KUALA LUMPUR: Malaysia should not have filed a dispute complaint against the European Union (EU) with the World Trade Organisation (WTO) over palm oil-based biofuels, the Dewan Rakyat was told today.
Instead, Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani said Malaysia should let Indonesia do so and support the move made by the republic.
"In my opinion, Malaysia should not have filed a complaint with the WTO. This is because the Delegated Act under the Renewable Energy Directive (RED II) targets biofuels based on palm oil and does not address sustainability issues related to palm oil in general.
"Malaysia should instead support and remain as an observer in the case of Indonesia in defending palm oil as a biofuel source against any discrimination," he said in response to Teresa Kok (PH-Seputeh).
Kok asked whether the WTO's decision on Malaysia's appeal regarding the EU's discrimination against palm oil still allows EU to implement the Delegated Act that bans palm oil as biofuel by 2030.
Johari said according to statistics released by OilWorld in 2023, an estimated 25.2 per cent (12.2 million metric tonnes) of Indonesia's crude palm oil (CPO) production was processed to produce Palm Methyl Esters (PME), which is a primary biofuel blend input in Indonesia and Malaysia.
During the same period, only 7.7 per cent (1.4 million metric tonnes) of Malaysia's CPO production was processed to produce PME.
Indonesia filed a complaint to WTO on Dec 9, 2019. Malaysia filed its complaint 13 months later on Jan 15, 2021.
Johari further said: "When Indonesia saw that Malaysia also filed the issue to WTO, they decided to suspend their case, leaving Malaysia.
"Hence, the decision made by WTO saw no one win. There are 20 issues related to this, with 10 won by the EU and 10 by Malaysia.
"However, the general public out there lacks understanding of this issue. They perceive Malaysian palm oil as worse than that of Indonesia."
Meanwhile, in reply to a supplementary question from Bakri Jamaluddin (PN-Tangga Batu), Johari said Malaysia must continue to engage with the EU and its stakeholders to explain the Malaysia Sustainable Palm Oil (MSPO) scheme.
"Today, our export by the industry players to Europe was due to the Roundtable on Sustainable Palm Oil (RSPO) and MSPO.
"RSPO is internationally recognised, while as for MSPO- some recognise it, while some do not.
"Hence, one of the strategies is to engage and explain to the relevant stakeholders about MSPO.
"The MSPO standard is better than RSPO as it covers a wide spectrum of our palm oil plantation, including the smallholders.
"We must do the engagement from now on to ensure that our palm oil products can be accepted when MSPO becomes one of the prerequisites in exporting."
Bakri asked how far MSPO and RSPO can address the boycott of Malaysian palm oil.
Johari added: "EU is working on its specification to fix terms for us to export our products. We need to comply with the regulation that they are currently discussing with us, the European Union Deforestation Regulation (EUDR).
"Four main points of EUDR are no deforestation, must have a traceability system, must have a legitimate land title (of palm oil plantation) and on labour.
"All these four, we are engaging the EUDR, including introducing MSPO.
"If they can accept the MSPO, all products can go (can be exported)."
The EU had announced the EUDR on Dec 6, 2022, stating that the regulation is aimed at preventing deforestation due to agricultural activities.
