On 17 January 2018, the European Parliament voted on the revision of the Renewable Energy Directive (RED). The European Parliament sought to reduce to zero by 2021 biofuels and bioliquids produced from palm oil in the European Parliament’s member state’s consumption of energy from renewable energy sources.
The reason for this being that the widely-used commodity would derail Europe’s green ambitions for its transport sector if used as biodiesel. The plans by the European Union to ban palm oil from Malaysia, Indonesia and Thailand are officially to protect rain forests, but these three countries claim it is to protect the flagging oil industry in Italy, Spain and Greece.
As the world’s top 2 exporters of palm oil, both Malaysia and Indonesia will be greatly affected by the move. Malaysia is the world’s second-biggest palm oil producer after Indonesia. The two countries together account for nearly 90% of global palm oil output. Exports of the edible oil are a key source of revenue for Malaysia, with the European Union being its second largest export market.
So, what have Malaysia and Indonesia been doing to fight this ban? Why haven’t these countries fought harder to ensure that the ban never takes place? If the RED comes into play and is enforced, close to 650,000 palm oil smallholders in Malaysia and 3,000,000 palm oil smallholders in Indonesia will lose their livelihood. Shouldn’t the governments work together to ensure the its citizens have sustainable incomes in the foreseeable future?
Collectively, Malaysia, Thailand and Indonesia have the power to threaten the European Union due to the many bilateral trades that are currently in place between these South East Asian countries and the European Union.
Germany stands to lose most of all its neighbours from a trade war with bilateral trade with the three south east Asian countries totals over £27 billion, its biggest airline Lufthansa operates extensively in the region and car maker Mercedes Benz has found a lucrative market in Thailand.
France meanwhile is at risk of big losses to its aeronautics industry with its trade to Malaysia alone worth £3.5 billion.
Malaysia for one, has been focussing on Europe’s six biggest countries, which are Germany, France, the UK, Italy, Spain and Poland according to Mah Siew Keong, the Malaysian Minister of Plantation Industries and Commodities. He added that “Malaysia has visited these six countries and it looks very promising right now because five out of the majority European countries have stated that they will not support the discrimination against palm oil.”
Mah also claims, “moving forward, we will work to convince more countries to join on board”.
We can only hope that the Malaysian, Thai and Indonesian governments be proactive and work together to fight this ban before it comes into place. Surely, this is a classic case of exercising your strength in numbers.
Opinion article by The Editor of International Palm Oil Monitor