Expert Opinions on EUDR Compliance for Malaysian Palm Oil
The Malaysian palm oil industry is under pressure to be compliant with the European Union’s Deforestation Regulations which are set to be imposed on Malaysian exports to the EU.
Expert analyses on the issue are divided as to how much of an impact the EUDR will have on the Malaysian palm oil industry which is extremely export dependent.
Expert analyses on the issue are divided as to how much of an impact the EUDR will have on the Malaysian palm oil industry which is extremely export dependent.
Interoperability of EU and Malaysian destinations-Dr. Siti Hafsyah Idris
According to Dr. Harald Sippel from ESG in Malaysia.
"Europe's regulatory push under the EU Deforestation Regulation (EUDR) is weighing on palm oil demand, but Middle Eastern and Asian markets are increasingly absorbing the surplus without similar sustainability requirements.
That is gradually reshaping the geographic orientation of Malaysian palm oil exports. Less Europe, more Asia and the Gulf," ESG in Malaysia executive director Dr Harald Sippel told Business Times.
Sippel said the trend reflects a deeper structural adjustment in global palm oil trade rather than a simple fall in overall demand.
Where European importers demand rigorous sustainability credentials, many Asian and Gulf buyers are prioritising price and availability over certification. That has helped keep Malaysian exports buoyant even as regulatory barriers rise in the West.
Yet Europe's influence has not disappeared. The EUDR is reshaping industry practices by forcing producers seeking continued access to invest in traceability systems, certification and documentation.
Larger plantation groups, by contrast, are better placed to absorb those costs, potentially concentrating the supply of certified sustainable palm oil in fewer hands over time.
For producers able to meet the standards, Europe could remain a lucrative, if smaller, market. But Sippel cautioned of a longer-term concern for Malaysia.
This is manageable in volume terms, but it does raise longer-term questions about market diversification risk and the country's strategic interest in resolving rather than simply deferring the EUDR compliance pathway.
For Malaysia, the path forward will require balancing cost pressures, preserving market access and safeguarding competitiveness in an industry where the rules are being rewritten in real time.
Exclusive EUDR Compliance
The imposition of the EUDR will deliver a mixed bag of outcomes according to UOB Kay Hian (UOBKH) Research.
"On the upside, Malaysia is uniquely positioned because its Malaysian Sustainable Palm Oil (MSPO) certification is the only national scheme formally recognised by the EU.
That means Malaysian plantation companies could capture a larger share of the shrinking EU palm oil market, especially in food and oleochemicals where verified traceability is now essential.
The research house noted the implications for the oil palm industry are significant.
EU imports of palm oil have already fallen to 2.85 million tonnes in 2025/26, down 5% year‑on‑year, largely due to biofuel exclusion policies rather than EUDR itself.
The remaining demand pool is smaller but more tightly monitored, meaning compliant Malaysian cargoes could command a premium. Larger integrated planters such as SD Guthrie Bhd, Kuala Lumpur Kepong Bhd (KLK), and IOI Corp Bhd are well placed to absorb compliance requirements, while smaller, less traceable producers may struggle."
While large palm oil companies like SD Guthrie Bhd, Kuala Lumpur Kepong Bhd (KLK), and IOI Corp Bhd are well positioned to be EUDR compliant and therefore capable of meeting any requirements for EUDR compliance, the problem is that lesser equipped exporters who may be striving towards EUDR compliance may get chopped off at the knees even if they are MSPO certified.
The threat of exclusion for smaller Malaysian palm oil producers who are working towards sustainability demands from the world’s premier market for sustainable palm oil was enough for Malaysia to further ramp up the MSPO to offer all Malaysian producers an equal opportunity to the EU market.
Inclusive EUDR compliance under MSPO
Towards that goal of an inclusive industry where smallholders get to be a part of Malaysian palm oil exports to the EU, Malaysia expanded its Malaysian Sustainable Palm Oil certification to include middlemen between small holders and mills.
“FFB dealers are the key link between independent smallholders and mills. By bringing them into MSPO’s certified and auditable system, Malaysia is closing a long-standing traceability gap in the supply chain.
To further strengthen implementation and market confidence, Malaysia has also established the MSPO Impact Alliance, a collaborative platform involving industry players, global buyers, financiers and civil society.
MSPO Impact Alliance is aimed at turning sustainability commitments into practical solutions. It provides a clear action framework, allowing new approach tests, addressing on the ground challenges and scale innovations that strengthen MSPO certification and Malaysia’s position in global markets.”
Will these investments into the MSPO allow market access for smallholder inclusion for the EU market?
This report from New Straits Times indicates that Malaysia will keep its share of the EU market for palm oil despite Indonesia’s trade deal which will allow tariff free imports of Indonesian palm oil.
