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Wednesday, 29 January 2025 17:49

Indonesia and Malaysia Strengthen Palm Oil Cooperation

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Aerial view of an oil palm plantation in Dama District, West Kutai Regency, East Kalimantan. (Photo: RRI/Sdw)

 

An outcome of Indonesian President Prabowo Subianto's visit to Malaysia was an agreement to strengthen cooperation between Indonesia and Malaysia on palm oil. It was reached when Indonesia's Minister of Trade, Budi Santoso, accompanied President Prabowo in a meeting with Malaysia's Prime Minister, Anwar Ibrahim in Kuala Lumpur, Malaysia, on Monday, 27 January.

During the meeting, President Prabowo said that every country he visits always emphasizes their need for palm oil. He hoped Indonesia and Malaysia could further enhance cooperation in the sector.

 

Indonesia and Malaysia supply 80 percent of global palm oil, making them the world's largest palm oil producers. This makes their cooperation essential for controlling the palm oil trade, given the trade has always faced barriers from developed countries, who claim that it causes deforestation.

 

However, Indonesia has overcome these barriers by winning a palm oil dispute at the World Trade Organization (WTO) against the European Union's discriminatory policies. The WTO panel ruled that the European Union unfairly treated palm oil-based biofuels from Indonesia with similar products from the EU, like rapeseed and sunflower oil.

 

The WTO panel also found that the EU gave preferential treatment to products like soybeans imported from other countries. Furthermore, they criticized the EU for failing to conduct a timely review of the data used to determine which biofuels were at high risk of indirect land-use change (ILUC), and there were deficiencies in the design and implementation of the criteria for low-risk ILUC under the Renewable Energy Directive (RED) II.

 

As a result, the European Union has been required to amend its policies, as the WTO panel deemed the union has violated trade rules.

 

Indonesia welcomed the panel's decision, but it’s clear that challenges remain. There will continue to be obstacles to trade competition. That’s why cooperation between palm oil-producing countries is essential. They must prove that the palm oil trade should contribute to the people's welfare, rather than harming them. (Publish: Rama)

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