KUALA LUMPUR: Malaysia could risk losing RM100 billion annually in palm oil exports if the issue of mandating land grants and licenses is not emphasised in palm oil cultivation and the subsequent sale of the fresh fruit branches to the mills.
Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani said palm oil processing mills must comply with the Malaysian Sustainable Palm Oil (MSPO) certification requirements, which are demanded by importers, particularly the European Union (EU).
The certifications help to prove that the plantations are sustainably operated.
"After 2020, opening up forests and planting palm oil without MSPO certification is not allowed. If you don't get the MSPO certification, how can you sell the fruits? These processing mills have MSPO certification, and they cannot accept fruits collected from cleared forests.
"For other crops, I will not intervene, but for palm oil, we must be cautious. This is to ensure our products, worth more than RM100 billion, can be exported. If we are not careful, we will lose this RM100 billion," he said.
Johari made these remarks in response to former Prime Minister Datuk Seri Ismail Sabri Yaakob's statement urging the Malaysian Palm Oil Board (MPOB) to ease the conditions for selling palm oil fruits without requiring land grants and licenses, as this burdened smallholders, particularly the Orang Asli community.
"We produce 18.6 million tonnes of palm oil. We only consume four to five million tonnes, and the rest must be exported. We export to China, India, and the EU. "The EU has its own certification that we must comply with. To comply, any land intended for palm oil cultivation must have ownership documentation," he said.
The minister previously had said that Malaysia practices strict sustainability standards through its sustainability certification scheme.
In early September, the Malaysian Palm Oil Council (MPOC) urged the EU to delay the implementation of the EU Deforestation Regulation (EUDR).
Companies selling soy, beef, coffee, palm oil, and other products in the 27-nation EU bloc are required to prove their supply chains do not contribute to the destruction of forests.
Malaysia and Indonesia, together, account for about 85 per cent of global palm oil exports.
Johari suggested that state governments step in to manage land ownership issues to address concerns about smallholders or the Orang Asli community.
Meanwhile, a plantation analyst said requiring land grants and licenses for oil palm planting and fresh fruit bunch sales isn't just about adding red tape.
"It is about protecting Malaysia's palm oil industry. For one, it helps us meet global sustainability and traceability demands, especially with ESG standards becoming non-negotiable in markets like Europe. If we don't adapt, we risk losing key buyers and hurting our export value," the analyst told Business Times