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Reducing Effluent While Raising Affluence:Water Pollution Abatement in MalaysiaHow did Malaysia manage to nearly eliminate its leadingwater pollution problem, without simultaneously blockinggrowth of the industry generating the pollution?

Jeffrey R. VincentHarvard Institute for International DevelopmentMarch 18, 1993

Introduction

Productionofcrude palm oil (CPO) in Malaysiamore than tripled between1975 and 1985 (Figure 1; p.2l). This expansion solidified the industry'Sranking as the largest in the world - it accounted for half of worldproduction and three-fourths of world exports in 19801 - and made it thecountry's second largest earner of foreign exchange by 19842 (Figure 2;p.22).

In 1975, the CPO industry also held another, more dubious, distinction:it was the country's worst source ofwaterpollution.3 Pollution caused by theorganic wastes from CPO mills was equivalent to pollution generated by apopulation ofmore than 10 million people (Figure 3; p.23). This was nearlyas large as the entire population of the country. No proven treatmenttechnology for palm oil effluent (POME) existed. Extrapolating from 1975pollution loads, the industrial expansion that occurred between 1975 and1985 should have increased the population-equivalent of the industry'spollution load to 33 million people.

In 1985, however, the population-equivalentpollution load actuallyfellto 0.08 million people (Figure 3; p.23). Professor Khalid of the UniversitiPertanian Malaysia has remarked, "Malaysia is one of the few tradedependent industrializing nations to move decisively against pollution in akey export industry.'''! How did Malaysia manage to nearly eliminate itsleading waterpollutionproblem without simultaneously blocking growth ofthe industry generating the pollution? What lessons does Malaysia's experience hold for other industries and other countries? Is it a unique case, ordoes it illustrate general principles for designing policies to improveenvironmental quality without sacrificing economic growth?

Malaysia is one ofthe few tradedependentindustrializingnations to movedecisively againstpollution in a keyexport industry.

© HIID, 1993. All rights reserved.Research partially supported by the Asia Bureau of the United States Agency for International Development.

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The Palm Oil Industry in the MalaysianSocioeconomic Context

The federation of Malaysia is a multiethnic nation of 18 million people inpeninsularand insularSoutheastAsia. Itwasfonned in 1963bythe unionofthefonner Britishcolonies ofMalaya (which had gained its independence in 1957and is now tenned Peninsular Malaysia), British North Borneo (renamedSabah),Sarawak, and Singapore(whichwithdrew from thefederation in 1965).Oil palm plantations and the palm oil processing industry are concentrated inPeninsular Malaysia The rest of this case refers primarily to this part of thecountry.

At independence Malaysia was a quintessential primary commodityexporter. It was the world's leading producer ofnatural rubber and tin. Thesetwo commodities accounted for 39 percent and 23 percent, respectively, ofitsexport earnings in 1965.5 A World Bank team that visited Malaya in the mid1950s recommended that the country diversify its economy, particularlythroughdiversificationofthe agricultural sector.6 Oilpalm wasone ofthe cropsit recommended. During the 19508, however, rubber prices were relativelystable, so only limited diversification occurred.7 Instead, estate-owners andsmallholders concentrated on replanting rubber and in other ways upgradingtheir plantations. Rubber remained the preferred crop when new land wasopened.

The shift to oil palm came in the 19608, when rubber prices began aprolonged decline. Evidence that palm oil prices moved counter-cyclicallycompared to rubber prices offered the prospect ofmore stable aggregate exportearnings. In 1962, the government announced that it would permit estates andsmallholders to use rubberreplantinggrants, whichwere financed outofexportduties on rubber, to establish oil palm.8 A Ford Foundation report in 1963reiteratedthe World Bank'scall fordiversification, and again recommendedoilpalm.9 Now, the response was dramatic (Figure 4; p.24): the area ofprivate oilpalm estates inPeninsularMalaysia increasedmore thansix-foldbetween 1960and 1975, and by 1975 it was two-thirds as large as the area of private rubberestates.

The government itself got directly involved in oil palm plantations. Sincethe establishmentofthe rubberindustry inMalaysia, there hadbeen apersistentgap between rubber yields on estates and smallholdings. This and relatedfactors, such as small land parcels, contributed to a general problem of lowincomes in rural areas. To deal with these problems, in the 19508 the government established various agencies to assist smallholders. Chief among themwas the Federal Land Development Authority, or FELDA, which was established in 1956. Unlike many otherdeveloping countries in Asia, Malaysia wasrelatively land rich. FELDA's mission was to develop new land and to providesettlers with the infrastructure, land holdings, and technical assistance theyneeded to raise their crop yields and their incomes.

Jeffrey R. Vincent

Spring 1993 Harvard Institute for International Development

FELDA's initial land development schemes were based on rubber. Itsfirst oil palm scheme was not established until 1961. Between 1965 and1975, however, three-fourths ofthe area developed by FELDA was plantedwith oil palm. FELDA's oil palm schemes represented fully two-fifths oftheland converted to agriculture in Peninsular Malaysia between 1965 and1975. Settlers in FELDA oil palm schemes enjoyed incomes that were 16percent higher than in rubber schemes.10

Most of the settlers in FELDA schemes were ethnic Malays, whoconstituted half ofPeninsular Malaysia's population in 1970. Historically,Malays have had a lower economic status than ethnic Chinese Malaysians,the country's second largest ethnic group (a third ofthe population in 1970).This was partially a consequence of the traditional rural basis of Malays'economic activities- rice growing, fishing, rubberand coconut smallholding - while the Chinese were typically engaged in retailing, commerce,manufacturing, and othermore modem sectors centered in cities and towns.

Many in the Malay community felt that the economic gulf separatingthem from other Malaysians widened in the decade following independence. Rural-to-urban migration increased, but Malays frequently found itdifficult to obtain jobs after they moved. When they did, the jobs weretypically low skill and lowpaying. Squatter areas, lacking in public servicesand with squalid conditions atypical of the bucolic kampungs that theMalays had left behind, sprouted around Kuala Lumpur and other urbancenters.

In May 1969, these conditions, kindled by fears that the Chinese wereadding political clout to their economic dominance, exploded into racialriots that left hundreds dead. This experience fortified the government'sresolve to attack rural and urban poverty and to reduce income disparitiesbetween ethnic groups. These two objectives formed the twin prongs of thegovernment's controversial New Economic Policy (NEP). The NEPguidedeconomic development between 1971 and 1990 and was arguably the mostambitious affirmative action program in the world. It granted variouspreferences - government hiring, scholarships for higher education, andshare-holding requirements for new investments - to the bumiputera(Malays and other indigenous ethnic groups).

