Proposal to ban products with anti-palm oil labels is being prepared by KPDNHEP, says Kok

by SHAHEERA AZNAM SHAH/ pic by BLOOMBERG

MALAYSIA is mulling laws to remove products with anti-palm oil labels from shelves as the country devises stronger actions against the European Union’s (EU) proposal to ban the commodity in green fuel.

Indonesia has already removed local and imported food items with “palm oil free” or “no palm oil” labels from shelves at grocery stores since last month. The world’s largest palm oil producer has promised retaliatory actions against any policies that will cripple its biggest commodity export.

Kuala Lumpur (KL) could follow suit as both Indonesia and Malaysia account for 85% of the world’s palm oil production. Malaysia has also promised to retaliate against any unfair treatment to the country’s second-largest commodity export.

Primary Industries Minister Teresa Kok said a proposal to ban products with anti-palm oil labels is being prepared by the Ministry of Domestic Trade and Consumer Affairs (KPDNHEP).

“It is under KPDNHEP’s jurisdiction to study if we can remove the antipalm oil products from our shelves. I’ve already brought this proposal to its minister.

“We are looking into putting this matter under one of KPDNHEP’s regulations. We have mentioned about this and KPDNHEP is studying the proposal,” she said at the launch of Alif’s new label by Sime Darby Oils Sdn Bhd (SDO) in KL yesterday.

The “palm oil free” or “no palm oil” labelling is part of a campaign by certain foreign companies to dent the competitiveness of palm oil which is used in various daily products — from toothpaste to shampoo to chocolate bars and cosmetics.

Kok said KPDNHEP and palm oil agencies have been taking actions regarding the anti-palm oil products based on complaints.

“Supermarket products with anti-palm oil label is not a new affair and when it happens, KPDNHEP and palm oil agencies would approach the sundry shops and supermarkets to remove the products.

“It was done when they received complaints. Now it is possible to put a regulation on it,” she said.

Malaysia plans to bring the mistreatment against palm oil by the EU to the Dispute Settlement Body of the World Trade Organisation.

The EU was Malaysia’s second-largest export market for the commodity with a total export market of RM80 billion. Europe consumes 7.5 million tonnes of palm oil a year — about 10% to 15% of the global palm oil demand.

In the last few years, the bloc has taken a hard stand over the use of biofuel produced from palm oil.

Indonesia has threatened to ban imports of goods from the EU. The commodity is important to almost 20 million people in the republic.

Under its renewable energy directives, the EU will gradually limit and phase out palm oil biofuel imports into the bloc. The EU’s ban will impact about 650,000 smallholders.

Malaysia exported 1.91 million tonnes of palm oil to the EU last year compared to 1.99 million tonnes in 2017. The largest importer of Malaysia’s palm oil is India.

Meanwhile, SDO MD Mohd Haris Mohd Arshad said the rationalised cooking oil sector, following the subsidy removal for some product sizes, presents an opportunity for planters to develop the downstream segment further.

“Our volume is not very big. Before the cooking oil subsidy was removed, we were doing 2,500 tonnes per month and currently, we are processing about four million tonnes of palm oil around the world each year…the figure is very small.

“It has been that way because the cooking oil is a subsidised market, thus it comes with subsidised volume for each company to produce.

“Now that the government has changed the subsidy policy, it becomes a level playing field for a company like us,” he said.

Haris said SDO plans to extend its cooking oil brand, Alif, to Kalimantan by year-end.

“Alif is a Malaysian brand that is being sold in Malaysia, but there is a plan to bring the brand to other markets, particularly in Kalimantan, Indonesia.

“We have a processing factory in Kalimantan, and we are thinking of extending our brand in South Kalimantan, hopefully, by this year,” Haris said.

In 2016, the government removed subsidies for all cooking oil products except for the 1kg polybag and 5kg bottle, in line with the Restructuring of Cooking Oil Price Stabilisation Scheme implemented in June 2007 due to the high price of palm oil.