Los resultados en la articulación institucional

Although today palm oil cultivation has massively extended to the islands of Borneo and Java, and even to Papua New Guinea, this study focuses on the geographical core of the cluster, where the first rubber and palm oil estates were launched prior to WWII: the Malay Peninsula, including Singapore, and, to a lesser extent, the island of Sumatra.

The decision to focus specifically on these two locations was based on the fact that these are the two core areas where the organizational structure of the cluster emerged prior to the introduction of the oil palm. In contrast, plantations were launched in the surrounding islands only later, in the late 1950s, mostly to extend the acreage of existing players; these, therefore, will not be included in the scope of this study despite now being integral parts of the cluster.

The Malay Peninsula and Sumatra were very homogenous in terms of ethnicity of the population, climatic and geographical features, and level of infrastructure. Further, especially during colonial times, their respective plantation activity benefited from proximity to Singapore and the linkages between the Western, Chinese, and Indian trading communities, involving a continuous exchange of know-how and technology (Chiang, 1970; Huff, 1993).

Because of the dominant role of Malaysia in the establishment of the cluster, however, the analysis focuses largely on the developments in the Malay Peninsula; meanwhile, Sumatra will remain mostly in the background as a reference point. Although the DEI remained a major international player in rubber and palm oil and a source of important agricultural knowledge during the whole colonial period, and especially in the 1920s (Joseph, 2008), the constitution of the cluster ended up being primarily a Malaysian affair, because the ownership and the centers of decision-making power lay in the British Empire more than on the Dutch colonial side. Although rubber had been domesticated almost simultaneously in

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Malaya and Sumatra, foreign (and mostly British) rubber players based in Malaya quickly became dominant, controlling not only the majority of acreage in the Peninsula but also vast proportions of the estates in North and East Sumatra. Whether or to what extent this is dependent on the two different colonial systems is beyond the scope of the present study and would require a more detailed analysis. Nevertheless, colonial regulation undoubtedly did matter in this regard: from the end of the cultivation system in 1870, the Dutch colonial authorities introduced an open policy towards foreign investment and land grants for natural resource exploitation which continued through the rubber boom in the 1910s. In contrast, British administration across all colonies became increasingly reluctant to grant land concessions to foreign firms. While generally more supportive to European plantation developers than its African counterparts (Johnson, 2007), the British colonial administration in Malaya became increasingly conservative from the 1910s on, placing restrictions on land alienation in a “romantic anti-capitalism” mood, aiming to “protect” Malay rural society and culture (Yacob, 2008). Therefore, when British agency houses such as H&C or Guthrie with large interests in British Malaya flocked into land-abundant Sumatra, the same did not happen for Dutch players in the Peninsula. As early as 1911, British agency houses controlled more than 60% of the plantation acreage in Sumatra (Swart, 1911). Once palm oil started to be developed in the Indonesian island, these rubber players could easily transfer the crop to their Malayan estates.

Finally, besides local factors, the role of Britain as the dominant colonial power and the influence of the City of London as the primary global financial center and major funder of rubber ventures in the region also helped to make rubber a largely British endeavor. In 1910, Malaysia alone accounted for 1.6% of British FDI stock, and in terms of sectoral distribution plantations it represented 2.6% of global FDIs (Fitzgerald, 2015 53-55).

As for palm oil, the cluster as it is today owes much more to the Malaysian side than to the Indonesian one. Although the early development of the crop remained primarily in the

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hands of planters in Sumatra, after WWII the industry shifted to British Malaya, as Indonesia gained independence and took over foreign invested properties, leading to the rapid decline of the industry under President Sukarno (White, 2012). British companies in Malaya developed palm oil as a major alternative to rubber in the post-colonial period and the new Malayan government handled the process of decolonization well enough to involve foreign companies in the development of smallholding schemes for the crop. Finally, it was Malaysian capital and knowledge that, from the 1980s, revived the Indonesian palm oil industry, of which it still owns a large share (Varkkey, 2013).

One final reason for prioritizing the Malaysian over the Indonesian angle in this analysis of the cluster is that Malaysia managed to use the existing cluster’s organizational structure as a means of simultaneously upgrading the local economy and integrating it into global markets. Despite the continuous frictions between different stakeholders of the plantation activity during decolonization, in Malaysia the cluster functioned as a channel of development and went from being a bastion of colonial exploitation to a driver of local growth, which later spread across the whole region and continues today. Without a doubt, Malaysia represents an exceptional case among most similar middle-sized developing economies, where the departure of colonial powers opened civil and ethnic conflicts, put in power corrupt and dysfunctional governments, and often led to long periods of economic stagnation and poverty before they could embark upon industrialization and access global trade networks.

As explained in the second and third articles below, although between 1945 and 1970 Malaysia was never entirely safe from ethnic and civil tension, political crises, or more or less explicit hostility towards the former colonial power, decolonization in the country involved a gradual shift from British to native rule in both the political and economic spheres. Although foreign investors never stopped expressing constant preoccupation during the nation-building process, in Malaysia foreign business activity continued its expansion

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and foreign investors were allowed to retain large shares of the surplus produced in the three post-war decades up to the 1970s, when the Malaysian government took the first steps to reduce foreign ownership. The massive British interest in the Malayan economy and the UK’s prolonged military presence in the country, even after independence, undoubtedly played a role in the direction that new Malaysia chose for its own development. However, the incumbent Malaysian Government did not necessarily espouse the development strategies inspired by the Washington consensus or World Bank and IMF propositions, and nor did it side with the communist powers and their anti-capitalist crusade as soon as British control waned. Rather, Malaysia embraced its own development formula, in line with the agenda of the Bandung Conference of 1955.