InfoSAWIT, JAKARTA – The relationship between Malaysia and the European Union has entered a new phase following a joint statement in Kuala Lumpur on September 5, 2025. During the occasion, the EU Commissioner for Environment referred to the Malaysian Sustainable Palm Oil (MSPO) standard as a relevant national sustainability standard, and efforts are underway to align it with the new EU regulation, the European Union Deforestation Regulation (EUDR).
Some Malaysian media immediately interpreted the statement as full EU recognition of MSPO. However, a crucial note came from the Oversight Board of the Indonesian Palm Oil Strategic Studies (IPOSS), Yuri Thamrin, who asserted that political recognition is different from legal validation. To date, there is no official EU document stating that MSPO meets all EUDR requirements.
The EUDR is a strict EU regulation that prohibits the import of commodities linked to deforestation, including palm oil, coffee, cocoa, soybeans, beef, and timber. Products entering the European market must be proven to be legal, deforestation-free, and traceable to their geographical coordinates.
In this context, MSPO can be a supporting instrument. But the national certification does not automatically replace the legal obligations under the EUDR. If exporters rely solely on the MSPO label without additional verification, there remains a risk of rejection at European ports.
Malaysia's Status Remains "Standard Risk"
The EUDR system uses a country benchmarking mechanism to classify countries into low risk, standard risk, or high risk categories, based on the level of deforestation, law enforcement, and data transparency. Malaysia is currently at the standard risk level.
This means that palm oil exports from the neighboring country must still undergo a full due diligence procedure by European importers. This position is clearly different from a low-risk status, which provides easier market access. Thus, while MSPO is politically credible, Malaysia's legal status in the eyes of the European Union has not changed.
According to Yuri Thamrin, the seemingly exaggerated interpretation by the Malaysian media is understandable. A positive narrative about MSPO is important for strengthening the image of palm oil, both domestically and in international markets. However, he emphasized that diplomatic phrases such as "acknowledged as credible" or "relevant national sustainability standard" are political language, not legal decisions.
"The European Union is careful not to give the impression that MSPO automatically becomes a free ticket for palm oil exports. If that happened, the authority of the EUDR as a supranational standard could be weakened," he said, quoted by InfoSAWIT from IPOSS on Thursday (9/18/2025).
A Lesson for Indonesia
Compared to Indonesia, Malaysia has received international political recognition for its MSPO earlier. Indonesia has the Indonesian Sustainable Palm Oil (ISPO), which serves a similar function but is still in the process of being strengthened to align with global demands.
ISPO is currently improving several aspects: data transparency, digital traceability systems, and the involvement of small-scale farmers. With continuous improvements, ISPO has the potential to strengthen Indonesia's position in palm oil, just as MSPO has for Malaysia.
"Instead of seeing who is ahead, it is important for both countries to focus on harmonization with international standards. That is what will determine future market access," Yuri added.
Although not yet final, the latest development is still significant. The EU's political recognition opens up opportunities for more concrete technical cooperation: the integration of traceability systems, the enhancement of legal standards, and support for small-scale farmers. If this process goes well, the administrative burden on exporters will be reduced, and the credibility of Malaysian palm oil in the international market will become stronger.
However, until the European Union issues an official legal document, MSPO remains a supporting national standard. It cannot replace the binding EUDR obligations for all exporters.
Geopolitical Dimension
From a geopolitical perspective, the EU's move to refer to MSPO as a credible standard is also strategic. Tensions over the EUDR had flared up, as Malaysia and Indonesia considered the regulation discriminatory and a threat to small-scale farmers. By giving a nod to MSPO, the EU seems to be opening the door to a broader dialogue while still maintaining the authority of its regulation.
For Indonesia, this is a moment to accelerate the strengthening of ISPO. If ISPO can prove its conformity with EUDR requirements, Indonesia's position in the global palm oil market will be more solid.
MSPO is now politically recognized by the European Union as a relevant national standard. However, formal legal validation has not yet been granted, and Malaysia's status remains in the standard-risk category. Exporters are still required to undergo full due diligence.
The lesson to be learned is clear: understanding the difference between political recognition and legal validation is crucial to avoid false expectations. More critically, both Malaysia with MSPO and Indonesia with ISPO are required to strengthen their sustainability standards to ensure palm oil survives in an increasingly competitive global market. (T2)
