12.02.2018 (The Malaysian Reserve) - Malaysia does not plan to impose a blanket ban on goods from the European Union (EU) as a retaliatory action against the bloc’s unfair treatment to palm oil biofuels.
International Trade and Industry Minister Datuk Seri Mustapa Mohamed (picture) said a total trade ban on EU would cause a massive disruption to the economy due to the sizeable number of European companies in Malaysia from German, the Netherlands, Britain and Sweden.
“However, we are taking this matter (the proposed EU ban) seriously, as we view this as a discrimination towards palm oil,” he said at Sime Darby Plantation Bhd’s unveiling of “Operational Excellence and Innovation Business Management Strategy 2.0” in Kuala Lumpur last Friday.
He said the government has also voiced its objections to the economic bloc.
“The government has already issued several statements, but we are not there yet to cut total ties with the EU,” he said.
Mustapa said the discussion with the EU is currently being headed by Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong.
However, he did not dismiss the possibility of a selected ban.
“We are not talking about total ban of trade with the EU because the world is a lot more complicated now.
“There was a time when we can be an island, but we cannot afford to become a standalone nation anymore, especially with the current global climate,” he added.
According to Mustapa, approximately 200 companies from each of the four main EU countries have a strong footprint in Malaysia.
“As I mentioned before, trade relations are complicated because we are part of the global value chain.
“Therefore, any big decisions that can impact the nation in a large scale must be done carefully,” he said.
Mustapa said the government has a 100% leverage for procurement such as for the defence industry.
However, he said the government has no control to regulate the private sector from importing their goods and services.
“Since Malaysia is a fully enterprise nation and not a control economy or a communist nation, the government does not have the power to regulate the private sector’s import-export dealings,” Mustapa said.
Despite the EU’s proposed ban, a few EU countries have shied away from the bloc with Sweden opposing the resolution.
The proposal suggests that all edible oils should no longer be considered as a source of renewable energy for sustainability purposes by 2025.
The EU Parliament recently voted in favour of the amendment to the draft law, eliminating the contribution of palm oil in biofuels and bioliquids products by 2021.
According to a recent Bernama report, the government is currently reviewing the purchase of products from countries in the EU, as the proposal — if approved — would affect the incomes of some 500,000 smallholders across the country.
It will also affect the demand for palm oil, which is one of the biggest commodity-based export contributors with a value of RM71.5 billion in 2017.
The palm oil industry is the fourth-largest contributor of the country’s gross national income, accounting for about 8%, or equivalent to RM50 billion.
Malaysia is the second-largest producer of palm oil, generating 39% of the world’s consumption.