The European Commission (EC)’s decision to give Malaysia a ‘standard risk’ classification under the European Union Deforestation Regulation (EUDR) benchmarking system overlooks the country’s tangible results in reducing deforestation, according to the Malaysian Palm Oil Council (MPOC).
The EUDR requires companies selling or exporting seven commodities – cocoa, coffee, palm oil, soyabean, cattle, rubber and timber – in the EU to ensure they are deforestation-free and legally sourced.
In addition to restricting imports of commodities linked to deforestation, the EUDR requires the EU to classify regions by risk levels – low, standard or high – with the classification determining how strict due diligence rules will be for companies trading those seven commodities.
According to a Euractiv report, all 27 EU countries have been given ‘low risk’ status, along with the USA, China, Australia and Canada.
Countries classified as ‘high risk’ included Belarus, Myanmar, North Korea and Russia, with all remaining countries – including Malaysia – in the ‘standard’ category, the 22 May report said.
“[The] publication of the country benchmarking is an important milestone ahead of the entry into application of the law on 30 December 2025 for large companies and 30 June 2026 for micro- and small enterprises,” Euractiv quoted the EC as saying in a press release.
The MPOC said on 22 May that Malaysia’s classification was “unfair” as other countries with “weaker” records on forest conservation had been given ‘low risk’ status.
“Malaysian palm oil companies and smallholders have made significant strides to reduce primary forest loss and forest degradation. This is further exemplified through the mandatory implementation of the MSPO [Malaysian Sustainable Palm Oil] certification scheme since 2020, which has led to a substantial reduction of forest loss in Malaysia,” MPOC chairman Carl Bek-Nielsen said.
“The European Commission knows that we have a far better record on this than some European states. And yet the European Commission has rewarded its own members with ‘low risk’ status.”
According to MPOC CEO Belvinder Sron, the EC’s decision on Malaysia is not what the country’s palm oil industry had expected.
“We are deeply disappointed … Of most concern to us, and I am sure other EU trading partners, too, is the accompanying documentation that explains the data on which the Commission has based its decision.”
The organisation said it would request clarification from the EC on its full benchmarking methodology used in the assessment, she said.
Between 2014-2023, Malaysia reduced primary forest loss by 65%, and in 2024 had achieved a further 13% reduction, Sron added.
“Since 2019, we’ve also seen a decline in total planted area for oil palm. Through our mandatory MSPO 2022 standard, we mandated zero conversion of natural forests, protected areas, and High Conservation Value areas after 31 December 2019. Malaysia’s sustainability efforts are fully aligned with the deforestation-free and legality criteria of the EUDR, and with our broader climate commitments under the Paris Agreement.”
Despite Malaysia’s classification as ‘standard risk’, Malaysia’s Plantation and Commodities minister Johari Abdul Ghani was quoted as saying in a 27 May report by The Star that he remained optimistic.
“Our certification is already recognised. Currently, we are classified under ‘standard risk’, but we are working on improving this. We aim for recognition of our sustainability and traceability systems,” Johari said.
Acknowledging that Malaysia must comply with the EUDR even if enforcement was not in effect yet, Johari said many of Malaysia’s major exporters already operated within a fully traceable and sustainable supply chain.
“A large portion of our products are exported to Europe because many of our players are large companies. These companies own the entire supply chain, from plantations, mills, and refineries to oleochemical plants, so they have full control and are able to meet export requirements,” he added.
Johari said Malaysia said was working to ensure that its sustainability certification systems such as the MSPO standard were accessible to, and inclusive of, small-scale farmers.
“What we want to do now is ensure the MSPO standards can also embrace smallholders. As of today, about 85% of our smallholders are able to comply.
“They do not have mills or refineries, but they produce the fruits. We help integrate them into the supply chain and justify their compliance,” he told reporters on 21 May.
Johari also said representatives from the EU were expected to visit Malaysia in September or October to observe local practices and assess the country’s readiness for the EUDR.
