Palm oil has long been a key trade priority for Indonesia. However, as the fourth most populous country in the world, Indonesia is increasingly concerned about the intensifying negative campaigns against palm oil. These campaigns are driven by NGOs, competing vegetable oil industries, and governments at both central and regional levels in various countries. For instance, the European Union (EU) adopted the Renewable Energy Directive II (RED II), which arbitrarily categorizes palm oil as a high "Indirect Land Use Change" (ILUC) risk commodity. This directive mandates a reduction in palm oil consumption in the EU starting in 2021, aiming for its eventual elimination by December 31, 2030.

More recently, the EU introduced the EU Deforestation Regulation (EUDR), a policy framework aimed at reducing the environmental impact of deforestation. The EUDR requires operators and traders who place seven commodities (palm oil, coffee, cocoa, rubber, wood, soy, and cattle) on the EU market or export them from the EU to prove that these products are legal and do not come from land deforested or degraded after December 31, 2020.

Elsewhere, Norway has excluded palm oil biofuel from government procurement processes, a regional state in Pakistan proposed a tariff increase on palm oil for health-related reasons, and India has repeatedly raised its import tariffs on palm oil due to domestic political considerations. This situation evokes the beggar-thy-neighbor policy, where one country addresses its economic issues through measures that often exacerbate the economic difficulties of other nations.

For producing countries, palm oil represents more than just a commodity. The palm oil sector provides livelihoods for 16 million Indonesians through direct and indirect employment. Small farmers in rural and remote areas are heavily involved in palm plantations, comprising 42 percent in Indonesia, 40 percent in Malaysia, and 80 percent in Nigeria. In Indonesia alone, about 61 cities and small towns rely on this sector for their development and sustenance. Additionally, palm oil is a crucial source of export revenue for Indonesia, generating around $ 22.67 billion in 2023, with the EU, China, and India being the primary export destinations.

Given these stakes, it is unsurprising that Indonesia voices significant concerns over increased efforts to wage a trade war against palm oil. From Indonesia's perspective, if the issue is environmental impact, then all vegetable oils should be treated equally. Targeting palm oil without applying the same standards to other vegetable oils appears discriminatory and biased. Indonesia believes that environmental issues should be addressed holistically, without singling out specific products or sectors.

A report issued by the European Commission's Directorate-General for Environment (DG Envi) in 2013, titled "The Impact of EU Consumption on Deforestation," suggests that globally, the main crops contributing directly or indirectly to deforestation include soybeans (19 percent), maize (11 percent), oil palm (8 percent), rice (6 percent), and sugar cane (5 percent). Another report highlights that livestock is a primary non-vegetable oil contributor to deforestation, responsible for 18% of greenhouse gas emissions, 55% of water consumption, and 45% of land use.

Regarding health concerns, existing studies suggest that consuming saturated fatty acids from palm oil does not inherently increase the risk of cardiovascular diseases. Even if saturated fats need to be regulated, measures should be non-discriminatory, targeting all food products containing saturated fats, regardless of their origin.

Other vegetable oils also pose health risks. For example, canola oil is associated with kidney and liver problems, heart conditions, hypertension, strokes, and growth retardation in infants due to its erucic acid content and higher trans fat levels. Over 90 percent of canola oil is genetically modified, raising concerns about toxicity, allergic reactions, immune suppression, cancer, and nutritional loss. Similarly, soybean oil is linked to obesity, diabetes, cardiovascular diseases, and inflammation due to excessive Omega-6 fatty acids. It is also manufactured using harsh chemical solvents, which can cause serious health issues.

The question remains: why is palm oil continually blamed as the main source of environmental and health problems? Palm oil is the most efficient oil crop, producing the highest tonnage per hectare. When sustainably produced and properly processed, palm oil is not a threat to nature or human health but rather a gift from nature. Campaigning against palm oil in favor of other vegetable oils will be perceived as punitive by Indonesian farmers. This approach neither addresses the issues effectively nor promotes free and fair trade.

As global value chains face disruptions and more countries adopt reciprocal trade measures, Indonesia might consider following suit if it feels unfairly treated. However, Indonesia remains hopeful that fair trade is possible, which is why it brought the palm oil issue to the WTO against the EU. It is a matter of principle, and the government should not trade off its offensive stand on palm oil for its defensive interest in nickel, for example. Indonesia should hold its ground, as the livelihoods of millions are at stake.


Sumber : Jakarta Globe

Malaysia’s palm oil industry is hoping to get a fresh kick from China’s insatiable appetite for mala hotpot as the world’s second-largest producer of the vegetable oil looks to diversify markets for a sector that faces possible sanctions under deforestation rules imposed by the European Union.