"Long term access to the European market will depend on traceability, certification and regulatory compliance rather than price alone."
Trouble with EU Green Trade Policies and the way ahead for Malaysian palm oil
Dotting every i or crossing every t to comply with the EU’s green demands may not be enough of an assurance of long term market access to the EU. Malaysia’s continued upscaling of the MSPO reflects what Dr. Sippel said about “market diversification risk and the country's strategic interest in resolving rather than simply deferring the EUDR compliance” but the EUDR and MSPO are only parts of an equation where the final answer should meet the sustainability goals of both the EU and Malaysia.
The long term solutions presented recently by two Malaysian experts on sustainability, trade and development at The Malaysian Embassy at The Hague shows what needs to be involved beyond import requirements and certification.
Dr. Helena Varkkey raised two dynamic points that challenged the EUDR’s core principles.
Dr. Siti Hafsyah Idris pointed a way forward to meet the green demands of the Global North and the development needs of the Global South where both meet on common ground.
“The central legal question is not whether global supply chains must be sustainable, but how domestic statutory systems and regional trade regimes establish verifiable regulatory interoperability.”
Dr. Idris recommended a legal system with two authors where Malaysia and the European Union converge through the Sustainable Development Goals, the Paris Agreement, the Convention on Biological Diversity, and WTO law.
With trade negotiations scheduled for completion by October 2027, now is as good a time as any to bury the bone permanently by tackling the issue of palm-based biofuels.
The bone is how the EU classified palm oil as a high Indirect Land Use Change (ILUC) risk due to perceived deforestation for biofuels.
Malaysia for its part has committed to halting further deforestation for palm oil expansion to ensure this does not happen. The launch of Palms 2030 by the Malaysian Palm Oil Board to deploy its technical expertise strategically to respond to trade challenges presents a new challenge to the EU's aged environmental arguments against palm oil.
Considering the conflict of opinions from within the European Union’s elected officials which could lead to changes in the EUDR that few could have foreseen or prepared for, the answer as to whether the upscaled MSPO is interoperable with the EU’s green regulations may lie in the emissions of the EU and Malaysia.
Will Malaysia’s efforts to reduce its palm oil industry’s emissions to produce green energy as an essential element of sustainable palm oil production be a solution for the EU’s green visions and its energy crisis?
CSPO Watch thanks The Malaysian Embassy at The Hague for the information shared on the presentations of Dr. Helena Varkkey and Dr. Siti Hafsyah Idris.
Published October 2026 CSPO Watch
"Europe's regulatory push under the EU Deforestation Regulation (EUDR) is weighing on palm oil demand, but Middle Eastern and Asian markets are increasingly absorbing the surplus without similar sustainability requirements.
That is gradually reshaping the geographic orientation of Malaysian palm oil exports. Less Europe, more Asia and the Gulf," ESG in Malaysia executive director Dr Harald Sippel told Business Times.
Sippel said the trend reflects a deeper structural adjustment in global palm oil trade rather than a simple fall in overall demand.
Where European importers demand rigorous sustainability credentials, many Asian and Gulf buyers are prioritising price and availability over certification. That has helped keep Malaysian exports buoyant even as regulatory barriers rise in the West.
Yet Europe's influence has not disappeared. The EUDR is reshaping industry practices by forcing producers seeking continued access to invest in traceability systems, certification and documentation.
Larger plantation groups, by contrast, are better placed to absorb those costs, potentially concentrating the supply of certified sustainable palm oil in fewer hands over time.
For producers able to meet the standards, Europe could remain a lucrative, if smaller, market. But Sippel cautioned of a longer-term concern for Malaysia.
This is manageable in volume terms, but it does raise longer-term questions about market diversification risk and the country's strategic interest in resolving rather than simply deferring the EUDR compliance pathway.
For Malaysia, the path forward will require balancing cost pressures, preserving market access and safeguarding competitiveness in an industry where the rules are being rewritten in real time.
Exclusive EUDR Compliance
The imposition of the EUDR will deliver a mixed bag of outcomes according to UOB Kay Hian (UOBKH) Research.
"On the upside, Malaysia is uniquely positioned because its Malaysian Sustainable Palm Oil (MSPO) certification is the only national scheme formally recognised by the EU.
That means Malaysian plantation companies could capture a larger share of the shrinking EU palm oil market, especially in food and oleochemicals where verified traceability is now essential.
The research house noted the implications for the oil palm industry are significant.
EU imports of palm oil have already fallen to 2.85 million tonnes in 2025/26, down 5% year‑on‑year, largely due to biofuel exclusion policies rather than EUDR itself.