Land development schemes by FELDA and other agencies became achief tool for fighting Malay rural poverty and providing economic optionsother than migration to cities. The schemes increased Malays' economicassets, as the settlers received title to the land after repaying a portion of thedevelopment costs at favorable interest rates. The agencies set up to developand administer the schemes and assist the settlers provided professionalemployment for Malay civil servants.

These agencies and the schemes became prominent not only because oftheir role in advancing the government's socioeconomicengineering objectives, butalso because they were well run. FELDA schemes have theircritics

Reducing Effluent While Raising Affluence: Water Pollution Abatement in Malaysia

Land developmentschemes by FELDAand other agenciesbecame a chief toolfor fighting Malayrural poverty andproviding economicoptions other thanmigration to cities.

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The land developmentprogram was integralto the government'seconomic and socialdevelopment policies,and increasingly itsfortunes depended onthe performance of thepalm oil industry.

The combination ofideal climate, suitablesoils, and sound management createdconditions for oil palmto thrive in Malaysia.

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- for example, those who argue that the schemes failed to tap settlers'initiative fully - butbenefit/costanalyses have by and large shownthat theyearned positive rates of return and succeeded in raising smallholder incomes. 11 The authors of a book on environmental problems caused bydevelopment in Peninsular Malaysia have conceded that the schemes were"one of the most successful forms of rural land development in the ThirdWorld."12 The land development program was a high profIle governmenteffort, integral to the government's economic and social developmentpolicies, and increasingly its fortunes depended on the performance of thepalm oil industry.

Palm Oil Processing and POME Pollution

L ike most of Malaysia's leading crops, the oil palm, Elaeis guineensis,is an exotic. It is native to Africa and was first planted commercially inMalaysia in 1917.13 Due to high returns to rubber, only minor expansion ofthe crop occurred during the next five decades. Nevertheless, during thistime estates gained valuable experience growing the crop, so when theWorld Bank and the Ford Foundation recommended it they were convincedit was viable.

Malaysia's soils are nutrient poor, like soils in much of the humidtropics. They have good physical properties, however, and decades ofresearchon rubber and estates' experimentation withoil palm had generateda good deal ofknowledge onhow to grow perennial tree crops on them. Thecombination ofideal climate, suitable soils, and sound managementcreatedconditions for oil palm to thrive in Malaysia. In fact, Malaysia is the onlycountry apart from the Congo where oil palm produces fruits year round.14

Oil palm fruits yield two commercially valuable oils. The middle layerofthe fruit produces palm oil, an all-purpose vegetableoil. Thenutorkernelyields palm kernel oil. Quantitatively, palm oil is the more importantproduct. A fruit cluster, or fresh fruit bunch (FFB), yields about eight timesas much palm oil as palm kernel oil, by weight. IS

FFBs must be harvested and processed as soon as they are ripe. If lefton the tree, they are devoured by rodents, birds, and other predators; ifharvested but not processed the same day, the oil is spoiled by the formationof free fatty acids.16 CPO mills must therefore be located on or adjacent tooil palm plantations. The processing needs of the plantations thus led to theestablishment of a large number of moderate-sized mills scattered aroundthe countryside, rather than a small numberoflarge mills concentrated nearexport points.

CPO mills' processing technology is relatively simple. 11 It is primarilya physical process, and has its origins in the technology used aboard whale

Jeffrey R. Vincent

Spring 1993 Haroard Institute for International Development

ships inthe 1800s. Figure 5 (p.25) shows the majorsteps. Mills require aboutone tonne of water to process one tonne ofFFB, arid therefore they tend tobe located on watercourses.18 FFBs are sterilized using steam to loosen thefruit and to arrest the formation offree fatty acids. The fruit is then strippedfrom the bunches by rotary drum threshing and pressed to release oil liquor.The oil liquor is sent to a clarification tank, where palm oil is decanted. Theunderflow or sludge from this tank is processed through a separator torecover residual oil. Oil from the clarification tank and the separator ispurified through centrifugation and finally vacuum dried. Nuts are recovered during the pressing operation, cracked, and processed using a hydrocyclone to yield palm kernel. POME is a mixture of the wastes generated bysterilization, clarification, and hydrocycloning. Mills generate 2.5 tonnes ofPOME for every tonne of CPO produced. '9

Like their whaler ancestors, CPO mills in Malaysia in the early 1970sdisposed of their waste by dumping it, untreated, into the nearest body ofwater.20 When there were only a handful of mills in the country theenvironmental impacts ofthis disposal method were minor. POME consistsmainly of dissolved organic compounds, which at low concentrations arereadily decomposed by naturally occurring microbes.

Between 1965 and 1975, however, the output ofCPO grew at a literallyexponential rate, as oil palm plantations in converted rubberestates and landdevelopment schemes began reaching maturity. The area ofmature oil palmplantations and the output of CPO doubled between 1971 and 1975 alone(Figures 6,1; pp. 26,21). The environmental impact of the rising POMEdischarge was worsened by the fact that most of Peninsular Malaysia isdrained by a relatively small number of major rivers. Although the millswere dispersed, many were on one of these rivers or their tributaries.Virtually overnight, CPO mills became the major source of water pollutionin almost every major river basin in the peninsula.

Pollution problems caused by POME relate mainly to its oxygendepletingeffects. Tonne for tonne, the oxygen-depletingpotential ofPOMEis one hundred times as great as that of domestic sewage.21 When dumpedinto previously unpolluted watercourses, POME is initially decomposed byaerobic (oxygen-requiring) bacteria. As decomposition proceeds, oxygen isdepleted. IfPOME discharge continues, the population of aerobic bacteriaeventually crashes. So do the populations of other organisms that requireoxygen, such as the fish, prawns, and other aquatic animals that provided asignificant share ofthe protein in the diets of riverine Malay villagers in the1960s and 1970s.22 By mid-1977, 42 rivers in Malaysia were so severelypolluted that freshwater fish could no longer sUlvive in them.23 Oxygendepletion also affected mangroves near river mouths, which provided vitalspawning and feeding grounds for marine organisms caught by traditionalMalay fishermen.24

When the oxygen concentration in freshwater falls below 2 parts permillion, most aerobic life cannot survive.2S Decomposition of POME


Like their whalerancestors, CPOmills in Malaysia inthe early 1970sdisposed of theirwaste by dumpingit, untreated, intothe nearest body ofwater.

Virtually overnight,CPO mills becamethe major source ofwater pollution inalmost every majorriver basin in thepeninsula.

By mid-1977, 42rivers in Malaysiawere so severelypolluted that freshwater fish could nolonger survive inthem.

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Malaysia's success indeveloping the largestpalm oil industry inthe world made it thefirst country to confront a severe POMEpollution problem.

