Malaysia Criticizes ‘Unjust’ EU Deforestation Law Impacting Palm Oil Exports

KUALA LUMPUR – Malaysia expressed disappointment on Thursday (April 20) over a newly passed European Union law that bans imports of commodities linked to deforestation, citing concerns about its impact on palm oil exports.

The law, approved by the European Parliament on Wednesday, requires companies selling goods in the EU to provide “verifiable” proof that their products were not sourced from land deforested after 2020, or face substantial fines. The regulation applies to several commodities, including soy, beef, palm oil, wood, cocoa, coffee, rubber, and derived products like chocolate, leather, and furniture.

Malaysia, the world’s second-largest palm oil exporter after Indonesia, sees the law as an intentional move to raise costs and create trade barriers for its palm oil industry, a major source of export revenue.

“The regulation is unjust and primarily aims to protect a domestic oilseeds market that is inefficient and cannot compete with Malaysia’s efficient and productive palm oil exports,” said Fadillah Yusof, Malaysia’s Minister of Plantation Industries and Commodities, in a statement.

Malaysia is working alongside Indonesia to craft an appropriate response and remains open to dialogue with the EU to address these concerns. The country is particularly worried about the law’s effect on small farmers, who may struggle to meet the compliance costs. Smallholders represent 26% (1.5 million hectares) of Malaysia’s oil palm planted area. Globally, over seven million smallholders rely on palm oil for their livelihood and to overcome poverty.