The remaining demand pool is smaller but more tightly monitored, meaning compliant Malaysian cargoes could command a premium. Larger integrated planters such as SD Guthrie Bhd, Kuala Lumpur Kepong Bhd (KLK), and IOI Corp Bhd are well placed to absorb compliance requirements, while smaller, less traceable producers may struggle."
While large palm oil companies like SD Guthrie Bhd, Kuala Lumpur Kepong Bhd (KLK), and IOI Corp Bhd are well positioned to be EUDR compliant and therefore capable of meeting any requirements for EUDR compliance, the problem is that lesser equipped exporters who may be striving towards EUDR compliance may get chopped off at the knees even if they are MSPO certified.
The threat of exclusion for smaller Malaysian palm oil producers who are working towards sustainability demands from the world’s premier market for sustainable palm oil was enough for Malaysia to further ramp up the MSPO to offer all Malaysian producers an equal opportunity to the EU market.
Inclusive EUDR compliance under MSPO
Towards that goal of an inclusive industry where smallholders get to be a part of Malaysian palm oil exports to the EU, Malaysia expanded its Malaysian Sustainable Palm Oil certification to include middlemen between small holders and mills.
“FFB dealers are the key link between independent smallholders and mills. By bringing them into MSPO’s certified and auditable system, Malaysia is closing a long-standing traceability gap in the supply chain.
To further strengthen implementation and market confidence, Malaysia has also established the MSPO Impact Alliance, a collaborative platform involving industry players, global buyers, financiers and civil society.
MSPO Impact Alliance is aimed at turning sustainability commitments into practical solutions. It provides a clear action framework, allowing new approach tests, addressing on the ground challenges and scale innovations that strengthen MSPO certification and Malaysia’s position in global markets.”
Will these investments into the MSPO allow market access for smallholder inclusion for the EU market?
This report from New Straits Times indicates that Malaysia will keep its share of the EU market for palm oil despite Indonesia’s trade deal which will allow tariff free imports of Indonesian palm oil.
"Long term access to the European market will depend on traceability, certification and regulatory compliance rather than price alone."
Trouble with EU Green Trade Policies and the way ahead for Malaysian palm oil
Dotting every i or crossing every t to comply with the EU’s green demands may not be enough of an assurance of long term market access to the EU. Malaysia’s continued upscaling of the MSPO reflects what Dr. Sippel said about “market diversification risk and the country's strategic interest in resolving rather than simply deferring the EUDR compliance” but the EUDR and MSPO are only parts of an equation where the final answer should meet the sustainability goals of both the EU and Malaysia.
The long term solutions presented recently by two Malaysian experts on sustainability, trade and development at The Malaysian Embassy at The Hague shows what needs to be involved beyond import requirements and certification.
Dr. Helena Varkkey raised two dynamic points that challenged the EUDR’s core principles.
- It is questionable to what extent the dominant trade-based approaches to sustainability foster transformative change.
- The concerns of consumers in the Global North tend to get priority over socioenvironmental concerns of producing countries in the Global South, posing important obstacles for procedural justice.
Dr. Siti Hafsyah Idris pointed a way forward to meet the green demands of the Global North and the development needs of the Global South where both meet on common ground.
“The central legal question is not whether global supply chains must be sustainable, but how domestic statutory systems and regional trade regimes establish verifiable regulatory interoperability.”
Dr. Idris recommended a legal system with two authors where Malaysia and the European Union converge through the Sustainable Development Goals, the Paris Agreement, the Convention on Biological Diversity, and WTO law.
With trade negotiations scheduled for completion by October 2027, now is as good a time as any to bury the bone permanently by tackling the issue of palm-based biofuels.
The bone is how the EU classified palm oil as a high Indirect Land Use Change (ILUC) risk due to perceived deforestation for biofuels.
Malaysia for its part has committed to halting further deforestation for palm oil expansion to ensure this does not happen. The launch of Palms 2030 by the Malaysian Palm Oil Board to deploy its technical expertise strategically to respond to trade challenges presents a new challenge to the EU's aged environmental arguments against palm oil.
Considering the conflict of opinions from within the European Union’s elected officials which could lead to changes in the EUDR that few could have foreseen or prepared for, the answer as to whether the upscaled MSPO is interoperable with the EU’s green regulations may lie in the emissions of the EU and Malaysia.
Will Malaysia’s efforts to reduce its palm oil industry’s emissions to produce green energy as an essential element of sustainable palm oil production be a solution for the EU’s green visions and its energy crisis?
CSPO Watch thanks The Malaysian Embassy at The Hague for the information shared on the presentations of Dr. Helena Varkkey and Dr. Siti Hafsyah Idris.
Published October 2026 CSPO Watch