Governments try to get a handle on palm oil

Malaysia and Indonesia are the centre of palm oil production. They are the two biggest exporters in the world, with Indonesian palm oil making up 58% of the market and Malaysia 24%.

Palm oil is also a commodity that has often been linked to deforestation, and is one of the seven commodities covered by the upcoming EUDR.

How these governments regulate palm oil is an important part of the sector as a whole.

In recent years, the governments of Malaysia and Indonesia have tightened regulations around palm oil, aiming to make the sector more sustainable. But will their efforts be enough?

Governments aim to get a handle on the industry Two new developments are symptomatic of this. In Indonesia, the long-planned Tanah Merah oil palm project in the region of Papua has been blocked by the Indonesian government, a decision upheld by the Supreme Court, as reported by Mongabay.

The project, according to the NGO Earthsight, would have given around 2,800sq km of largely primary forest over to palm oil projects.

Meanwhile, in Malaysia, the state of Sarawak has stopped issuing provisional licences for new palm oil plantations, reports Human Rights Watch.

According to Luciana Tellez-Chavez, a senior researcher at the organisation, the decision was made to ‘mitigate deforestation.’

These are only two small decisions within wider efforts of these countries to regulate the palm oil sector.

National sustainability measures such as Indonesian Sustainable Palm Oil (ISPO) and Malaysian Sustainable Palm Oil (MSPO) have taken their place alongside more multinational organisations like the RSPO.

Furthermore, in 2019 Malaysia prohibited the conversion of natural forest, the same year as Indonesia’s similar moratorium.

Nevertheless, according to Tellez-Chavez, control of land in Malaysia is still under state jurisdiction, making the enforcement of the prohibition difficult.

“Any policy shift in these two countries has major implications for most of the palm oil circulating in the world,” Tellez-Chavez explains.

Importantly, recent scrutiny of the industry “has undeniably put pressure on governments to address issues. In Indonesia and Malaysia, this has translated into moratoriums on the expansion of plantations and companies being required to follow national palm oil certification schemes… and plantations being frequently audited by third parties.”

Will this affect the EUDR?According to Tellez-Chavez, Sarawak’s decision to halt palm oil plantation licences shows the effectiveness of the EUDR as an instigator of change.

“Here’s the main reason to protect the EUDR: it works. It’s incentivizing governments and industry to raise standards to protect what is remaining of the world’s wilderness,” she explained in a social media post.

Nevertheless, whether this could work the other way around – whether increased regulation could affect the two countries’ status in the upcoming EUDR benchmarking, for instance – is less clear.

“Certainly these are measures that would contribute to make palm oil exports from both countries more compatible with the EUDR requirements – but ultimately the risk benchmarking criteria in the regulation is designed to assess results, not just pledges,” she explains.

“The measures have to be in place, enforced, and actually yielding results in terms of reducing deforestation and respecting rights.”