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continues, but now by anaerobic bacteria that release hydrogen sulfide,ammonia, and other malodorous compounds.26 These compounds are toxicto fish ,27 and theirodor is notmerely anuisance. In the 1970s, some villagerswere forced to leave their homes and set up new villages because the stenchfrom CPO mills was so overpowering.28

Rivers and streams provided the majorsource ofdrinking water for ruralMalaysians in the 1970s.29 Water from anaerobic, POME-choked rivers wasunsuitable for human consumption, forcing villagers in some areas to digwells.30 Rivers were also the site ofintakes for municipal water supplies formost cities and towns. POME pollution raised the cost of treating water tomeet municipal standardsY While most CPO mills are not located in thenorthern rice-growing region of the peninsula, some farmers suspected thatPOME pollution was hurting their yields,32 although one study failed toconfinn this. 33 Finally, local people worried that POME clogging wascreating stagnant pools that were breeding grounds for disease-bearingmosquitoes.34

Between 1974 and 1978, CPO mills were the major source of waterpollution complaints to the government.35 The communist insurgency,which was still present in Malaysia into the late 1980s, used the pollution ofthe country's rivers and streams in its antigovernment propaganda. Itseemed inevitable that the problem would only get worse. The total area ofnewly cleared or immature plantations was nearly as large as the mature areain 1975 (Figure 6; p. 26). Worse, no technology for treatingPOME existed.36

Malaysia's success in developing the largest palm oil industry in the worldmade it the first country to confront a severe POME pollution problem.Unlike the 19th-centurywhalers, mills were notdischarging theirwaste intoa vast ocean miles from home, but into their country's own limitedfreshwater resources.

The Government's Policy Response, I:Prescribing a Remedy

The POME pollution problem put the government between a rock and ahard place. On the one hand, the government could not ignore the problem.POME discharge and the problems associated with it were already large, andthey were growing. The well-being of the rural poor, most of them Malay,was particularly affected. On the other hand, the government could not shutdown the palm oil industry. The government realized that it could notalleviate poverty without economic growth, and the palm oil industry wasa principal engine of the economy's growth. Land development schemeswere aprincipal means by which the government was attempting to raise theeconomic status of rural Malays.

Jeffrey R. Vincent


The government therefore proceeded finnly but cautiously. Its first stepwas to pass the Environmental Quality Act (EQA) in 1974. POME pollutionwas not the sole factor motivating the passage of the EQA (for example,rubbermills were also a majorsource ofwaterpollution), but it was arguablythe most important one. The EQA called for the establishment ofa Division(later Department) of the Environment (DOE). It authorized the DOE to"prescribe" particular classes of industrial premises and to require them toobtain a license before they could operate. The EQA authorized the DOE toattach license conditions related to pollution control. In detennining theconditions, the EQA directed the DOE to consider factors related to theeconomic cost of pollution control:37

(a) whether it would be practical to adapt the existing equipment, control equipment, or industrial plant to conformwith the varied or new condition;

(b) the economic life of the existing equipment, control equipment,or industrial plant;

(d) the estimated cost to be incurred l7y the licensee to complywith the varied or new condition.

The EQA did not similarly require the DOE to consider the economicbenefits of pollution control, but it did direct the DOE to "consider thequantity or degree of cutback of emission ... to be achieved by the variedor new condition."

A novel feature ofthe licensing provisions was the authorization to varythe size of the license fee according to:38

(a) the class ofpremises;(b) the location ofsuch premises;(c) the quantity ofwastes discharged;(d) the pollutant or class ofpollutants discharged;(e) the existing level ofpollution.

Provision (c) gave the DOE latitude to make the license fee equivalentto a pollution tax: mills that polluted more would be taxed more via thehigher license fee.

The DOE was established in April 1975, within the Ministry ofScience,Technology, and Environment,39 Its most urgent task was to fonnulatelicense conditions for CPO mills. In the year that had elapsed between thepassage of the EQA and the fonnation of the DOE, the populationequivalent of the CPO industry's pollution load had increased from 8 to 10million people (Figure 3; p. 23).


The governmentrealized that it couldnot alleviate povertywithout economicgrowth, and thepalm oil industrywas a principalengine of the economy's growth.

Suppose it is 1975 and youare thefirst head ofthe DOE.The EQA authorizes you todeal with the POMEproblemby attaching conditions to licenses for CPO mills. Howdo you determine the conditions to attach to the licenses?Bear in mind the lack of aproven technology for treatingPOME.

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The Government's Policy Response, II:Making Polluters Pay

The DOEbeganthe process offonnulating licenseconditions by fonning anexpert committee with representatives from both industry and government.40

The committee's assignment was to investigate possible treatment technologies and to advise the DOE on regulations that were ''not only environmentallysound but also sensible within the framework. of economic feasibility andavailable technology.''41

Suppose it is 1975 and youare the Director-General ofMalaysia's Economic Planning Unit. The Director ofthe newly formed DOE asksfor your input on license conditions for CPO mills. Whatadvice do you give him? Bearin mind the importance ofthepalm oil industry to economicdiversification andthe NEP'sgoals.

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The passage ofthe EQA, the establislunentofthe DOE, and the fonnationof the committee convinced the industry that the government was intent onreducing POME pollution. The industry began exploring treatment technologies and, through the committee and other channels, sharing infonnation onpromisingleads and dead ends. Although no off-the-shelftreatment system forPOME existed, systems for treating other types of organic waste had beendeveloped in industrialized countries.42 These systems typically involved aseries ofponds that provided properconditions for growing bacteria thatcouldfeed on the waste. Water containing the waste got cleaner and cleaner as itproceeded from one pond to the next The industry hoped it could adapt one ofthesesystemsandavoidthehigherR&Dcosts involvedindesigningatreatmentsystem from scratch.

The industry conducted laboratory experiments to hunt for sufficientlyvoracious bacteria and constructed pilot ponds and tanks to test ways to growthe microbes in the field. Itconsulted foreign as well as local experts.43The factthat foreign (mainly British) interests controlled much of the industry made iteasier to tap into foreign expertise.

Within two years the industry's efforts were bearing sufficient fruit toconvince the DOE that it need not wait much longer to exercise its licensingauthority. The environmental costs ofwaiting were escalating.The populationequivalent of the pollution load from POME rose by another 4 million peoplebetween 1975 and 1977 (Figure 3; p.23).

On July 7, 1977, the DOE armounced the Environmental Quality (Prescribed Premises) (Crude Palm Oil) Regulations.44 The regulations imposedstandards on eight parameters of POME: BOD (biological oxygen demand, ameasure of oxygen-dep1eting potential), COD (chemical oxygen demand,anothermeasure ofoxygen-depleting potential), total solids, suspended solids,oil and grease, ammoniacal nitrogen, organic nitrogen, and pH (Table 1; p. 18).The regulations requiredCPOmills to applyforanoperatinglicenseevery year.In their applications, mills needed to describe their system for treating anddischarging POME. The DOE could reject a mill's license application if itdisapproved ofthe proposed treatment system. Every three months mills alsoneeded to file "quarterly returns" inwhich they reported the amount ofPOMEdischarged and its composition, based on tests by independent laboratories.

