Indonesian palm oil sector expresses concerns over EU deforestation legislation

The Indonesian government and country’s palm oil trade bodies have reportedly expressed concerns over the EU deforestation regulations based on due diligence principles being put forward under the European parliament, writes Neill Barston.

While the need for greater regulation and transparency in relation to commercial supply chains, including the cocoa sector has been widely welcomed across Europe and further afield, divisions are said to have emerged with supply partners in South East Asia over the potential impact of any new legislation, according to industry organisations in the region.

Under the legislation being brought forward in the EU parliament, there would be an enhanced level of onus on individual companies to ensure that deforestation is not linked to products being imported to the EU from locations around the world, including key cocoa supplies in West Africa, and other major ingredients including palm oil from across South East Asia.

Consequently, as noted by the Indonesian Palm Oil Association, the country’s president Joko Widodo and his ministerial team have put forward their issues over policy development at the recent inaugural ASEAN-EU Summit, which aimed to mark historic trading partnerships of more than four decades between the EU and Indonesia and Malaysian regions.

Significantly, palm oil has remained a key ingredient within the confectionery and snacks trade globally, though its use has attracted controversy due to considerable variations in standards with regards to harvesting and wider agricultural practices with regards to enhancing sustainability credentials.

Moreover, in a press conference after the event President Widodo is reported to have said: “Partnerships must be based on equality. There must be no coercion. There can no longer be one side that always dictates to the other and assumes that ‘my standard is better than yours.’”

Furthermore, Indonesia’s Foreign Affairs Minister Retno Marsudi added: “The President expressed concern on European Union policies that are discriminatory in nature and hamper Indonesia’s commodity exports. The new policy that is in the headlights of the President is the Deforestation Regulation.”

As Joko Supriyono, Chairman of the Indonesian Palm Oil Association (GAPKI) noted in the wake of the key meeting, the country remains dedicated to its role as a key link in global supply chains: He said: ” Indonesia remains committed to supplying the EU with sustainable commodities like palm oil. The EU institutions need to recognise Indonesia as a valued, reliable trade partner and affirm their commitment to pursue cooperation and partnership with Indonesia and our ASEAN neighbours.”

From an EU perspective, President of the European Council, Charles Michel, speaking in an opening address of the recent meeting, stressed that the EU and South East Asia regions had a strong history of co-operation that spanned 45 years, which he believed could be built upon by closer ties, including the potential for a new free trade agreement.

He said: “The EU and ASEAN are the world’s two most advanced regional integration organisations. We understand each other very well, we share the same values and the same spirit of cooperation, we both know the challenges of transforming the vision of a political community anchored in common interests and common rules into concrete reality for our citizens.

“Today’s meeting is also an opportunity to bind our regions closer together. One way to do that is through trade. Trade is a powerful tool for promoting growth and closer ties between our regions. Our trade agreements with Vietnam and Singapore have already boosted our common trade and will continue to help drive our recovery and we are exploring trade agreements with other countries in your region. We also hope to develop an EU-ASEAN Free Trade Agreement.”

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