In a joint press conference on Thursday (Feb 9), Indonesias coordinating minister for economic affairs Airlangga Hartarto met with Malaysian deputy prime minister Fadillah Yusof to consider “several pressing issues” linked to the palm oil industry.

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The two ministers said that the Council of Palm Oil Producing Countries, an intergovernmental organisation for palm oil producing countries, would make up the delegation along with smallholders in the palm oil supply chain.

The discussions primarily concern the EU’s decision to introduce a deforestation law in December 2022 that compels companies to supply a due diligence statement that details a commodity’s origins.

The regulation requires suppliers to provide information about when and wher the commodity was produced and provide reassurances it was not produced on land deforested after 2020 – or face severe penalties.

EU moves to clamp down on palm oil deforestation

Indonesia and Malaysia – two of the worlds biggest palm oil producers – would be impacted by the regulation.

The two countries have rejected this notion, arguing that the palm oil policies are discriminatory and that they have taken measures to protect the environment as well as support local farmers.

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“We agreed to continue to protect the palm oil sector by strengthening efforts and cooperation to overcome discrimination against the palm oil industry,” said Airlangga.

“The meeting [with Malaysia] agreed to conduct a joint mission to the EU to communicate [to them] and prevent unintended consequences of the regulation to the palm oil sector and seek possible collaborative approaches with interested parties.”

The situation escalated last month after Malaysia threatened to stop exporting palm oil to the EU in response to the deforestation law.

At the time, EU Ambassador Michalis Rokas said, "[The law] applies equally to commodities produced in any country, including EU member states, and aims to ensure that commodity production does not drive further deforestation and forest degradation,"

EU accused of putting up palm oil barriers

Belvinder Sron, acting chief executive officer of the Malaysian Palm Oil Council (MPOC), said it has seen “many efforts by European special interest groups to ban or restrict palm oil”.

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“Our complaint is about discrimination, and unfair treatment. The EU is applying costs and barriers to palm oil, but not to other oils.

The regulation is a deliberate effort to reduce market access and increase the costs of Malaysia’s exports thus reducing the competitiveness of Malaysia’s palm oil.”

Despite Indonesia and Malaysia’s stance, Airlangga said the subject of an export boycott to the EU was not on the agenda in the conversation with Yusof.

“Stopping exports was not something that we had discussed. As a country involved in the import and export [of palm oil]… that was not an option,” said Airlangga.