KOTA KINABALU (Aug 20): As the European Union Deforestation Regulation (EUDR) raises the cost of doing business in Europe, the Malaysian Palm Oil Council (MPOC) is actively exploring alternative markets that offer greater accessibility and fairness.

MPOC chief executive officer Belvinder Kaur Sron said markets under consideration include India, China, Asean, Africa and the Middle East, which could provide significant opportunities for Malaysia’s industry players and smallholders.

Although Europe remains an important market for Malaysia, Belvinder noted that the implementation of the EUDR poses a significant challenge.

Global data research indicates that compliance could cost palm oil producers up to US$1.50 billion (RM6.57 billion).

“The EUDR is a non-tariff barrier imposed by the EU. It discriminates against Malaysia’s four major commodities — palm oil, rubber, timber and cocoa — by restricting open market access.

“The regulation’s stringent requirements on traceability and geolocation would impose — I'm not using the word 'could', as it would impose — additional financial and technical burdens on Malaysian companies, particularly smallholders, potentially excluding them from the EU supply chain,” she said.

She made these remarks during her welcoming speech at the East Malaysia Palm Oil Forum here on Tuesday.

Also present was Bursa Malaysia Derivatives Bhd director Mohd Saleem Kader Bakas.

Last year, the EU imported 2.7 million tonnes of palm oil and palm oil products from Malaysia, making it the third-largest export destination after India and China.

Belvinder also expressed concerns regarding the EUDR's benchmark system, which categorises countries as low, medium, or high risk based on deforestation rates and agricultural land expansion.

“Currently, all countries are benchmarked as medium risk,” she said.

Despite these challenges, she said Malaysia is well positioned to meet EUDR demands due to the revised Malaysian Sustainable Palm Oil (MSPO) standard, which includes enhanced sustainability requirements.

This ensures that Malaysia’s palm oil supply chain is both fully sustainable and traceable.

“To ensure compliance with the EUDR, the MPOC facilitated a gap analysis of the MSPO standard, independently conducted by a French economist and auditor for the Roundtable on Sustainable Palm Oil (RSPO) and the European Forest Institute. The few gaps identified can be closed.

“Given the significance of this issue, we have included a paper from MSPO to update stakeholders on Malaysia's progress in meeting EUDR requirements and other efforts to refine the MSPO scheme,” she said.

The focus is on closing the four identified gaps — deforestation-related definitions, legality, geolocation and traceability — ensuring full alignment with EUDR requirements.

While the EU supports national sustainability certification schemes like MSPO, Belvinder noted that these cannot replace the due diligence statements required by the EUDR.

However, the data provided by MSPO can assist in fulfilling these due diligence obligations.

“The MPOC and the Ministry of Plantation and Commodities are working diligently with MSPO to push for the acceptance and acknowledgement of MSPO within the EU framework.

"Despite the challenges posed by the EUDR, the MPOC remains committed to ensuring that Malaysian palm oil continues to be recognised for its sustainability and traceability," she added.

Uploaded by Tham Yek Lee