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Indonesia retaliates against EU over palm oil ban

Wednesday, 24 April 2019

The proposed EU RED Act to ban use of palm oil as biofuel in EU countries by 2030 has provoked Indonesia to retaliate by limiting imports from EU countries including spirits. This is seen as just the first step of more retaliatory acts by Indonesia to strike back at EU countries in the coming months and SOPPOA fully support the move by the Indonesian government to protect the palm oil industry and its people.

Indonesia is the world’s largest producer of palm oil and any move to ban it is a threat to the economy of the country as well as the millions of growers, millers, and associated businesses related to palm oil production in Indonesia, including revenue for the government. Malaysia has not yet taken any step against the EU proposed ban but the Prime Minister had earlier issued a warning to EU that trade ties could be affected, including declining to buy EU fighter jets and luxury cars. The main reason why Malaysia and Indonesia are taking steps against EU is that the proposed ban on palm oil is not scientifically proven, a move to protect the oil seeds industry in EU and prevent competition from palm oil.

Currently, the EU proposed ban on palm oil is based on questionable reports on unsustainable production and destruction of habitats; both these accusations are not scientifically proven and methodology used in the reports are not internationally acceptable as scientific models. The proposed ban is nothing more than a disguise to brand palm oil as bad oil which should not be used for biofuel feedstock in EU for biodiesel. What the report did not mention is that palm oil is the most productive, cheapest and readily available oil in the market and any substitution will surely result in greater land degradation, higher cost of production and greater poverty in Asia where smallholders will not be able to sell their palm oil.

SOPPOA has also written to support the Prime Minister’s warning to EU on the proposed ban on palm oil for biofuel feedstock in EU countries as it is also against WTO rules. There will definitely be more such retaliatory measures being taken by other palm oil producing countries in the future should the proposed ban be adopted and trade between EU and Asian partners will surely suffer as a result. It should be clear to EU nations that the world’s population will still need affordable oil in the years ahead as population grows and majority of these people are in Asean region. The EU risk being isolated as a regional grouping with limited resources and purchasing power which will lead to their own downfall.