Jeffrey R. Vincent

Spring 1993 Harvard Institute for International Development

The DOE also announced that it would make the standards increasinglystringent each year over four years. The first generation of standards wouldtake effect on July I, 1978. BOD was the key parameter in the standards.From the first to fourth generations, mills would be required to reduce theBOD concentration in their effluent from 5000 parts per million (ppm) one-fifth the level in untreated POME45-to 500ppm. The DOE warned theindustry that the fourth generation ofstandards would not be the fmal ones.46

The license conditions did not come as a surprise to the industry through the committee, the industry had been consulted as they weredeveloped - but this did not mean that they were pleased. Some companiesclaimed that the DOE had not sufficiently heeded the EQA's directive to"take into consideration, before attaching conditions to licenses ... whetherit would be practical to adapt the existing equipment, control equipment, orindustrial plant to conform with the varied or new condition."47 Followingthe DOE's announcement of the regulations, an engineer with one of thelargest plantation companies claimed that "The standards proposed appearharsh against the technology available."48 He continued,

What is quite clear at this stage is that there is no single generallyapplicable solution that is proven on a large scale, over an acceptable period of time.... there can be little doubt that the limits fordischarge will be very difficult to meet, except at a cost incompatible with the economics ofoperating a mill, unless there are unforeseen advances in technology.49

Other industry representatives concurred.so

The DOE stood its ground, despite the industry's complaints. It countered by pointing to several provisions that eased the burden of complyingwith the regulations. First, in phasing in the standards over four years, theDOE recognized that the industry needed time to construct treatmentfacilities, to gain experience operating them, and inother ways to move fromexperiment to practice. Informally, at least, the DOE weighed the environmental benefits of more rapidly implementing the standards against theindustry's cost ofmeeting the standards more quickly, and it found that thelatter exceeded the former.

Second, the DOE used the flexibility in the licensing provisions to relatethe size of the annual license fee to a mill's POME discharge. It recognizedthat mills that discharged less pollution degraded the environment less andtherefore should, according to the "polluter pays principle," be obliged topay less to operate. The license fee consisted oftwo parts-a flat processingfee of M$I00 and a variable effluent-related fee.sl If a mill dischargedPOME into a watercourse, the effluent-related fee was linked to the BODload in the effluent, with the mill required to pay M$lO/tonne ofBOD loaddischarged. If the mill discharged POME onto land, the fee was linkedsimply to the quantity of POME discharged, with the mill required to payM$O.05/tonne. Table 2 (p.19) shows the basic license fee that a mill wasrequired to pay for watercourse or land disposal, for various amounts of


------_.--,--

An engineer with oneof the largest plantation companiesclaimed that "Thestandards proposedappear harsh againstthe technology available."

In phasing in the standards over four years,the DOE recognizedthat the industry needed time to move fromexperiment to practice.

The DOE used theflexibility in the licensing provisions to relatethe size of the annuallicense fee to a mill'sPOME discharge.

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POMEandvariousBODconcentrations. HigherPOMEdischarge(forbothwatercourse and land disposal) and higher BOD concentrations (for watercourse disposal only) resulted in higher fees.

The DOE did not set the fees by estimating that M$l0 was the value ofthe environmental damage caused by an additional tonne of BOD discharged into awatercourse (e.g., the loss offish production or increasedcostof treating drinking water), and that M$0.05 was the value of the damagecaused by an additional tonne ofPOME discharged onto land (e.g., waterlogging). The DOE's officers, none of whom were economists, were moreuncertain about the level of the fees than any other part of the regulations.In the end, the DOE set the fees at levels that it guessed would provide someinducement for the industry to reduce its pollution emissions without beingonerous. If actual environmental costs were greater than the fees, then thefees did not induce a large enough reduction inpollutionemissions-loweremissions would have generated environmental benefits that more thanoffset the additional treatment costs incurred by mills. On the other hand,ifactual environmentcosts were less than the fees, then the fees induced toomuch reduction- higheremissions would have caused additional environmental damage, but the value of the damage would have been less than thetreatment costs saved by mills.

Mills could choose theleast-cost option:either paying the directcost of treating thePOME to meet thestandard, or paying theexcess fee todischarge POME witha BOD concentrationexceeding thestandard.

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Third, the DOE recognized that mills could substantially reduce theirpollution discharge even if they fell short of achieving the standard. Hence,it did not make the first-generation BOD standard mandatory. Forexample,amill that reduced the BODconcentrationofits POMEfrom the 25,000ppmtypical of untreated POME to 10,000 ppm would have reduced the BODload it discharged by 60 percent. Given the time needed to install treatmentfacilities and to get them up and running, such amill could well be on its wayto full compliance with the standard. The short-run environmental benefitsfrom cancelling the mill's license could be less than the long-run costs to theeconomy oflosing the mill's output.

The DOE pennitted mills to pay an excess license fee in lieu ofmeetingthe standard. The fee was linked to the BOD load in the POME and wasidentical for watercourse and land disposal, M$IOO/tonne of BOD loadabove the standard of 5,000 ppm. Table 2 (p.19) shows the fee for variousPOME and BOD levels. Mills could choose the least-cost option: eitherpaying the direct cost oftreating the POME to meet the standard, or payingthe excess fee to discharge POME with a BOD concentration exceeding thestandard. As in the case of the basic license fees, the DOE did not calculatethe level of the excess fee by analyzing incremental treatment costs andincremental environmental damages. Instead, it set the excess fee muchhigher than the basic license fee to induce mills to meet the standard.

Fourth, and finally, the DOE recognized that ongoing R&D wasnecessary for addressing the POME disposal problem. Therefore, it included in the regulations a provision authorizing it to grant a partial or fullwaiver of effluent-related license fees to mills conducting research on

Jeffrey R. Vincent


POME treatment. The industry had expressed its doubts about the effectiveness of proposed treatment systems at an operational scale; what if thesedoubts were confinned? The DOE warned the industry that it was notsatisfied with even the fourth-generation standard; could systems be developed to reduce the BODinPOMEto even lowerlevels? Following site visitsin 1976, a Japanese consulting finn pessimistically concluded, "Both initialand running costs for [a] mill waste treatment plant ... which can reduce thelevel of BOD in treated water below 500 ppm [the fourth-generationstandard] will be extremely high and the mill will be impossible to affordsuch high expenses."S2

To create an incentive for the industry to maintain its POME-relatedR&D programs, Section 17 of the regulations stated:

Ifthe Director-General [of the DOE] is satisfied that research on effluentdisposal or treatment ofa kind or scale that is likely to benefit the causeofenvironmentalprotection is being or to be carriedoutat anyprescribedpremises. he may, with the approval of the Minister, completely orpartially waive any effluent-related amount payable by virtue of [thelicense-{ee] regulation.

