Indonesia and Malaysia are the world’s largest exporters of palm oil, which plays an important role in their economic recovery. Together they account for 85% of global palm oil production. But they are hampered by the European Union which they allege favors producers of other vegetable oils.
After meeting with Malaysian Prime Minister Muhyiddin Yassin, Indonesian President Joko Widodo told a joint news conference that Indonesia is fighting against palm oil discrimination. “Our struggle will be optimal if we fight together, and Indonesia expects the same commitment from Malaysia,” he said.
Muhyiddin said that his country will continue to strengthen cooperation with Indonesia in addressing negative campaign against palm oil and advancing it for sustainable development.
“We are concerned over the current anti-palm oil campaign, especially in Europe, Australia and Oceanea,” Muhyiddin said. “This campaign is baseless and does not reflect the sustainability of the world palm oil industry and it’s against the EU and WTO commitments regarding free trade practices.”
He said that continuity of the palm oil sector is critical to both economies. There are over 2.7 million palm oil smallholders in Indonesia and 600,000 in Malaysia.
In December, the 10-member Association of Southeast Asian Nations, to which Malaysia and Indonesia belong, upgraded its relations with the EU after years of reservations from Indonesia and Malaysia. They object to the EU policy on palm oil that categorizes it as unsustainable and lays out plans to phase out its use in biofuels by 2030.
The dispute began in 2017, when the European Parliament issued a resolution effectively refusing to recognize palm oil as a renewable biofuel feedstock because of the deforestation, social conflicts and labor rights issues associated with its production. The measure was approved by the European Commission in 2019, which puts the bloc on track to phase out palm oil as a biofuel.
The EU also decided to impose an import tariff on biodiesel from Indonesia, set at between 8% and 18% over the next five years. It cited both environmental concerns and the need to balance out what it called the unfair advantage to Indonesian producers as a result of the country’s biodiesel subsidy.
Both decisions have been criticized by Indonesia and Malaysia, prompting the Indonesian government to initiate a lawsuit at the World Trade Organization in December 2019. Malaysia followed suit on Jan. 15, Muhyiddin said.
“We should to ensure that we can protect our palm oil industry to save millions of people, including smallholder farmers, whose lives depend entirely on this industry in Indonesia and Malaysia,” Muhyiddin said.
The Associated Press’ investigation reports late last year revealed that many palm oil companies in Indonesia and Malaysia exploit children in their plantations. The investigation into child labor was part of a broader in-depth look at the industry that also exposed rape, forced labor trafficking and slavery.