On Wednesday, during Chinese Premier Li Qiang’s first official visit to Malaysia to coincide with the 50th anniversary of diplomatic ties, the two countries renewed a five-year economic and trade pact and expanded cooperation across sectors such as green technology and cross-border crime.

China is the second-largest importer of Malaysian palm oil, buying last year nearly 3.1 million tonnes of the controversial commodity that environmental groups have said is responsible for mass deforestation and the destruction of the habitat of critically endangered animals such as the orangutan.

But Malaysia thinks there is plenty more room to grow demand in China, which counted nearly 400,000 restaurants across the country that specialise in Sichuan hotpot in 2021, according to the official data.

The government has cooked up a plan to convince the hundreds of thousands of hotpot operators in China to consider palm oil as an alternative base for the tongue-numbing broth, which is often made from beef tallow and can be so spicy that some versions purportedly cause hallucinations.

“Palm oil is not only abundant but also versatile and stable under high heat, which is ideal for the intense cooking process of mala hotpot,” Malaysia’s Plantation and Commodities Deputy Minister Chan Foong Hin told This Week in Asia.

Chan said the government had already set up partnerships with Chinese enterprises in a bid to embed palm oil as deeply as possible in the hotpot industry supply chain, while actively promoting the benefits of using palm oil in China’s culinary traditions.

“The feedback so far has been very positive, indicating a strong potential for growth in this market segment,” he said.

Malaysia’s hotpot push began last year, when domestic restaurant operators and commercial producers of the mala hotpot soup base sought alternative fats to offset a shortage in beef tallow, which is traditionally used due to its flavour and texture.

The shift coincided with complaints filed to the World Trade Organization by Malaysia and Indonesia, the world’s largest producer of palm oil, against the EU’s deforestation regulation that the two nations said placed unfair restrictions on palm oil in favour of vegetable oils grown in Europe.

The WTO in March ruled in favour of the EU’s move to exclude palm oil as a renewable source of biofuel by 2030 under its deforestation regulation, which was formally adopted in 2021 to drop imports of crops grown on deforested land or where there is a high risk they would displace food crops.

Once in full effect, the EU’s regulation would ban the import of vegetable oils deemed to have contributed to recent deforestation. Malaysia and Indonesia have said that it places unreasonable requirements on smallholders, who can ill afford to implement technology such as GPS tracing on their produce.

Malaysia has argued that it no longer allows land clearing or deforestation to expand oil palm plantations in the country.

In 2015, it launched its Malaysian Sustainable Palm Oil (MSPO) certification to promote sustainable practices in the industry and counter the deforestation narrative that has been a common thread in diplomatic and public discussions in Europe.

The EU remains a major market for Malaysian palm oil and palm oil products.

The region imported nearly 2.8 million tonnes in 2023, but demand has seen a steady decline as EU member states face sustained public resistance to the ubiquitous oil, used in everything from making lipsticks and soaps to pastries and the popular Nutella spread.

Malaysia was actively promoting the use of MSPO-certified palm oil and palm oil products to China, deputy minister Chan said, adding that the now-mandatory certification for Malaysian-produced palm oil showed “Malaysia’s commitment to sustainable palm oil production”.

“China has shown a positive view of MSPO and is accepting imports of MSPO-certified products. More Chinese companies are expected to import MSPO-certified palm oil products in the future,” he said.


Sumber : South China Morning Post

PUTRAJAYA: Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani stressed the critical role of a robust tax system in preventing government debt escalation and ensuring long-term financial stability.

Johari, who was also the former second finance minister, said the government had to take drastic measures to prevent such debt situations that could impact future generations.

He said there were quarters who cut corners to evade taxes.

He emphasised the need to boost government revenue while maintaining fairness for all taxpayers.

"However, it must be fair to those who diligently comply with the tax system.

"Government agencies are involved in tax collection but the revenue is not for us, but for the country and future generations," he said during a dialogue session at the Public Services Department's peer guides' Madani Aspirations gathering today.

He said government initiatives could not be sustained if it relied on debts.

Prime Minister Datuk Seri Anwar Ibrahim was reported as saying that Malaysia managed to curb its debt growth last year, with the increase in debt slowing to 8.6 per cent from 10.2 per cent in 2022.

The total federal government debt for 2023 stood at RM1,172.5 billion, accounting for 64.3 per cent of the gross domestic product (GDP), compared with RM1,079.6 billion or 60.3 per cent of GDP in 2022.


Sumber : New Straits Times