Palm oil in biodiesel ban will hurt global economy

The ban will make palm oil highly uneconomical and cause a 30% to 40% price hike

By SHAHEERA AZNAM SHAH / Pic By BLOOMBERG

The French National Assembly’s (FNA) recent decision to exclude palm oil use in biodiesel and cease tax incentives for the sustainable crop will hurt the rise of the global economy, said the Ministry of Foreign Affairs.

Its Minister Datuk Saifuddin Abdullah said the action is seen as a de facto ban as it will make palm oil highly uneconomical and cause a 30% to 40% price hike.

“This move will indirectly favour Europe’s home-grown products, specifically rapeseed and sunflower oils,” he said in a statement yesterday.

On Dec 19 last year, the FNA adopted an amendment for its 2019 budget to exclude the use of palm oil as a biodiesel feedstock and end tax incentives for palm oil.

On Monday, a letter from Prime Minister Tun Dr Mahathir Mohamad to President of Republic of France Emmanuel Macron was handed over to the French ambassador in Kuala Lumpur.

The letter explains Malaysia’s position on the FNA’s decision regarding the declassification of palm oil as a biodiesel feedstock in the country.

Saifuddin added that the palm oil has been treated with discrimination as other oil crops are not subjected to the same stringent requirements demanded of palm oil.

The Malaysian government has called on the European Union (EU) countries to reject moves that hinder the use of palm oil in biofuels.

“The move may infringe World Trade Organisation rules and goes against the spirit of globalisation and free trade, of which the EU countries have been so keen to promote and protect.

“Malaysia calls on our EU partner countries to treat us and our people as it would want themselves to be treated,” he said. He added that palm oil is among the most efficient and cost-effective oilseed crop that will benefit both producers and consumers.

“Also, there has been no reputable studies that conclusively indicate the adverse effect of palm oil to health,” he said.

Saifuddin further said Malaysian oil palm plantations have proven to be committed to the sustainable production of the crop as they were the first to acquire the Roundtable on Sustainable Palm Oil certification.

“Through the mandatory Malaysian Sustainable Palm Oil (MSPO) certification scheme, every drop of palm oil produced in Malaysia will be certified sustainable by 2020.”

Saifuddin said the judgement on palm oil by some European countries are heavily based on misguided perceptions and general assumptions that the sustainable oil is linked to environmentally harmful activities.

“The FNA has also decided to treat palm oil-based biofuel as a regular fuel and not as a green fuel.

“This seems to be based on the misguided perception and generalisation that palm oil is linked to deforestation. It is badly detrimental to the 650,000 smallholders and two million Malaysians who are highly dependent on the industry for their livelihood,” he said.

Saifuddin stressed that the current national forest cover has been acknowledged at nearly 55.3% of the total land area in the country.

“This is far higher than the forest cover in most large European countries including France, Germany, Italy and the UK,” he said.