KUALA LUMPUR: The delay in implementing the European Union Deforestation Regulation (EUDR) has given Malaysia's palm oil sector additional time to enhance its readiness for full compliance, according to the Malaysian Palm Oil Board (MPOB).
MPOB director-general Datuk Ahmad Parveez Ghulam Kadir said this window of opportunity allows the industry to engage more deeply with stakeholders, strengthen sustainability initiatives, and ensure Malaysia's continued prominence in the global palm oil market.
He said as the sector adapts to the evolving regulatory landscape, it remains well-positioned to uphold its commitment to sustainable palm oil production while meeting the growing demand for ethically sourced products in the EU and beyond.
"The EU's decision to delay the implementation of the EUDR presents a valuable opportunity for Malaysia's oil palm industry to further strengthen its foothold in the EU market while ensuring full compliance with the evolving regulatory framework.
"As the EU moves towards stricter environmental standards, Malaysia's palm oil sector has taken proactive measures to ensure its alignment with these new rules. A key component of this strategy is the emphasis on the Malaysian Sustainable Palm Oil (MSPO) certification, which has become mandatory for all palm oil producers in the country.
"This certification highlights Malaysia's commitment to sustainable practices, focusing on environmental protection, social responsibility, and traceability," he told Business Times.
Ahmad Parveez said despite the challenges posed by the EUDR, the Malaysian palm oil industry has made significant progress in producing deforestation-free, EUDR-compliant products.
He noted that FGV Holdings Bhd's successful production of EUDR-compliant crude palm kernel oil (CPKO) serves as an encouraging model for other companies.
"It is expected that more Malaysian palm oil producers will adopt similar best practices, further strengthening the country's reputation as a leader in sustainable palm oil production," he said.
According to Ahmad Parveez, the EUDR introduces requirements that go beyond traditional sustainability measures, demanding full traceability, geolocation information, and other detailed compliance documentation.
He said while these measures aim to eliminate deforestation and improve transparency in supply chains, they place a substantial financial and administrative burden on producers, especially smallholders.
He added that smallholders, who make up a significant portion of Malaysia's palm oil production, often lack the resources and capacity to meet these stringent requirements.
"The added costs of compliance, without any corresponding premiums or price incentives for palm oil, intensify the pressure on the industry. Smallholders, in particular, may find it challenging to bear these costs, which could impact their livelihoods and undermine the sustainability of the sector.
"This issue is compounded by the exclusion of smallholders from the EUDR's compliance framework, which risks further marginalising them and undermining their role in the palm oil supply chain," he said.
Ahmad Parveez noted that their exclusion could lead to reduced market access, creating barriers that diminish their income potential and overall livelihood.
He said as these smallholders struggle to meet the EUDR's demanding standards, the broader efforts to promote sustainability and traceability in the palm oil industry could be weakened.
"Addressing this challenge requires targeted support for smallholders, including access to affordable certification programs, training on compliance procedures, and financial incentives to ease the burden of meeting regulatory requirements.
"Furthermore, creating mechanisms for smallholders to participate in the sustainable palm oil certification process will be crucial in ensuring that they are not left behind as the industry adapts to the EUDR," he added.
Previously, EU negotiators agreed on a one-year delay for a ban on importing goods linked to deforestation, keeping the original rules unchanged.
The delay, proposed by the EU in October, extends the deadline to Dec 30, 2025, following complaints from 20 EU countries, companies and nations like Brazil and Indonesia.