Even without the waiver, the effluent related fees created an incentive forresearch, as mills that succeeded indeveloping technologies for reducing theBOD in POME were rewarded by being charged lower license fees. Formills that had R&D programs, the waiver replaced this incentive with onemore explicitly tied to R&D activities.

When the regulations took effect on July I, 1978, the populationequivalent of the POME pollution load had increased by more than anothermillion people (Figure 3; p. 23). Since 1974, when the EQA was passed, thepopulation-equivalent had doubled. The DOE had not been fiddling whileRome burned, but it could not yet claim any tangible success in reducing thecountry's number-one pollution problem.


The DOE recognizedthat ongoing R&Dwas necessary foraddressing the POMEdisposal problem.

Should the Malaysian governmenthaveactedmore rapidly to reduce pollution/romCPO mills? Bear inmind thatthepollution-equivalento/theBOD load discharged by themills rosefrom 8 millionpeople in 1974, when the EQAwaspassed, to16millionpeopie in 1978,when regulationspromulgated under the EQAwere finally implemented.

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Harvard Institute for International Development

Performance of the Regulations

Spring 1993

The excess-feeprovision enabledthe industry to avoidundue treatmentcosts.

Should the DOE have maintained the excess fees on theBOD loaddischargedbymillsinstead of making the standards mandatory? Bear inmindthatduring thefirstyearof the regulations, when theexcess fees were employed,the average mill reduced theBOD load itdischargeddailyby only half the amount theDOE expected.

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The DOE was somewhat disappointed with the perfonnance of the regulations during the first year. On the positive side, the DOE collected asubstantialamount of revenue from license fees (fable 3; p. 20). Many mills chose to paythe excess fee rather than treat their effluent to meet the 5,000 ppm standard,which indicates that the excess-fee provision enabled the industry to avoidundue treatment costs. Forty-six mills (out of 130) paid license fees ofmorethan M$lO,OOO; seven paid more than M$lOO,OOO.s3 Most important to theDOE, the average mill reduced its daily discharge of BOD from about 220 to125 tonnes.

Although this was an impressive reduction, it was less than the DOE hadexpected, based on a calculation ofwhat was theoretically possible (Figure 7;p.27). The DOE had expected the average mill to reduce its daily discharge to25 tonnes. The DOE's high expectations were not met because so many millsopted to pay the excess fees.54 The DOE continued to receive complaints aboutwater pollution caused by CPO mills. In 1979, mills caused 17 incidents that"affected or temporarily disrupted the use of ... water bodies ... for drinking,fishing, agricultural irrigation and aesthetic uses."ss

TheDOEcouldhave responded byraisingthe basic andexcesslicensefees,since these fees were apparently 100 low to induce compliance with the BODstandard. (The impactofthe fees was perlIaps notas weak as itappeared; manymills had simply not yet begun operating treatment systems they were constructing). Instead, from the second yearonward the DOE made the standardsnot only more stringent butmandatory. It could now fine and ultimately cancelthe license of any mill that violated the BOD standard.

The DOE's resolve was soon tested. It learned that a mill in the state ofPenang was discharging effluent with a BOD concentration exceeding thesecond-generation standard of2,000 ppm. The DOE threatened to suspend themill 'slicenseifitdidnotcomplywithintwomonths.Themilldid, andnofurtheraction was taken.S6

Just a few months later, a violation by a second mill, coupled with aheadline-grabbing accident,pushed the DOEto take harsheraction.S7 The mill,on the Sungai (River) Langat in the state ofSelangor, had built huge holdingponds for its effluent instead of building a treatment system with sufficientcapacity.Themill ignoredrepeated warningsby theDOE,apparentlyconfidentthat the DOE would not suspend its license. In late October, 1979, the dikearound one ofthe holding ponds burst, flooding anearby village with tonnes ofpartially decomposed effluent. Although no villagers were killed, many losttheirhomes, livestock, andotherpossessions.Nationalnewspapers reported theaccident Backed by the public'soutrage, the DOE suspendedthe mill's licenseon November 2. Between 1981 and 1984, the DOE was to take legal actionagainst an additional 27 mills.s8

Jeffrey R. Vincent


During the second year, the average mill reduced its daily discharge ofBOD to 60 tonnes, half the level during the first year. Although this still didnot match the DOE's expectation, the discrepancy between performanceand expectation was much less than in the first year (Figure 7; p.7). Theanaerobic ponding treatment system was proving to be more successful, andmore affordable, than expected, at an operational scale. Mills had encountered some problems, such as a buildup of sludge in the pondgS9 orinsufficient land (which prevented a quarter of the mills from constructingadequate systems before the third yearofthe regulations),«J but they had alsodevised means ofovercoming these problems. Forexample,land-shortmillsdeveloped systems based on agitated tank digesters rather than ponds.61 Injust two years the regulations had reduced the population-equivalent of thepollution load from 15.9 to 2.6 million people (Figure 3; p.23), despiteincreases in the numberofCPO mills from 131 to 147 and the output ofCPOfrom 1.8 to 2.6 million tonnes (Figure 1; p.2l).

The BOD load continued to decrease in succeeding years. The industry's efforts to develop even better treatment technologies were given aboost in 1980 when the government established the Palm Oil ResearchInstitute of Malaysia (PORIM). A survey conducted by PORIM and theRubber Research Institute of Malaysia in 1980-81 found that 90 percent ofthe 40 mills surveyed were discharging POME with a BOD concentrationbelow the fourth-generation standard (500 ppm), and that 40 percent weredischarging POME with a BOD concentration below 100 ppm.62 Thesefindings and other evidence ofongoing improvements in treatment technology led the DOEto announce fifth- and sixth-generation BODstandards thatcalled for even lower BOD levels (Table 1; p.l8). In a concession to theindustry, the DOE eliminated the standards on COD, total solids, andorganic nitrogen, which the survey revealed had proved difficult for theindustry to meet. In 1991, three-quarters of CPO mills complied with thesixth-generation BOD standard, and more than four-fifths complied with theother standards.63 In 1989, the population-equivalent was less than onepercent of its level at the inception of the regulations (Figure 3; p.23), eventhough CPO production reached an all-time high (Figure 1; p.2l).

The industry's ability to reduce its BOD discharge has been facilitatedby not only improvements in treatment technology but also by the development, by it and by PORIM, of various commercial byproducts made fromPOME.64 As early as 1977, a Danish company saw in the forthcomingregulations a market opportunity and began marketing to mills a process toconvert separator sludge into animal feed. 65 By 1982, ten large pig andpoultry farms were using POME meal in their feed mixes.66 Mills thatdischarged POME onto land found that it had a fertilizing effect.61 Thisenabled many plantations to eliminate their purchase of fertilizers,68 whichsaved one company an estimated M$390,OOO peryear.69 In 1992, three millswith tank digesters were recovering methane, which constitutes 60 to 70percent of the gas generated during anaerobic digestion, and using it togenerate electricity for mill use.'O The industry has discussed sellingelectricity generated from biogas to the National Electricity Board." One


The industry's ability toreduce its BOD discharge has been facilitated by not onlyimprovements in treatment technology butalso by the development of various commercial byproductsmade from POME.

