Indonesian President Joko Widodo in Malaysia amid threat to key palm oil industry
Indonesian President Joko Widodo is in Malaysia today, where he will meet Malaysian Prime Minister Mahathir Mohamed for talks expected to include discussion of the European Union’s plan to ban palm oil biofuel.
Malaysia and Indonesia are the top two producers of palm oil and top exporters of palm oil biofuel. They have challenged this ban in the WTO, arguing that the EU’s practices are discriminatory against their economies.
Prior to the phasing out of this ban, Germany and the Netherlands were top importers of palm oil. However, after the European Commission expressed concern over the crop’s environmental impact in early 2018, they have committed to phasing out palm oil in biofuel by the end of 2020.
Now, after a letter to the EU signed by both nations in April was overlooked, both states are preparing for massive retaliation, including the cancelation of deals valuated at billions of dollars and the suspension of free trade talks.
In 2010, the EU approved the use of palm oil as part of their renewable energy plan, resulting in the opening of numerous palm oil plantations in Malaysia and Indonesia. Now, these plantations have reached maturity but access to the EU market is dwindling.
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