Lawmakers in the European Parliament voted 371 to 240 to a one-year delay and amendments to alter the EU Deforestation Regulation (EUDR), a new law aimed at ensuring that products imported to or exported from EU markets no longer contribute to deforestation and forest degradation globally, which was set to apply to from the end of this year, beginning with large companies.
initially introduced by the EU Commission in November 2021, with proposals aimed at effectively banning deforestation-linked projects on the EU market, and establishing strong compliance requirements for companies providing or utilizing key commodities and products such as palm oil, beef, timber, coffee, cocoa, rubber and soy, in addition to some of their derived products, such as leather, chocolate, tires, or furniture.
Under the new rules, companies that want to place relevant products on the EU market, or export them, will face mandatory due diligence rules, including a requirement to trace the products back to the plot of land where it was produced, to prove that the products were produced on land that was not subject to deforestation after 2020, and are compliant with all relevant applicable laws in force in the country of production.
In the context of Malaysia, the EUDR has significant implications within the palm oil and rubber supply chains.
Apart from the raw material, the new regulations are seen to impact key strategic export oriented downstream industries in the country, such as rubber gloves, palm oil and tyre manufacturing.
According to MRC’s chief executive officer Muhammad Eizaaz Muhammad Redzuan, “Rubber is mostly produced by smallholders by some 75% to 80%, unlike palm oil in Malaysia. So it will be a little bit difficult since these are mostly managed by individuals. When we compare our rubber producing industry with the Ivory Coast, Indonesia or Thailand – most of the rubber plantations in these countries are owned by larger organisations and as such monitoring is easier”.
