Indonesia, Malaysia send letter of objection to EU over palm curbs

Malaysian palm oil futures fell over 1 percent on Friday, recording a fifth session of declines in six, tracking weakness in soyoil on the U.S. Chicago Board of Trade (CBOT).

JAKARTA: Indonesian President Joko Widodo and Malaysian Prime Minister Tun Dr Mahatir Mohamad have signed a joint letter of objection to the European Union over its plan to phase out the use of palm oil in renewable fuel, an Indonesian official said on Monday.

The letter was sent to the EU over the weekend, said Luhut Pandjaitan, coordinating minister for maritime affairs, who also oversees natural resources issues. He declined to disclose the content of the letter.

Indonesia and Malaysia, the world's top producers of the vegetable oil, have both threatened a World Trade Organization challenge against the EU over its plan to stop the use of palm oil by 2030 in renewable transport fuel.

An Indonesian delegation arrived in Brussels for an official visit this week "as a response to the EU's discriminatory policy", the country's Coordinating Economic Ministry said in a separate statement on Monday.

The Indonesian delegates were part of a joint mission of the Council of Palm Oil Producing Countries, which consists of Indonesia, Malaysia and Colombia.

"The main purpose of the joint mission is to convey disappointment and to fight the delegated act that has been adopted by the European Commission," the statement said.

Last month, the European Commission determined that palm has resulted in excessive deforestation and its use should be phased out.

The EU plans to increase its use of renewable energy sources and to take into account deforestation when it determines what can be labelled renewable.

Indonesia, the world's largest palm oil producer, argues that rather than promoting sustainability in the vegetable oil sector, the regulation is more about protecting and promoting the European Union's home-grown vegetable oils.

European spirits makers said last week they are facing difficulties exporting drinks to Indonesia amid rising tension over palm, but an Indonesian official denied that it was a retaliation against EU's renewable energy policy. - Reuters