EU ban on palm oil affects Malaysia and Indonesia

The European Union (EU) has classified palm oil as a ‘high risk’ product in one of their efforts to reduce global warming. The EU claimed that palm oil production is a major cause of deforestation which could lead to multiple climate, social, and economic problems. Therefore, the countries of EU will ban the import of palm oil.

Consequently, the proposed ban caused an uproar on both Malaysian and Indonesian palm oil producers and various ministers.

It is no surprise that the news was not well received by Malaysia and Indonesia alike, because collectively they produce 85% of the global palm oil supply. On top of that, the ban could risk farmers losing their jobs and plunging them into poverty.

The Malaysian government has been vocal in opposing the ban, saying that there isn’t any convincing data or justification to back up EU’s claim on palm oil. Foreign Affairs Minister Datuk Saifuddin Abdullah said this had nothing to do with the environment, but rather a calculated political act.

Indonesia also voiced their concerns, stating the ban is a ‘double standard’ that could harm the livelihood of millions. This is because 40% of Indonesia’s palm oil are cultivated by smallholders, which decreased the countries poverty rate significantly.

Furthermore, Malaysia and Indonesia announced that they would bring this issue to the World Trade Organisation (WTO) if the ban succeeds.

Not long after, China stepped in to rescue Malaysia’s palm oil industry by purchasing 1.62 million tonnes of palm oil, which cost RM3.64 billion in total.

Primary Industry Minister Teresa Kok expressed her gratitude to the three Chinese companies which purchased the palm oil, thanking them for reducing the stockpile of palm oil and palm oil related products.

Furthermore, Teresa explained that the ministry will be visiting the European Commission in May to discuss the sustainability of palm oil production and its practices. As the ban will jeopardise their international relationship, she hopes that Malaysia and EU will continue to be allies.