Indonesian and Malaysian Resistance to EU Deforestation Regulations: A Collision of Sustainability and Economic Interests

To Simone Galimberti

The titles of the two articles could not better describe the current approach used by Indonesia and Malaysia in dealing with the EU’s new groundbreaking regulations in the field of sustainability and environment.

“Indonesia and Malaysia Combat EU Palm Oil Discriminationwas headlined by the Jakarta Post in an article covering Indonesian President Jokowi’s recent state visit to Malaysia.

So did the Murray Mail headline describing the same development.Anwar: Malaysia, Indonesia agree to protect oil palm interests”

Both countries are concerned about the lasting impact on their economies of the EU Deforestation Regulation (EUDR), which sets a high bar for standards on the protection of terrestrial forests.

The regulations are wide-ranging and can pose real challenges for the Southeast Asian palm oil industry.

It is clear that powerful lobby groups will push back and do all they can to reject this provision.

But despite the high degree of rhetoric favored by politicians in the region, theirs is wishful thinking.

There is room to adjust the implementation of the EUDR, especially in relation to the real concerns of small palm oil farmers, but nothing that could lead to a dramatic change in the regional impact of the regulation.

And certainly, the legislation will result in dramatic changes that will change the way the palm oil industry operates for the better in the long run.

However, efforts continue to go to great lengths to deny the fact that the palm oil industry is responsible for large-scale deforestation in Southeast Asia.

This was not serious enough that the sector has been marred by consistent patterns of labor and human rights violations.

For years, the governments of both Indonesia and Malaysia have argued that laws like the EUDR and closely related laws such as the Renewable Energy Directive and the forthcoming Due Diligence Act are at best neglected and at worst the situation for denying the importance of , which is currently in the final stages of negotiations in the EU and is about to be addressed.

Common narratives have mostly been defined by both denial and expediency.

In another article published in The Jakarta Post, the chief lobbyist for Indonesia’s palm oil industry attempted to portray the EUDR as the main culprit in ending sustainability practices in the country.

Eddy Martono, President of the Indonesian Palm Oil Association (GAPKI), is deeply concerned that the EUDR will render the Indonesia Sustainable Palm Oil (ISPO) and the Roundtable on Sustainable Palm Oil (RSPO) obsolete. expressed.

“If other producers, such as Malaysia, are also imposed, it would disrupt global vegetable oil supplies and ultimately harm global vegetable oil consumers,” Martone added. .

However, the same article also contained the view of one of the top trade unionists representing small palm oil farmers, who expressed a different position and scaled back claims that European legislation harms the interests of small farmers. are doing.

Mansuetus Dart, Executive Director of the Palm Oil Farmers Association (SPKS), explained, “I disagree that the government’s efforts are aimed at the ‘profit of smallholder farmers.'” suggested that there is a possibility of fighting against Against the big palm oil companies.”

Furthermore, according to Dalt, the EUDR only implements the provisions of the Indonesian Minister of Agriculture Regulation No. 1/2018 on fair prices, which have already been implemented but have not yet been implemented.

The problem is compounded as the EU aims to end the use of palm oil as a biofuel source.

It should be remembered that the predecessor of the recently approved RED bill, the so-called RED II, which has been in force since 2018, already defined the palm oil industry as a high risk factor for deforestation. The conclusion that indirect land use change (ILUC) is high and both Indonesia and Malaysia are competing in the WTO.

However, recent developments appear to have given Indonesia and Malaysia some leeway on this issue, at least temporarily.

Despite intensive lobbying by environmental groups in this regard, the latest revival of the Renewable Energy Directive states that by the end of March, the so-called RED III will raise the renewable energy target in the transport industry from 14% to 14%. It is expected to increase exponentially to 29%. , Biofuels based on palm oil are not outright banned.

The European Commission and the European Council, the former executive branch of the EU and representative bodies of member states, respectively opposed a rapid phase-out of palm oil as a biofuel source originally envisioned by the European Parliament.

In this complex scenario, a recent joint high-level mission to the European Commission by the Indonesian and Malaysian governments could open a new stage in discussions on EUDR implementation.

But the real responsibility lies with the governments of Indonesia and Malaysia.

Rather than reacting retroactively to the set of laws decided in Europe, it should have been more proactive in developing stricter rules domestically, including enforcing all the regulations already passed.

Unfortunately, even though some changes did occur, largely forced by pressure from environmental groups, this was not their top priority.

Even existing sustainability certification programs have become more effective over the years and have played an important role in ensuring better practice, but they cannot be seen as a replacement for strong and coercive legislation.

The pace of deforestation in Indonesia and Malaysia has slowed in recent years, but it’s not time to be complacent.

