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Last Updated: 08 July 2022

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PRESS STATEMENT
MALAYSIA CAN ILL-AFFORD TO BE A “SITTING DUCK” OF THE WESTERN ANTIPALM OIL CAMPAIGN

1. AS the world’s two top palm oil producers, Malaysia and Indonesia, have for the past two decades or so been subject to numerous anti-palm oil campaigns by western countries and the developed world, which eventually affected the marketability of palm oil and its related products in these markets.

2. The smearing campaign, which created negative perceptions towards palm oil –if not systematically and strategically put to rest–, can affect the competitiveness of Malaysian palm oil exports in the long haul.

3. As palm oil and its related products have been a major revenue contributor to the country’s economy as well as having played a significant role in reducing rural poverty (by providing employment) and improving infrastructure, Malaysia has resorted to counter such malicious/baseless claims via a ‘soft consultancy ’approach.

4. Historically, the negative image of palm oil started taking shape in Europe beginning in 2003, revolving around issues pertaining to sustainability before moving to the nutritional aspects of palm oil.

5. The current practice of ‘no palm oil ’or ‘palm oil-free labelling in France and Belgium can be traced back to 2008, when the French retail chain Carrefour started to substitute palm oil in potato chips with sunflower oil.

6. Singling out palm oil with the ‘palm oil-free marketing and labelling campaigns convinced consumers that palm oil is terrible whether for nutritional or environmental reasons or both.

7. Recall that in 2019, the European Union (EU) has classified palm oil as a crop with a high-risk rate towards indirect land-use change, hence deemed to contribute to deforestation and loss of biodiversity. EU member countries are currently adoptingthe European Union Renewable Energy Directive II in their respective legislation.

8. Such a classification exercise will affect palm oil being a potential biofuel source since its usage will be gradually reduced beginning in 2023 before being ‘eliminated totally ’ as an EU biofuel source in 2030.

9. This has led to Malaysia initiating legal action against the EU and two of its members – France and Lithuania – on 15 January 2021 under the World Trade Organization’s (WTO) Dispute Settlement Mechanism. Such development came about after the EU implemented the directive without considering Malaysia’s commitment and views, even after the latter had given its feedback and sent economic and technical missions to Europe.

10.Malaysia will also act as a third party in a separate WTO case lodged by Indonesia, which is the world’s biggest palm oil producer, as a sign of solidarity and support.

11.In all fairness, Malaysia is left with no choice but to retaliate against “the bullies” even as it understands that the ensuing legal process can be dragging and costly, given it entails massive preparation and submission of documents for argument as well as meticulous research and ‘countless hours of meeting and deliberation by the panel tasked to look into the matter.

12.Thus far, no other restrictions have been imposed by the EU against palm oil. However, the fact remains that medium- to long-term damage has already been inflicted on palm oil’s image in the eyes of European consumers.

13.In this regard, the Ministry of Plantation Industry and Commodities (MPIC) will continue to closely monitor any latest developments from a legislation standpoint by the EU, which can potentially tarnish the reputation of palm oil, hence adversely affecting the viability of the palm oil and palm oil-related industry in Malaysia. I call upon all Malaysians to join MPIC and rise up to defend our palm oil in the eyes of the world.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
22 JUNE 2022

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Last Updated: 21 June 2022

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MEDIA RELEASE
MALAYSIA WILL NOT LOSE COMPETITIVE EDGE AS INDONESIA RESUMES
PALM OIL EXPORT

With regard to the latest move by our neighbour Indonesia who is also the world’s largest palm oil producer to lift the ban on palm oil exports effective May 23, the Ministry of Plantation Industries and Commodities (MPIC) wishes to urge all Malaysian oil palm growers – both plantation firms and smallholders alike – not to be unduly concerned with the recent development.

While a knee jerk correction in palm oil price is inevitable given such a move will somehow ease concerns over vegetable oil supply, MPIC does not expect a big downward adjustment to CPO prices as the market is well aware that this ban was always going to be temporary.

Moreover, the recent weakening of crude palm oil (CPO) prices could have already factored in this possibility. Market analysts expect Malaysian planters to be the largest winners on the long run as they are able to sell their CPO at high spot prices which should translate into higher profit margin in 2Q 2022 coupled with higher production year-on-year (y-o-y) and quarter-on-quarter (q-o-q).

While the export ban lifting is a big relief to Indonesia planters, they have certainly missed out on the high CPO price period (February-April 2022) when Indonesia palm oil prices were trading at a larger discount to Malaysia with all the export control policies put in place since late-January 2022.

