Malaysia ready to take palm oil import bans to WTO

The European Parliament wants to ban the use of vegetable oil in biofuels by 2020


Malaysia will not hesitate take any palm oil import bans by members of the European Union (EU) to the World Trade Organisation (WTO) to challenge the legality of such actions, said Datuk Seri Mah Siew Keong.

The plantation industries and commodities minister said that is one of the proposals which will be discussed when he meets Indonesian officials early next month to discuss the rising campaign against palm oil in the EU.

The meeting with his counterpart scheduled from Nov 1 to Nov 3 would also look at other joint efforts that can be taken in response to EU’s potential ban on palm oil imports.

“We are collaborating with Indonesia to counter negative campaigns against palm oil by the EU.

“We will discuss measures that we could take, including the proposal by the Ministry of International Trade and Industry on the possibility to escalate the matter to WTO should there be any trade rule infringement,” Mah told the press yesterday.

Malaysia is the world’s second-largest exporter of palm oil after neighbour Indonesia. Both, Indonesia and Malaysia account for about 85% of the world’s total palm oil production.

The EU is the second-largest export destination for Malaysia’s palm oil after India.

Malaysia accounts for 29% of global palm oil production and 37% of world exports. Oil palm plantations cover over 73% or 5.7 million ha of agricultural land in the country and contribute RM38.5 billion to the nation’s economy.

The European Parliament wants to ban the use of vegetable oil in biofuels by 2020 and that will impact palm oil. Certain EU members are also being pressured to ban palm oil imports, citing producers failure to adhere to environmental commitment and ill-treating the labour force.

The inaugural meeting of the Council of Palm Oil Producing Countries next week would be critical for Malaysia and Indonesia to counter the growing protectionism against the commodity.

Malaysia is currently strengthening the Malaysian Sustainable Palm Oil for EU’s requirements and all players including the smallholders must comply to the standards.

Last week, seven Malaysian MPs, including from the Oppositions met with officials from the EU to provide the facts and scenarios about the palm oil industry.

Mah did not provide details and outcomes from the meeting,

Despite the rising import curbs, Mah is confident that Malaysia’s palm oil and commodities exports will exceed RM70 billion, an RM3 billion increase, or about 5% rise from last year’s RM67 billion.

He said Malaysia is looking for new markets for palm oil.

“New market is very important as we can’t rely on the traditional markets like Europe and India alone. We have done a lot of promotional trips to other countries like Iran, Vietnam and the Philippines, and we see big potentials from them,” he said.

The ministry has also proposed a higher allocation for marketing purposes in Budget 2018.

Mah said Malaysia’s palm oil production is expected to increase by two million tonnes this year to 19.5 million tonnes.

“The industry players are facing a shortage of labour to meet the production demand,” he said.

A dialogue session was held yesterday with the Malaysian Palm Oil Association to discuss various issues including the labour situation in the palm oil industry.

As at June 30, 2017, the total workforce in the commodity sector stands at 543,380, of which 62% or 337,340 workers are foreigners. About 77% of the workers in the palm oil sector are foreigners.