For example, according to Indonesia’s Economic Coordinating Minister Airlangga Hartarto, “Even the level of deforestation in Indonesia has decreased by 75 percent between 2019 and 2020.” We succeeded in reducing the number of areas affected by this to 91.84%.

But still much remains to be done, explains an article by Benji Jones, Vox’s senior environmental reporter, and Toby Gardner and Yilva Rylander of the Stockholm Environmental Institute. .

As reported by Mongabay, Transparency International Indonesia (TII) recently released a disgusting report evaluating Indonesia’s top 50 palm oil companies, highlighting widespread corruption in the sector.

It is therefore of utmost importance for Malaysia and Indonesia to strengthen their efforts at the national level and within existing regional mechanisms at the legislative and enforcement levels.

While we cannot expect much from ASEAN, there is at least a glimmer of hope that the first environmental rights framework negotiations, which began in December 2022, will provide further impetus to improve regulation and strengthen compliance in the region. .

As environmental activist and journalist John Leo Argo from the Philippines explained to Rappler, “Establishing this framework is not an option, it is a threat to the environmental crises ASEAN faces and continues to face. It’s essential to deal with it.”

As Argo explained, there will be major challenges to enforcement. This tool can play a compelling role in encouraging Member States to act.

Linda Yanti Srithiawati, Senior Fellow at the Asia-Pacific Center for Environmental Law at the National University of Singapore, Faculty of Law, reached a similar conclusion and wrote a Fulcrum article on the issue.

“Environmental rights as human rights can be a difficult and politically challenging concept to understand and apply, but we can harness the will and power of all ASEAN stakeholders to support it. If possible, the enforcement of environmental rights in this region would not be impossible.”

In addition, the ASEAN Intergovernmental Commission on Human Rights (AICHR) has been particularly active in the areas of business and human rights. The commission also took the lead in developing the first-ever environmental rights framework.

It is of utmost importance that the ASEAN Environmental Rights Working Group (AER WG), which is tasked with developing this framework, be established early.

But this working group alone can’t go very fast.

That is why the ASEAN Environment Ministers’ Meeting (AMME) should also politically support this agenda.

AMME last met in 2021, even though both ministries were convened in Singapore in 2022 for the 17th Conference of the Parties to the ASEAN Agreement on Transboundary Haze Pollution (COP-17). is. The next meeting of AMME will be held in Laos this year.

Indonesia still has about six months of bloc chairmanship left in order to move forward discussions related to the framework as quickly as possible.

Ultimately, Malaysia, Indonesia, and Southeast Asia as a whole need a ‘systems approach’ to address the sustainability challenges imposed on their economies by their own domestic practices rather than legislation from Europe.

Countries in the region should move from crisis management to management demonstrating commitment to sustainable practices.

That is why countries like Indonesia should stop resisting broad and ambitious international legal instruments based on due diligence.

The current stalemate in negotiations and the lack of involvement of the world’s top leaders will require due diligence around the world.

The problem with Indonesia is that it is unwilling to apply such a framework to its large companies, indirectly protecting those involved in the palm oil industry in particular.

In a written statement at the eighth session of the so-called “unrestricted intergovernmental working group” negotiating the treaty, Indonesia stated that the scope of the treaty was “to manage the business activities of multinationals and enterprises. It should be formulated in a precise manner.” It shall not apply to domestic companies that have a transnational character in their business activities and are registered under relevant national laws. ”

Negotiations on an international treaty are still years away, but something more pressing may determine how Indonesia deals with the palm oil industry.

The Indonesia-EU Comprehensive Trade Agreement (IEU-CEPA) is still being worked out, but if properly designed it could be truly transformative, promoting high environmental standards and overall respect for human rights.

However, given this complex situation and challenges, it remains to be seen if consensus will be reached on this strategy file.

Active engagement with the international community in seeking progressive policies that protect smallholder farmers while holding the real responsibility on large corporations is the only way forward for countries like Indonesia and Malaysia.

Enforcing local laws that are already in force and developing more forward-looking policies, including approaches that differ from international mandatory due diligence treaties, can enable countries like Indonesia and Malaysia to demonstrate environmental stewardship. would be

It will demonstrate Southeast Asia’s determination to grow sustainably, putting the rights of the planet and its people at the heart of its ambitions.

The best way to do so is not to go on the defensive, but to involve the EU in an ambitious agenda, a plan of action that can be projected towards the credibility and respect that the palm oil industry does not yet deserve. is.

Such a vision could make Southeast Asia’s palm oil industry a benchmark for environmental sustainability, despite the fact that the biofuel industry will inevitably have a limited number of days ahead of palm oil. there is.

Simone Galimberti writes on democracy, social inclusion, youth development, regional integration, SDGs and human rights in the Asia-Pacific region.