Malaysia warns of damage to EU bilateral ties

Proposed act on palm oil by European Commission would hand a severe blow


Malaysia warned that the European Commission’s (EC) proposed delegated act — which accuses palm oil-producing countries of destroying the region’s natural rainforests — will harm the country’s relationship with the European Union (EU) .

Primary Industries Minister Teresa Kok (picture) said Malaysia and Indonesia, the world’s largest palm oil producers, will respond to the draft proposal which is open for public feedback until March 8, 2019.

“The Ministry of Primary Industries and its agencies are looking at the EC’s delegated act to deliberate on the response because the draft proposal will jeopardise Malaysia’s relationship with the EU, if passed.

“In fact, our delegation consisting of scientists and experts from the ministry are in Brussels, Belgium, at the moment to make a formal presentation to the EC about our position on the delegated act,” she said at the Malaysia-China Palm Oil Business Forum in Kuala Lumpur yesterday.

The EC published a draft proposal on Feb 8, 2019, suggesting that oil palm cultivation leads to significant de- forestation, and that the bloc will cease the use of palm oil-based biodiesel to meet the EU’s green fuel targets.

The EC is allowing feedback on the delegated act before it is set to be tabled at the next EC parliamentary session.

The act — if approved by the EC — will hand a severe blow to Malaysia and Indonesia as the EU is one of the major importers of palm oil, the edible vegetable oil which is used in everything from soap, to cooking oil, to chocolate bars.

Putrajaya had accused the campaign to boycott palm oil as part of a grand conspiracy to protect Europe’s seed oils, direct competitors to Malaysia’s main commodity.

Meanwhile, Kok said the proposal to curb oil palm plantation to six million ha is expected to be discussed by the government.

“The Cabinet will discuss this month on its viability and time period,” she said.

Kok was quoted by the media recently as saying that the government is in discussions to halt all expansion of oil palm plantations this year, in order to rectify the commodity’s reputation as the main contributor to deforestation.

She was reported as saying that Malaysia will cap the plantation at six million ha, which leaves another 150,000ha of land for smallholders and estates to develop.

On another note, three China-based firms and four local companies signed a deal to facilitate the export of 1.62 million tonnes (MT) of refined, bleached and deodorised (RBD) palm stearin to China worth US$891 million (RM3.64 billion).

The first deal was between Yantai Tianmao Edible Ltd Co and Sime Darby Plantation Bhd for the purchase of 100,000 tonnes of RBD palm stearin. The three other deals are Yihai Kerry (Shanghai) International Trade Co Ltd and PGEO Marketing Sdn Bhd; Yizheng Fangshun Industry Co Ltd and Cacao Paramount Sdn Bhd; and Yizheng Fangshun Industry Co Ltd and SOP Edible Oils Sdn Bhd.

Kok said the additional exports of palm oil-based products to China would ease the impact from the EU if the union decides to halt imports of Malaysia’s main commodity.

“It will definitely help to address our situation with the EU. In fact last year, the total imports of palm oil and palm oil products by China was 3.07MT, a threefold increase from 1.02MT in 2000,” she said.

She added that the demand for crude palm oil and palm oil-based products are expected to rise in 2019.

“The agreements today involve 1.62MT of palm oil-based products, which is more than half of what we exported to China last year, and it is a good sign in reducing our palm oil stock.

“I foresee the price will go up this year, and this agreement with China is just the beginning as they are expecting to import more of our palm oil following Prime
Minister Tun Dr Mahathir Mohamad’s visit to Beijing in April,” she said.

Last year, Malaysia exported 3.07MT of palm oil and palm oil-based products to China worth RM8.38 billion, a 7.3% increase from 2.86MT in 2017.

China, Malaysia’s second- largest consumer of palm oil and palm oil-based products last year, imported 41,450 tonnes of biodiesel worth RM113 million, a significant increase from 140 tonnes in 2017.