Malaysia eyes greater sustainability in palm oil sector as EU law looms

The Malaysian government said on Tuesday that it will encourage sustainability while maintaining the competitiveness of its palm oil industry ahead of the implementation of the EU’s anti-deforestation law at the end of this year.

The EU last month approved a one-year delay to the landmark deforestation law, which bans the importation of palm oil, soy and other goods linked to the destruction of forests.

The law requires companies and traders selling soy, beef, coffee, palm oil and other products in the EU to provide proof their supply chains do not contribute to deforestation.

Malaysia and Indonesia, the world’s largest exporters of palm oil, have previously expressed their concerns that the law and implementation rules are discriminatory.

Malaysia’s Deputy Plantation and Commodities Minister Chan Foong Hin said it was crucial for the country’s palm oil industry to understand the impact of the EU law so that domestic practices could be adapted to maintain market access and competitive edge. By aligning operations with the standards, Malaysia could consolidate its position in the market.

Chan said the success of Malaysia’s palm oil industry depended on the adoption of green initiatives, including advanced agriculture technologies, sustainable farming, and new production methods, to help protect the environment while creating new growth opportunities.

Malaysian Palm Oil Board director-general Ahmad Parveez Ghulam Kadir said ministries and agencies will continue collaborating with the local industry to address environmental concerns while also promoting economic stability and social responsibility to foster a more sustainable and balanced future.

He said Malaysian palm oil stocks are expected to fall to around 1.6 million tons this year, compared with 1.71 million tons in 2024.

Production in the world’s second-largest producer in 2025 should come in at 19.5 million tons, marginally higher than the 19.34 million tons in 2024. Meanwhile, palm oil exports are expected to be 17.3 million tons in 2025, up from 16.9 million tons in the previous year.