Banning anti-palm oil products may cost Malaysia, warns think tank

The primary industries ministry is proposing to ban products with anti-palm oil labels from being sold. (Bernama pic)

PETALING JAYA: A leading social and economic policy centre has advised Putrajaya to educate Malaysian consumers on palm oil instead of banning products with anti-palm oil labels to avoid trade retaliation from Europe.

Institute for Democracy and Economic Affairs (IDEAS) director Laurence Todd said banning the products would have a negative impact on prices and consumer choices as well as have trade repercussions.

“My advice would be to focus on consumer education and make people understand palm oil and its sustainability,” he told FMT.

Rather than risking a strained trade relationship with Europe, he urged the government to move forward with free trade negotiations that could create new opportunities, including for palm oil.

Todd, who had previously served in a number of roles in the British government, including in the defence ministry and the British Treasury, said free trade negotiations would potentially open more opportunities as Europe bought “much more than just palm oil” from Malaysia.

Todd was asked to comment on Primary Industries Minister Teresa Kok’s announcement that a proposal to ban products with anti-palm oil labels was being prepared by the domestic trade and consumer affairs ministry.

In neighbouring Indonesia, local and imported food items with “palm oil-free” or “no palm oil” labels have been removed from grocery stores since last month.

But Todd said, in the long term, the only strategy was to continue educating consumers on the sustainability of palm oil and to deepen trading relations with Europe.

“We cannot go for tit-for-tat. It is not the best approach. Europe buys electrical and electronic material, machinery, electro machinery and many other products from Malaysia,” he said.

Todd said there were other problems between Europe and Malaysia, such as liberalisation of intellectual properties even before the palm oil issue worsened.

“Palm oil came in and made it even more difficult (for both sides),” he said, adding that both sides needed to find an “accommodating ground” to reach an agreement.

Being a trading nation, Malaysia needed to be friendly with as many countries as possible as the trade war between the US and China continued, he added.

“It will get worse. And it is really important for trading countries like Malaysia to have as many trading partners as possible,” he said.