BIG ADVANTAGE

Indonesia’s policies could well work to Malaysia’s advantage as the world’s second largest palm oil producer, given this would enable it to emerge a dominant supplier to India which is the world’s top buyer of the edible oil. The combination of Malaysia’s lower export taxes and the Indonesian ban may mean Indonesia’s share of palm oil exports to India will fall to 35% in the current marketing year ending on Oct 31 from more than 75% a decade ago, according to an estimate from the Solvent Extractors' Association of India (SEA), a vegetable oil trade body.

In the first five months of the 2021/22 marketing year, India bought 1.47 million tonnes of Malaysian palm oil compared to 982,123 tonnes from Indonesia, data compiled by SEA showed. Trader estimates for May show India imported around 570,000 tonnes of palm oil with 290,000 from Malaysia and 240,000 from Indonesia.

Above all else, MPIC believes that CPO prices will remain at elevated levels going forward given the output uncertainties on major oilseeds (such as soybean, corn, rapeseed and sunflower seed) either due to geopolitical tensions or unfavourable weather.

Lastly, even as Indonesia would resume its palm oil exports on May 23 (Monday) – barely a month after imposing the ban on April 28 – it may not end there given palm oil prices in its domestic market have yet to come down to the desired level (in fact, lifting of the ban could result in a recurrence of domestic shortage in the country).

Given that the medium- to long-term outlook of the Malaysian palm oil industry remains bright, MPIC wishes to call on all Malaysian oil palm growers to join hands in helping to make the Malaysian Palm Oil Full of Goodness campaign which seeks to counter various misperceptions with regard to Malaysian palm oil a global success.

YB DATUK HAJAH ZURAIDA KAMARUDDIN
MINISTER OF PLANTATION INDUSTRIES AND COMMODITIES
22 MAY 2022

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Last Updated: 24 October 2020

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KEMENTERIAN PERTIMBANG TINDAKAN BERSESUAIAN BAGI MENANGANI ISU SEKATAN OLEH AMERIKA SYARIKAT TERHADAP PRODUK AGRIKOMODITI NEGARA 

1. Menteri Perusahaan Perladangan dan Komoditi, YB Dato' Dr. Mohd. Khairuddin Aman Razali telah menerima kunjungan pegawai kanan pengurusan FGV Holdings Bhd (FGV) diketuai oleh Ketua Pegawai Komunikasi Strategik Kumpulan, Dato’ Najmuddin Abdullah. Pertemuan tersebut membincangkan isu membabitkan dakwaan Amerika Syarikat (AS) ke atas FGV yang dikatakan mengamalkan buruh paksa selain perkembangan terkini pembangunan industri sawit negara .

2. Kementerian Perusahaan Perladangan dan Komoditi (KPPK) mengambil maklum dan memandang serius susulan beberapa insiden yang melibatkan penahanan eksport produk agrikomoditi Malaysia oleh Jabatan Kastam dan Perlindungan Sempadan (CBP) AS kebelakangan ini. KPPK berpandangan perlunya satu platform yang lebih adil bagi Malaysia dan AS berunding bagi menangani dakwaan serta tuduhan yang boleh menjejaskan aktiviti perdagangan antara kedua-dua negara.

3. KPPK dimaklumkan bahawa FGV telah menunjukkan komitmen yang tinggi serta mengambil langkah perlu dalam usaha membatalkan WRO sejak petisyen dikemukakan. FGV juga telah mengambil tindakan sewajarnya untuk memperbaiki sistem pengambilan buruh asing serta menetapkan piawaian pekerja yang bersesuaian dalam memastikan kebajikan pekerja terpelihara selaras dengan hak asasi manusia.

4. Tidak dinafikan, AS merupakan pasaran penting bagi produk agrikomoditi Malaysia yang merupakan antara penyumbang terbesar kepada pendapatan eksport negara. Bagi tempoh Januari-Ogos 2020, jumlah eksport agrikomoditi ke negara berkenaan bernilai RM14.10 bilion. Walau bagaimanapun dengan insiden yang semakin kerap berlaku, KPPK bersedia untuk mempertimbang tindakan yang sewajarnya bagi menangani isu tersebut.

5. Pada tahun 2018, KPPK dengan kerjasama Pertubuhan Buruh Antarabangsa (ILO) selaku perunding teknikal kajian telah melaksanakan kajian menyeluruh situasi buruh dalam sektor perladangan sawit Malaysia. Ia dijalankan bagi memastikan hasil kajian yang lebih komprehensif. Kajian ini telah dibentangkan dan diterima oleh Kabinet dan akan dikemukakan kepada Jabatan Buruh (DOL) AS sebagai salah satu inisiatif untuk mengeluarkan sektor perladangan sawit Malaysia daripada senarai Trafficking Victims Protection Reauthorization Act (TVPRA) yang menjadi rujukan kepada CBP AS dalam membuat keputusan. Langkah ini diharap dapat mengelakkan sekatan ke atas produk agrikomoditi negara pada masa hadapan.

