Malaysia hopes EU legislators will be accommodative on sustainable policies

By Danial Azhar and Ashley Tang

Malaysia said on Tuesday it hopes European lawmakers will be "more accommodative" on sustainable policies, following a proposal by the European Commission last week to delay the implementation of a law that would ban imports of products linked to deforestation.

The proposed one-year delay would help give producing countries time to take the necessary steps to comply and rectify their policies, particularly for small farmers who may have trouble meeting the costs and standards of compliance, Malaysia Plantation and Commodities Minister Johari Abdul Ghani told a palm oil forum.

Indonesia and Malaysia, the world's largest producers of palm oil, have strongly opposed the EU law, calling it discriminatory and aimed at protecting the bloc's oilseeds market.

"In the engagements we have made with EU, we are ready to comply. We just need a little bit more time for our small holders... the government will assist them to comply," Johari told a news conference at the event.

Malaysia has an estimated 450,000 small-scale producers, contributing to about 27 per cent of the country's total palm oil cultivation.

Johari said a transparent benchmarking criteria operated by EU regulators would also need to be closely looked over so as to not unfairly label producer countries as high-risk.

"In the spirit of trade fairness, we hope that the EU parliament will play a more accommodative role to address this matter," Johari said.

The EU policy, which requires companies selling soy, beef, coffee, palm oil and other products in the 27-nation bloc to prove their supply chains do not contribute to destruction of forests, was originally due to take effect on Dec. 30 this year.

Separately, Johari said Malaysia did not expect to face any issues arising from India's decision to raise a basic import tax on edible oils by 20 percentage points last month, as demand for Malaysian palm oil remained strong.

"We will continue to be a good partner to India... to supply sustainable palm oil," he said.

Johari said Malaysia has managed to overcome several prolonged production challenges such as labour shortages, with output on track to exceed 19 million metric tons this year, the highest since 2020.

The Malaysian Palm Oil Board previously forecast production at 18.75 million tons in 2024.