EU told not to table law against palm oil

By AFIQ AZIZ / Pic By ISMAIL CHE RUS

The government has urged the European Commission (EC), an institution of the European Union (EU), to not table the delegated act against the palm oil industry which is slated for next month.

Primary Industries Minister Teresa Kok (picture) said the EC should instead consider Malaysia’s arguments on the wrongful perceptions towards the edible oil and an unfair mechanism that is used to impose the law that has been described as discriminatory.

“So (as of now), we hope that the EC won’t table the delegated act to phase out palm oil in the coming European Parliament sitting in April,” she said.

Malaysia, led by Primary Industries secretary-general Datuk Dr Tan Yew Chong, had presented legal and technical arguments last week against the EU’s plan to limit the use of palm oil.

“Our expert team has given the presentation to the EC and related government bodies (in Brussels, Belgium). So, I am waiting for my secretary general and the team to report to us,” he told the press after meeting the cooking oil repackaging players that partake in the Cooking Oil Stabilisation Scheme (COSS) in Bangi, Selangor, yesterday.

Kok said the EC, which is currently finalising the draft of the law, is not using the right methodology in its study.

“We are arguing their methodology to impose this act is not scientifically sound. We are waiting for their return to present the report.

The proposed delegated regulation is supplementing the EU Renewable Energy Directive II to restrict and effectively ban palm oil biofuel altogether in the EU by 2030.

The EC had said the use of palm oil in motor fuel should be phased out because oil palm cultivation has led to deforestation, classifying the commodity as a high indirect land-use change risk.

Malaysia, the world’s second-largest palm oil producer with six million ha of plantations and hundreds of thousands of smallholders, is facing a direct threat from the move, as 80% of palm oil and its products are sourced to the export market.

Palm oil prices already fell more than 15% last year as stockpiles rose to record high in Malaysia amid subdued global demand.

In contrast, the commodity inventory has unexpectedly increased by 1.3% or 3.05 million tonnes last month, compared to January which also saw export to China drop by almost 75%.

Earlier in the meeting, Kok said the government targets a 10% increase in the use of palm oil and its products through the “Sayangi Sawitku” campaign, as part of the government’s move to increase local consumption and cushion its rising stockpile.

Meanwhile, Domestic Trade and Consumer Affairs Minister Datuk Seri Saifuddin Nasution Ismail said the government allocates RM600 million this year to subsidise cooking oil.

“The allocation involves 60,000 metric tonnes or 3.69% of subsidised cooking oil, involving 280 cooking oil packagers under COSS nationwide,” he said.

Malaysia had mandated B10 biodiesel (a blend of 10% palm oil and 90% petroleum diesel) for the transport sector last month.

Indonesia, on the other hand, had introduced B20 to its transport sector since 2016 and mandated the blend formula since September last year.

Malaysia produced 19.5 million tonnes of crude palm oil last year, of which three million tonnes of the total production were used for the local downstream market, including 1.6 million tonnes for cooking oil and 700,000 tonnes for the B10 consumption.