The EU ruled in March it would exclude most palm oil from green transportation fuel by 2030. (Antara Photo/Syifa Yulinnnas)

Indonesia and Malaysia Unite to Fight EU Discrimination Against Palm Oil

AUGUST 10, 2019

Jakarta. President Joko "Jokowi" Widodo and Malaysian Prime Minister Mahathir Mohamad have agreed to form a united front in fighting off the European Union's discriminatory policy against palm oil-based products from the two Southeast Asian countries.

"Both leaders are totally committed to continue the fight against palm oil discrimination," Retno said in a statement on Saturday.


Indonesia and Malaysia have already made commitments to sustainable palm oil processing and management, Retno said. 

Indonesia has also acquired palm oil certifications and scientific data to counter the current narrative that palm oil is the main destroyer of rain forests in the world – compared to similar commodities like soybean and rapeseed.

"Our approach is an open approach. Let's work together. But if this invitation to cooperate is not getting an answer and we continue to be discriminated against, of course, Indonesia and Malaysia will not stay silent. We will fight," Retno said.

The two Asean member countries and the European Union have agreed to form a working group on palm oil. Indonesia says the working framework is doubly important. 

The EU issued a ruling in March that would exclude most palm oil from being used in green transportation fuel by 2030 due to the damage it causes to the environment. 

Counter Tariff

Separately, Indonesian Trade Minister Enggartiasto Lukita said he would propose a 20-25 percent tariff on EU dairy products to counter the union's plan to impose an 8-18 percent anti-subsidy duties on Indonesian biodiesel, which is made from palm oil. 

"I have conveyed this strong message to the EU trade minister. They are still free to impose anything on us as long as it's based on a fair parameter," Enggartiasto said.

"But if [the parameter] continues to be unfair, [that's] another step toward protectionism and a trade war. It would be impossible for us then to stay quiet," Enggartiasto said. 

The minister said he has told local dairy importers to start finding other dairy suppliers from Australia, New Zealand, the United States or India before Indonesia starts imposing the tariff.

He did not say when the tariff is likely to be imposed. 

The EU exported milk and cream worth $135 million to Indonesia last year, accounting for 26 percent of the country's import of the dairy product, UN Comtrade data showed.