A worker at an oil palm plantation in Paloh, Johor. In Malaysia, 650,000 smallholders rely on the crop for their livelihood.

IS Malaysia looking to impose tough trade measures on nations that boycott Malaysian palm oil?

The move is inevitable following news that European Union lawmakers have vowed to ban the use of palm oil in biofuels. Kuala Lumpur, in a strong rejoinder, has called the EU move a protectionist trade barrier and a form of “crop apartheid”.

Malaysia is the world’s biggest palm oil producer after Indonesia, and the two countries together account for nearly 90 per cent of global output. Exports of the edible oil are a key source of revenue for Malaysia, with the European Union its No. 2 market.

In Malaysia alone, some 650,000 smallholders rely on the crop for their livelihood. Last week, hundreds of them gathered in Kuala Lumpur to protest a push by EU lawmakers to curb palm oil imports.

Datuk Seri Mustapa Mohamed

NST understands that the Malaysian cabinet, at its meeting last week, discussed the issue and proposed counter-measures. One option for Malaysia is to review its import policy on nations that impose sanctions on palm oil.

This could effectively mean a “Buy EU Last” policy, a decision that could hurt EU nations eyeing Malaysian contracts for the supply of big-ticket items, such as planes and power generators.

Coincidentally, Tun Dr Mahathir Mohamad met 14 EU ambassadors on Thursday in what is seen as an attempt to convince the Europeans that his opposition coalition is genuine.

Ambassadors from France to Romania and Spain were among those present at the meeting at the residence of Ambassador and Head of Delegation of the EU to Malaysia, Maria Castillo Fernández.

European lawmakers approved draft measures this month to reform the power market there and reduce energy consumption to meet more ambitious climate goals. The plan includes a ban on the use of palm oil in motor fuels from 2021.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed has said Malaysia and other palm oil producers would complain about the matter to the World Trade Organisation.

A Jalil Hamid feels in a digital world, the winner does not always take all. He can be reached via jalil@nst.com.my

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