The Honduran palm oil industry: Employing lessons from Malaysia in the search for economically and environmentally sustainable energy solutions

Honduras is actively seeking ways to expand its palm oil industry for the purpose of processing biofuels for both internal consumption and export. This would be a critical juncture for Honduras, presenting an opportunity to move beyond the export of basic agricultural commodities and a history of path dependency and weak economic indicators. In order to glean lessons on how to approach palm oil expansion in the most effective manner, I turn to the Malaysian case. Once impoverished, Malaysia expanded plantations, promoted technological innovation, and provided financial incentives and tax structures to develop one of the most sophisticated palm oil industries in the world. In this paper, the insights to be gleaned from the Malaysian case are organized into three key themes: Governance, Investing in Research and Human Capital, and The Environment. Recommendations for Honduras include: increased collaboration with funding bodies, NGOs and universities to foster research; fiscal policies that support the development of a domestic market; and key environmental controls to ensure sustainability in the long term. These insights offer practical and pragmatic solutions not only for Honduras, but also the wider community of small, tropical, developing nations seeking to develop a viable biofuels sector.