Page 13


Was the key to theprogram's successits 'carrot-and-stick'approach?

Most of the costswere ultimatelyborne by oil palmgrowers.

Page 14

analysis found that the payback period for the investtnent required to buildan integrated fertilizer/biogas recovery system wasonly 3.1 years.72 In 1984,four mills found uses for all their POME and consequently had zerodischarge.73

No study has analyzed which features of the regulations deserve themost credit for the massive reduction in the industry's pollution discharge.Were the innovative economic incentives in the regulations, such as theeffluent-related license fees, the excess fees (in the first year), and thewaivers for researchexpenditures, the key features? Orwere thekey featuresthe more traditional, command-and-control aspects ofthe regulations, suchas the mandatory standards (afterthe first year) and the DOE's authority, anddemonstrated willingness, to suspend or cancel licenses? Orwas the key thecombination of these features, a carrot-and-stick approach?

What is clear is that over time the regulations have taken on more of acommand-and-control flavor. An obvious change is the switch from excessfees to mandatory standards. Less obvious is the erosion of the economicincentives due to inflation. The DOE has never revised the effluent-relatedlicense fees in the 1977 regulations. The fees of M$lO/tonne of BOD (forwatercourse disposal) and M$0.05/tonne of POME (for land disposal)legislated in 1978 were worthonlyM$6.37 andM$0.03, respectively, in realterms in 1992. Due to their much higher incomes - Malaysia had the tenthfastest growing economy in the world during the last twenty years Malaysians undoubtedly place higher values on environmental quality thanthey did 15 years ago.

In spite of the fact that the industry grew even while it was facing theregulations, the regulations did impose costs on it. By 1984, mills otherthanthose owned by FELDA had spent an estimated M$100 million to constructand operate treattnent systems.74 In the end, who actually paid these costs?By 1985, Malaysiaexported mainly refined rather thancrude palm oil. Bothproducts are sold in an extremely competitive world market for fats and oils.This prevented the industry from passing the costs of treating POME ontoconsumers in importing countries. Instead, mostofthe costs were ultimatelyborne by oil palm growers, who have no outlet for FFBs aside from sales toCPO mills.75 The regulations made FFB prices lower than they would havebeen otherwise. Professor Khalid concludes,76

These findings serve notice to other trade-dependent industrializing nations that environmental protection need not impair overall competitiveness. However, [it] may significantly change the distribution ofreturns totrade.

Although estates and land development agencies footed most ofthe billfor the regulations, they did notprotestvociferously. Whynot? Although theeffect of the regulations on FFB prices was discernible through economicanalysis, it was not obvious in the marketplace. Moreover, in the 1980sestates and land development agencies faced a more obvious source of

Jeffrey R. Vincent


economic difficulties: labor shortages caused by the country's successfulindustrialization. Lack ofsettlers forced the government to slow the rate ofland development (Figure 4; p. 24) and to refonnulate FELDA schemes asessentially government-run estates. Private-sectorjobs created by industrialization lessened the need for state-sponsored agricultural development toachieve the government's socioeconomic goals. Rapid growth of othersectors explains why palm oil's share of the country's export earningsdeclined in the 1980s, even through the value ofexports continued rising inabsolute tenns (Figure 2; p. 22). One wonders what would have beenthe fateofthe regulations iftheirnegative impactonoilpalm growers had beenmoreobvious, and if the country had failed to diversify its economy into moreindustrialized sectors.

Reducing Effluent While Raising Affluence: Water Pollution Abatement in Malaysia PagelS

Haroard Institute for International Development

Endnotes

Ma Ah Ngan, YusofBasiron, and Mohd. Nasir Amiruddin,"The interdependence ofeconomic development and environmental quality in South East Asia: Malaysia as a casestudy" (unpub. ms., Palm Oil Research Institute of Malaysia, 1980), p.2.

2 International Monetary Fund, International Financial Statistics 1990.

3 A. Maheswaran and Godwin Singam, "Pollution control inthe palm oil industry - promulgation of regulations"(Planter 53:470-476, 1977), p. 470.

4 Khalid Abdul Rahim, "Internalization of externalities:who bears the costofpollution control?" (The Environmentalist 11:19-25,1991), p. 22.

5 International Monetary Fund, International Financial Statistics 1990.

6 Ma, Yusof, and Mohd. Nasir, op. cit., p. 2.


8 H.S. Khera, The oil palm industry ofMalaysia (PenerbitUniversiti Malaya, 1976).



11 Jeffrey R. Vincent and Yusuf Hadi, "Deforestation andagricultural expansion in Peninsular Malaysia" (Development Discussion Paper No. 3%, Harvard Institute forInternational Development, Cambridge, Mass., 1991), p.19.

12 RobertS. Aiken, Colin H. Leigh,Thomas R. Leinbach, andMichael R. Moss, DevelopmentandEnvironment in PeninsularMalaysia (McGraw-Hill International Book Company, Singapore, 1982), p. 158.

13 Vincent and Yusuf, op. cit., p. 15.

14 J. Thillaimuthu, "The environment and the palm oil industry: a new solution-the incineration of sludge" (Planter54:228-236, 1978), p. 229.

15 Ministry ofFinance, Malaysia, Economic Report 1992/93.

16 Aiken et al., op. cit., p. 169.

17 Aiken et al., op. cit., p. 8; Ma Ah Ngan, C.S. Chow, C.K.John, Ahmad Ibrahim, and Zaid Isa, "Palm oil mill effluenttreatment-a survey" (in Proceedings ofRegional Works1wp on Palm Oil Mill Technology and Effluent Treatment(PORIM Wortshop Proceedings No.4), Palm Oil ResearchInstitute of Malaysia, 1982), p. 123.


Page 16

Spring 1993

19 Ma, Yusof, and Mohd. Nasir, op. cit., p. 6; Ma, Chow,

John, Ahmad, and Zaid, op. cit., p. 125.


21 Maheswaran and Singam, op. cit., p. 470.

22 Aiken et al., op. cit., p. 183; A. Maheswaran, Abu BakarJaafar, and Godwin Singh, ''Water quality management inMalaysia" (unpub. ms. presented at symposium titled TheInterdependence ofEconomic Development and Environmental Quality in South-East Asia, held August 5-7,1980,at Miami University, Oxford, Ohio), p. 12.


