The Plantation Industries and Commodities Ministry today said negative perceptions of palm oil must be put to rest to ensure the competitiveness of exports in the long run.
Minister Datuk Zuraida Kamaruddin said Malaysia and Indonesia had for the past two decades been subject to numerous anti-palm oil campaigns by Western countries and the developed world.
"This will affect the marketability of palm oil and its related products in these markets.
"Palm oil and its related products are major revenue contributors to the country's economy and have played a significant role in reducing rural poverty by providing employment and improving infrastructure," she said in a statement.
She said "palm oil-free" marketing and labelling campaigns had convinced consumers that palm oil was bad, whether nutritionally, for environmental reasons or both.
In 2019, the European Union (EU) classified palm oil as a crop with a high-risk of leading to indirect land-use change, so it is seen as contributing to deforestation and biodiversity loss.
"EU member countries are currently adopting the European Union Renewable Energy Directive II in their respective legislation.
"This classification will affect the chances of palm oil being a potential biofuel source as its usage will be reduced from next year before being 'eliminated totally' as a biofuel source in the EU by 2030," she said.
She said this led to Malaysia initiating legal action against the EU and two of its members, France and Lithuania, on Jan 15, 2021 under the World Trade Organization’s (WTO) Dispute Settlement Mechanism.
This came after the EU implemented the directive without considering Malaysia's commitment and views and even after Malaysia gave feedback and sent economic and technical missions to Europe.
Malaysia will also act as a third party in a separate WTO case lodged by Indonesia, which is the world's biggest palm oil producer, as a sign of solidarity and support.
"In all fairness, Malaysia has been left with no choice but to retaliate against the bullies even as we understand that the legal process can drag on and be costly."
She said the legal challenge entailed a lot of preparation and submission of documents for argument, as well as meticulous research and long meetings and deliberations by the panel tasked to look into the matter.
Thus far, no further restrictions have been imposed by the EU against palm oil.
"However, the fact remains that medium- to long-term damage has already been inflicted on palm oil's image in the eyes of European consumers.
"In this regard, the ministry will continue to closely monitor the latest developments in legislation in the EU, which could tarnish the reputation of palm oil and adversely affect the viability of palm oil and the palm oil-related industry in Malaysia."