Firstly, what is EUDR?
Think of the European Union Deforestation Regulation (EUDR) as a “green passport.” From December 2025, any soy, beef, cocoa, coffee, wood, rubber or palm oil entering the EU must prove it did not come from land cleared after 2020.
What just happened?
On 22 May 2025 the European Commission published its risk list.
The EU grades exporting countries low, standard or high risk. Low-risk products breeze through customs, while standard-risk cargo face extra paperwork, geo-location proofs and random audits.
Operators sourcing from standard and high risk countries, or parts of countries, are subject to the same standard of due diligence obligations. The only difference is that shipments from high-risk countries will be subject to enhanced scrutiny from competent authorities.
To the surprise of analysts and the frustration of Kuala Lumpur, Malaysia was classified as ‘standard-risk’, alongside Indonesia and Brazil. Commodities Minister Datuk Seri Johari Abdul Ghani called the verdict “outdated,” noting Brussels leaned on FAO 2015-2020 averages instead of current satellite data.
Malaysia’s real deforestation record
- Satelligence (Mar 2025): only 6,000 ha of forest lost in Malaysian oil-palm concessions last year – down 70% from the 2016 peak and just 3% of Indonesia’s 2024 loss.
- Global Forest Watch shows Malaysia’s tree-cover loss trending flat for five straight years, while primary forest remains legally protected under the Malaysian Forestry Act (amended 2022).
- 23% of Malaysian growers recorded any deforestation in 2024, versus 67% of Indonesian counterparts.
In short, Malaysia has already hit the brakes on forest conversion; the EU is looking in the rear-view mirror.
Why global brands choose Malaysian palm oil
- High yield, low land-use: One hectare of oil palm delivers up to 10 × more oil than soybean, shrinking agriculture’s footprint.
- MSPO & RSPO certification: Under the Malaysian Sustainable Palm Oil (MSPO) standard, 96% of national output is independently audited for no-deforestation, no-peat, and full traceability – requirements the EUDR itself demands.
- Stable supply & price: Companies such as Unilever, Nestlé, Ferrero and L’Oréal rely on Malaysian palm fractions for everything from detergents to chocolates because substitutes (shea, sunflower, rapeseed) cost more, use more land, and often travel greater distances.
What “standard risk” means for businesses, and your wallet
- Extra compliance layers: EU importers must geo-tag every parcel of Malaysian palm supply. That means new software, auditors, and legal counsel – all costs that cascade down the value chain.
- Shelf prices inch up: Analysts at Rabobank estimate EUDR paperwork could add €80–€120 per tonne of oil. For consumers, that’s a pricier chocolate bar or shampoo bottle, with zero environmental gain.
- Smallholders squeezed: Over 300,000 Malaysian small farmers risk exclusion if European buyers decide due-diligence costs outweigh volumes. Ironically, these same farmers are MSPO-certified and deforestation-free.
Malaysia is not standing still
The Malaysian Palm Oil Board (MPOB) is compiling 2021-2024 satellite evidence to petition Brussels for a low-risk upgrade during the 2026 EUDR review. Meanwhile, joint working groups with the EU are mapping digital traceability straight from estate to European port – proof that partnership, not punishment, delivers forests and livelihoods together.
The bigger picture
Labelling Malaysia “standard risk” while granting all 27 EU members “low risk” – despite ongoing primary-forest decline in parts of Europe – feels less like science and more like politics. Up-to-date data show Malaysian palm oil is already grown on existing land, under some of the world’s strictest sustainability rules, and is crucial for keeping global food prices affordable.
Bottom line: Palm oil is not driving deforestation in Malaysia; outdated metrics are driving misunderstanding. Upgrading Malaysia to low risk would recognise real progress, protect smallholders, and guarantee European consumers sustainable products—without the unnecessary price hike.
