth analysis of the rise and fall of
the Indonesian Palm Oil Pledge (IPOP). IPOP is a form of cooperation between six palm oil
big companies with the shared goal of cleaning up the industry from deforestation, forest fires
and social conflict, but was disbanded after being framed by the Government of Indonesia
(GoI) as a threat to smallholder development, the state’s rule-making authority, and considered
the IPOP as an illegal cartel. The authors argue that there is a need to recenter the domestic
state institutions back into GVC analysis. The state is bringing itself back into GVC governance
because the collective actions of non-state actors of GVCs affects its sovereignty over the
territory, rulemaking, producers and economic organization.

In my presentation, I will discuss more about the paper and elaborate how this paper could be
related to my research topic. Lastly, I will share my interview plans.

Josephine Rakun Lunardi

A Research Fellow in Value Chain Analysis