6. Kementerian menyarankan agar pihak industri sawit termasuk FGV untuk terus meneroka pasaran baharu mengambil kira situasi pandemik COVID-19 masa kini dengan memfokuskan eksport sawit ke negara-negara lain yang berpotensi di benua Afrika seperti Nigeria, Asia Tengah dan sebagainya.

7. Di samping itu, bagi mengukuhkan lagi komitmen kerajaan, tiada lagi pengambilan baharu pekerja asing akan dilaksanakan pada masa ini. Oleh yang demikian, isu buruh paksa yang dibangkitkan dan dilaporkan oleh DOL merupakan isu lama dan telah pun diambil tindakan oleh pihak industri.

8. KPPK dengan kerjasama kementerian dan agensi berkaitan sentiasa memberi perhatian mengenai pembangunan industri sawit negara dan mengambil berat kebajikan pekerja di sektor agrikomoditi demi menjamin kemakmuran sejagat dan kemaslahatan bersama.

YB DATO' DR. MOHD. KHAIRUDDIN AMAN RAZALI
Menteri Perusahaan Perladangan Dan Komoditi
22 Oktober 2020

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Last Updated: 27 December 2022

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MEDIA STATEMENT
EU REGULATION ON DEFORESTATION-FREE PRODUCTS : A DELIBERATE
ACT TO BLOCK MARKET ACCESS

On 6th December 2022, The EU Council and Parliament reached a provisional deal on a proposal to minimise the risk of deforestation and forest degradation associated with products that are imported into or exported from the European Union.

As a producing and trading country, Malaysia is deeply concerned over the developments of the EU Deforestation-Free Products Regulation, targeting commodities including palm oil, timber, cocoa, and rubber. This unilateral initiative is detrimental to free and fair trade, and could result in adverse impacts on global supply chain. Some aspects of the risk-assessment process of the Regulation are counterproductive to commitments to curb global deforestation and run the risk of disincentivizing producing countries.

Malaysia underscores the need for a balanced approach between achieving development goals and climate ambition. The 2030 SDGs remain the utmost priority for Malaysia. We have embarked on sustainability initiatives including national certification schemes, such as the Malaysian Sustainable Palm Oil (MSPO) certification scheme, Malaysian Timber Certification Scheme (MTCS) and Sustainable Forest Management (SFM) practices, with a view to facilitating access into the EU Single Market.

The Regulation will place additional burdens on Malaysian palm oil exporters to the EU market, specifically additional traceability requirements and data that must be provided to end-customers based in the EU. Countries will be ranked as ‘high risk’, ‘standard risk’ or ‘low risk’ and restrictions on commodities will be either more or less stringent, based on this ranking.

The Deforestation-Free Products Regulation is a deliberate act by Europe to block market access, hurt small farmers and protect a domestic oilseeds market that is inefficient and cannot compete with the cost of palm oil. Moreover, this Regulation could lead to higher food prices and reduced output at a time of record global inflation.

Europe’s justifications for promoting this Regulation is based on unsound reasoning and has a weak scientific basis. Malaysian palm oil is sustainable, and is one of the most certified vegetable oils in the world today. The Malaysian Sustainable Palm Oil (MSPO) standard already guarantees Malaysia’s commitment to comprehensive sustainability standards. Malaysia will continue to provide sustainable and deforestation-free palm oil to our European and global customers. There is no need to add further costs and burdens.

It would be offensive to Malaysia if either palm oil, or the country, is designated high risk by the EU Regulation. There is no justification for it .

Unnecessary regulations on palm oil exacerbate the food supply crisis, increase costs of food, increase energy costs and harm both the European and Malaysian economy and undermines our poverty alleviation efforts. The EU must commit to genuine engagement with producing countries.

Malaysia values the EU as one of our important trading and investment partners. We stand ready to further enhance this mutually-beneficial partnership, especially building on the recent signing of the Malaysia-EU Partnership and Cooperation Agreement (PCA) as well as possible resumption of Malaysia-EU Free Trade Agreement (FTA) negotiations.

YAB DATO’ SRI HAJI FADILLAH BIN HAJI YUSOF
DEPUTY PRIME MINISTER AND MINISTER OF PLANTATION
AND COMMODITIES
23rd DECEMBER 2022