Time to call EU’s bluff on palm oil


Prime Minister (PM) Tun Dr Mahathir Mohamad did not mince his words in the letter to French President Emmanuel Macron, calling him to reject plans to ban the use of palm oil in biofuels.

Failure to review the decision, he said, will force Malaysia to suspend free trade talks with the European Union (EU) and impose similar sanctions against French exports.

Given that he had once unleashed a “Buy British Last” campaign in the early 1980s over higher tuition fees for foreign students, a “Buy French Last” policy is certainly not impossible.

France and the EU are adamant about plans to phase out palm oilbased biofuels as early as next year.

“Of course, it would be best to find a compromise. But it looks like the position has hardened,” Sunway University Business School’s Prof Dr Yeah Kim Leng told The Malaysian Reserve.

Yeah said it is possible for Malaysia to impose higher tariffs on a list of French-made items including commercial aircraft, military equipment, cars, cosmetics and food products.

“In an extreme case, it could be a complete ban,” he said.

Under the “Buy British Last” policy, a bureaucratic red tape was imposed on all British imports and contracts.

Everything that came from Britain must receive the approval of the PM’s Office, which made doing business in Malaysia difficult and expensive.

Among the many deals that were affected by the two-year boycott include an initial agreement to buy US$1.95 billion (RM5 billion) in arms from Britain.

The agreement was later cancelled and Malaysia went on to order 18 MiG-29s from Russia and 18 FE-18 Hornets from the US instead.

Malaysia has long considered France’s Rafale jet, built by Dassault Aviation SA, as the frontrunner in its plan to replace the Russian MiG-29s that are now mostly grounded.

However, the escalating tension now puts the deal, said to be worth about US$2 billion (RM8.25 billion) involving the purchase of 18 Rafale jets, in jeopardy.

The rising animosity could also affect talks between Air- Asia Group Bhd and Airbus SE on developing an industrial aeronautical centre in Malaysia.

The idea was mooted after AirAsia X Bhd confirmed the purchase of 100 A330neos from the European aerospace group in July last year.

Recently, however, the budget carrier pledged its support to promote Malaysian palm oil.

Asian Strategy and Leadership Institute’s Centre for Public Policy Studies chairman Tan Sri Dr Ramon Navaratnam said it is important for Malaysians to be united and adopt policies that are consistent with national interests.

He said the EU’s claim that palm oil farming led to mass deforestation was hypocritical of the environmental destructions that came with other EUcultivated oilseeds.

“We should not be defensive. France is doing it to protect their own interest and promote their own products. As a developed country, they should promote development and encourage us to produce more sustainable oils, not put lopsided restrictions,” Ramon said.

Indonesia and Malaysia, who jointly account for nearly 90% of global palm oil supply, have long stressed similar restrictions should be imposed on the use of other vegetable oils as biofuels.

While the request seems fair, it is unlikely that the EU would pay heed to the appeal.

An all-out ban on all foodbased biofuel would be catastrophic for the region’s transportation segment — 70% of which is still heavily depending on biodiesel.

“We should call their bluff,” Ramon said. “If there is anyone who can do it, it is Dr Mahathir.”