Indonesia and Malaysia may join forces to counter possible European Union restrictions on the import of palm oil, the Nikkei Asian Review reported today.
It said the two countries, which account for 82% of the world’s palm oil production, raised the issue of import restrictions with EU president Donald Tusk yesterday in Manila, where international summits involving Asean are taking place.
The two countries are worried about their palm oil exports as the European Parliament passed a resolution in April on palm oil and deforestation, claiming rain forests were being cleared to make way for oil palm plantations.
Indonesia and Malaysia however, consider the EU measures as discriminatory and claim they have taken steps to promote sustainable practices in the palm oil industry.
The Nikkei report said President Joko Widodo told Tusk to reconsider the resolution, saying the palm oil industry supports Indonesia’s economic growth and poverty-eradication efforts.
About 17 million Indonesians rely directly or indirectly on palm oil for their livelihood.
It said Prime Minister Najib Razak would discuss counter-measures with Widodo at a meeting in Kuching on Nov 22.
“If we act independently, the impact will not be that effective,” Najib said.
EU accounts for 17% of Indonesia’s exports and 13% of Malaysia’s, according to the Singapore Institute of International Affairs.
The think tank said any ban by the EU will push both countries to seek more buyers in China and India. This could undercut the EU’s efforts to eliminate deforestation.
During his visit to China last year, Najib had asked the Chinese government to import more palm oil from Malaysia, a move that helped Malaysia’s crude palm oil price bounce back to RM2,700 per tonne, up from RM2,000 in 2015.
Nikkei said Plantation Industries and Commodities Minister Mah Siew Keong has warned that Malaysia would consider retaliatory measures against EU products if they insisted on implementing the resolution.-FMT