Malaysia, Indonesia to talk on retaliatory moves for palm oil

Malaysia needs to work with Indonesia on plans to launch a complaint against the palm oil limits to the WTO, says Kok

by RAHIMI YUNUS / pic by MUHD AMIN NAHARUL

MALAYSIA and Indonesia are expected to discuss further on retaliatory moves against palm oil restrictions on biofuel that will take effect on June 10 as propagated by members of the European Union (EU).

Primary Industries Minister Teresa Kok (picture) said the discussions could only be conducted once Indonesia’s new line up of ministers are determined following the the country’s recent election.

She said Malaysian officials will wait for the new members of the Indonesian government to settle down after the election win, which will likely be until July, before resuming talks on measures to counter the palm oil usage limits set by the EU.

As it is, Kok said the Indonesian administration will be led by the incumbent President Joko Widodo.

However, ministers who are involved in the palm oil matter may not necessarily be the same as those prior to the election.

She said Malaysia needs to work with Indonesia on plans to launch a complaint against the palm oil limits to the World Trade Organisation (WTO).

“The proposed WTO complaint is still in the pipeline. We need to have some coordination with the Indonesian side. They just announced the election results. We need some time to go about it,” Kok said at a press conference in Putrajaya last Friday.

While offensive measures are on the cards, Kok said Malaysia will continue promoting palm oil in Europe and lobby the new EU commissioner and European Parliament MPs who will be elected after the bloc election soon.

Kok said a Malaysian delegation will meet the new European MPs in October to share Malaysia’s efforts on the sustainability of palm oil industry, forest preservation and success stories of local industry players.

The EU’s restrictions for the use of palm oil in biofuels will begin to take effect on June 10. The new regulation is scheduled to be reviewed in 2021.

Kok said Malaysia will work hard within the next two years to reform the industry and get all the oil palm plantations certified with the Malaysian Sustainable Palm Oil (MSPO) status.

At present, she said only 30% out of the total 5.85 million ha of oil palm plantation areas in the country are MSPO-certified.

She added that the country is facing challenges to get small and medium smallholders to embark on MSPO certification because some of the land plots are managed by contractors.

“We are reaching out to them. But some of them could not be found. For instance, some plantations are managed by contractors and the owners may not be in the country. The owners must come forward to get their plantations certified,” Kok said.

Malaysia has targeted for all the local oil palm plantations to be MSPO-certified, but it may be an uphill task to be completed given the current level of uptake.

Malaysia and Indonesia are the world’s top producers of palm oil at about 85% of global output, while EU countries are the second-largest buyers from both countries after India.

Europe currently consumes 7.5 million tonnes of palm oil a year, or about 10% to 15% of the global palm oil demand.

In biofuels, the continent uses about three to four million tonnes of palm oil every year.