24 Foo Gaik Sim and Rajinder Raj, "A review of currentresearch in treatment of palm oil mill effluent" (TechnicalReportNo.3, Standards and Industrial Research Institute ofMalaysia, 1978), p. 2-3.


26 Maheswaran and Singam, op. cit., p. 471; Shamsudin Hj.Abd. Latif and Jimat Bolbassan, "Report on study of theimpact of the effluent discbarge from Trengganu Development Management Berbad (1DMB) palm oil mill on thewater quality ofSg. Ransan, Sg. Tebak, and Sg. Kemaman"(WPC-0311B-381SR-05/81 , Department of the Environment, Malaysia, 1981), p. 2.

27 Shamsudin and Jimat, op. cit., p. 2.

28 The Star (Kuala Lumpur, November 2,1979).

29 Augustine S.H. Ong, A. Maheswaran, and Ma Ah Ngan,"Malaysia" (in Environmental Management in SoutheastAsia, edited by Cbia Lin Sien, National University ofSingapore Press, 1987), p. 17.

30 Aiken et aI., op. cit., p. 183.

31 Mabeswaran, Abu Bakar, and Singh, op. cit., p. 12.

32 Aiken et aI., op. cit., p. 180.

33 K. Kanapathy, "A survey of the quality of some padiirrigation water in Malaya and its interpretation" (Malaysian Agricultural Journal 46:286-297, 1968).

34 Shamsudin and Jimat, op. cit., p. 2.

35 Ho Yuen Chuen, "Control and management ofpollution ofinland waters in Malaysia" (Arch. Hydrobiol. Beih. 28:547556, 1987), p. 548.


37 Environmental Quality Act, 1974 (Act 127). Part III, Section 11.

Jeffrey R. Vincent

Spring 1993

38 Environmenlal Quality Act, Partm, Section 17.

39 Ong, Maheswaran, and Ma, op. cit., p. 15.


41 Ong, Maheswaran, and Ma, op. cit., p. 37.

42 B.J. Wood, "A review of current methods for dealing withpalm oil effluents" (Planter 53:477-495, 1977), p. 477.

43 Wood,op. cit., p. 477.

44 A. Maheswaran, "Legislative measures in the control ofpalm oil mill effluent discharge" (in Proceedings of theWorkshop on ReviewofPalm Oil Mill Effluent Technologyvis-a-vis Department of Environment Standard (PORIMWorkshop Proceedings No.9), 1984), p. 2.

45 Palm Oil Research Institute of Malaysia, "Environmentalquality and standard" (unpub. ms. prepared for 8th PalmOilMill EngineerlExecutives Training Course, held April 25,1986), p. 13.


47 Environmental Quality Act, Part m, Section 11.



50 For example, Thillaimuthu, op. cit., p. 228.

51 M$ =Malaysian dollar (ringgit) =US$O.40 in 1992.

52 Kurita Water Industries Ltd., "Palm oil mill wastewatertreatment" (mimeo, OS-GT-SO-REV, 1979), p. 1.

53 Department of the Environment, Malaysia, EnvironmenlalQuality Report 1981-84, p. 118.

54 Maheswaran, Abu Bakar, and Singh, op. cit., p. 22

55 Maheswaran, Abu Bakar, and Singh, op. cit., p. 7.

56 Business Times (Kuala Lumpur, November 3,1979).

57 The Star, op. cit.; Business Times, op. cit.

58 Department of the Environment, Malaysia, EnvironmentalQuality Report 1981-84.

59 C.F. Chooi, "Ponding system for palm oil mill effluenttreatment" (in PORIM Workshop Proceedings No.9, op.cit., 1984), p. 56.

60 Maheswaran, Abu Bakar, and Singh, op. cit., p. 22; Ong,Maheswaran, and Ma, op. cit., p. 41; Teoh Guan Eng,"FELDA-problemsofimplementation" (inPORlM Workshop Proceedings No.9, op. cit.), p. 97.

61 Ma Ah Ngan, ''Process control for anaerobic digestion ofpalm oil effluent" (in PORIM Workshop Proceedings No.9, op. cit.), p. 84.

62 Ma, Chow, John, Ahmad, and Zaid, op. cit., p. 123.

Harvard Institute for International Development

63 Department of the Environment, Malaysia, EnvironmentalQuality Report 1991, p. 112.

64 Ong, Maheswaran, and Ma, op. cit., p. 62-63.

65 E.V. Jorgensen, Inc., "Palm oil sludge-a profitable investment" (mimeo, 1977).

66 H.K. Jorgensen, "The U.P. decanter-drier system forreduction of palm oil effluent" (in PORIM Workshop Proceedings No.4, op. cit.), p. 209.

67 Maheswaran and Singam, op. cit., p. 471; Ma, Yusof, andMohd. Nasir, op. cit., p. 14.

68 Ma, Yusof, and Mohd. Nasir, op. cit., p. 14; YusofBasironand Ma Ah Ngan, "Currentstatus ofenvironmentalmanagement and regulations in the palm oil industry in Malaysia"(unpub. ms., Palm Oil Research Institute of Malaysia,1992), p. 15.

69 T.K. Tam, H.K. Yeow, and Y.C. Poon, "Land application ofpalm oil mill effluent (POME)-H&C experience" (inPORIM Workshop Proceedings No.4, op. cit.), p. 223.

70 Ma Ah Ngan, personal communication; Ong, Mabeswaran,and Ma, op. cit., p. 62.

71 K.H. Lim, S.K. Quah, D. Gillies, andB.J. Wood, "Palm oileffluent treatment and utilization in Sime Darby plantations-the current position" (in PORIM Workshop Proceedings No.9, op. cit.), p. 46.

72 S.K. Quah, K.H. Lim, D. Gillies,B.J. Wood,andJ. Kanagaratnam, "Sime Darby POME treatment and land applicationsystems" (in PORIM Workshop ProceedingsNo.4, op. cit.),p.194.

73 Maheswaran,op. cit., p. 9.

74 Lim Kang Hoe, "Problems of implementation by MOPGCmembers" (in PORIM Workshop Proceedings No.9, op.cit.), p. 95-96.

75 Khalid, op. cit., p. 24.

76 Khalid, op. cit., p. 25.

Reducing Effluent While Raising Affluence: Water Pollution Abatement in Malaysia Page 17

PARAMETER STANDARD A STANDARDB STANDARDC STANDARDD STANDARDE STANDARDF1.7.78 1.7.79 1.7.80 1.7.81 1.7.82 1.7.84

Biochemical Oxygen Demand 5,000 2,000 1,000 500 250 100(BOD), 3-DAY, 30"C: MOIL

Chemical Oxygen Demand 10,000 4,000 2,000 1,000 ----- -----(COD): MOIL

Total Solids: MOIL 4,000 2,500 2,000 1,500 ----- -----

Suspended Solids: MOIL 1,200 800 600 400 400 400

Oil & Orease: MOIL 150 100 75 50 50 50

Ammoniacal-Nitrogen: MOIL 25 15 15 10 100* 150*

Organic Nitrogen: MOIL 200 100 75 50 ----- -----

Total Nitrogen: MOIL ----- ----- ----- ----- 300* 200*

pH 5.0-9.0 5.0-9.0 5.0-9.0 5.0-9.0 5.0-9.0 5.0-9.0

Temperature,oC

;p~.....00

~~(:;~s·§....

Table 1Palm Oil Mill Wastewater Standards

Source: Department of the Environment, Environmental Quality Report 1981-84. "Value of filtered sample

iF~lit~~~

~S-

f....o'::ta

f....

en

]......<.0

~

~ ena ~

:::I.;:: ;:s("l

OQ~. Table 2 .....

<.0

~<.0

License Fees for CPO Mills, 1978 Standards w;::n:.;:s....~~I I License fees (ringgit) - by mode of discharge~l:l

Pollution DischargeVi'-.~

POMEoutput BOD Concentration Processing Basic license fee Excess feee Total feed~ (tonnes/day) (ppm) fee Water Landb Water Land Water Land;::

~n

I I I. Increasing POME output~

~I~ I 45,000 5,000 100 2,250 2,250 0 0 2,350 2,350

~E=I I 90,000 5,000 100 4,500 4,500 0 0 4,600 4,600:::t.0;:s

~I I 135,000 5,000 100 6,750 6,750 0 0 6,850 6,850go....~~....st· I I II. Increasing BOD concentration

€I 90,000 2,000 100 1,800 4,500 0 0 1,900

4,600 I ~~ Is· ~90,000 5,000 100 4,500 4,500 0 0 4,600 4,600 it

~90,000 10,000 100 9,000 4,500 45,000 45,000 54,100 49,600 I I~....n:.

90,000 25,000 100 22,500 4,500 180,000 180,000 202,600 184,600 I I~S'

a. POME output times BOD concentration (divided by one million) times M$10. I....b. POME output times M$O.05. c'

Sc. Applies only if BOD concentration exceeds 5,000 ppm: POME output times -tIdifference between BOD concentration and 5,000 ppm (divided by one million)~

~times M$l00.

~~

d. Processing fee plus basic licence fee plus excess fee. §....1.0 ....

Haroard Institute for InternatiotUll Development

Table 3License fees collected by the DOE

Year 1000 M$a

1978 2,768

1979 714

1980 714

1981 40

1982 219

1983 271

1984 254

1985 158

1986 281

1987 310

1988 335

1989 362

a. M$ = Malaysian dollar (ringgit) = US $.040 in 1992

Source: Department of the Environment. Malaysia. Environmental Quality Reports.

Page 20

Spring 1993

Jeffrey R. Vincent


Figure 1Growth of the Palm Oil Industry in Malaysia

Million tonnes Number

7 350

50

o

100

150

200

250

300

1990198519801970 1975

----------------------~ ............

3

2

4

o1960 1965

1

5

6

Year

• =CPO output

0= Mills


Haroard Institute for International Development

Figure 2Crude and Refined Palm Oil Exports by Malaysia

Spring 1993

Percent

15

12 -----------

9

6

3

Billion ringgit

5

4

3

2

1

o1960 1965 1970 1975 1980

Year

1985

o1990

Page 22

1 ringgit =US $0.40 in 1992• = Export shareo = Export Value

Jeffrey R. Vincent


Figure 3BOD Load from CPO Mills in Malaysia

Million people

20

1000 tonnesJday

2000

o

1500

199019851975 1980Year

19701965

o1960

5 ---------- -------- 500

10 ------------ -- - ------ 1000

15

BOD =Biological oxygen demando =Population Equivalent

o =Generated

* =Discharged


Haroard Institutefor International Development Spring 1993

Figure 4Ownership of Oil Palm Plantations inPeninsular Malaysia

1000 ha

1000 -----------------

~o ----------------------

~o --------------

~o ----

~o ----- ----------------

01l:..............a....-.......L-..I--...--I........L----40........--J..-4--L.-L..-4-.....L......L.....I

1971 1974 1977 1980 1983 1986 1989

Year

• =Estates0= FELDA*= Other

Page 24 JeJfrey R. Vincen t

Spring 1993

Figure 5Palm Oil Extraction Process

Haroard Institutefor International Development

IFRESH FRUIT BUNCHES

~STERILISATION: :: STERIUSER CONDENSATE I

!EMPTY BUNCHES

ISTRIPPING I I INCINERATOR I

FRUITS

~

IDIGESTION IJ FIBRE FOR BOILER FUEL I

IPRESSING:

-,NUTS: ~: NUT CRACKER IOIL LIQUOR t

I HYDROCYCLONE I .1 WASTEI,CLARIFICATION I...

~ ~TANK

IKERNE~ SHELL FOR

~ ~ BOILER FUEL

ISLUDGE I I OIL I~ !

ISEPARATORI CENTRIFUGEPURIFICATION

! ~ ~IOIL \ SLUDGE I VACUUM DRYING

WASTE ~ISTORAGE I


.._------------ ._~_.-

Page2S

Harvard Institutefor International Development Spring 1993

Figure 6Status of Oil Palm Plantations in Peninsular Malaysia

1000 ha1600 r-----------------_

1400 ----------------------

1200 -------------------- -

1000 ----------------- ----

800 ------------- --------

~o --------- ------------

~O ----- ----------------

200

O""'-~~+--"--"--I--.a.......<~fo---I""""--I--+---"'---"'--+--I.--I."""'"1971 1974 1977 1980 1983 1986 1989

* Year

• =Mature0= Immature*=Newly Cleared

Page 26 Jeffrey R. Vincent

~a~n~.

~~

~....

Figure 7Expected and Actual BOD Load Reductions in The Palm Oil Industry

.g>~o....~

m0C

Co)

m-w'i0c_.ennJm...

CCifCD

r- ~_.i:1.3_.SO- (I)....- ~o3~cg.~- SO

~....0"§.

~~

~~....

5000

19821981

Number of Mills (July 1, 1980) = 135Total Discharge = 14,200 tonnes/day

1980

Effective Year(Beginning of July 1)

197919781977

250

~ 200 ~ ==t--, I I I I 4000c

Co)

m-w150 I \ I '\.1 I I I 30000

0

0r-0mQ.

5· 100 I \ I I " I I I 2000\ <

-a:::J:::JCD

~ 50 I I ...... I I I I 1000""""m

'<500

Source: Maheswaran, Abu Bakar, and Singh, 0p. cit.

~~N

"

~~

~li)0

~o

~~

~~

~~

~go;:s

~go~~....So

~~

<1\50

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