AreaMalaysia

Commodity GroupOilseeds, oils and meals

CommodityPalm oil

Date01/11/2015

Policy CategoryOther

Policy InstrumentBilateral cooperation

DescriptionSet up an intergovernmental organization to foster cooperation between Indonesia and Malaysia, including the regulation of production and management of stocks across countries to stabilize prices.

NotesRecent bilateral talks between Malaysia and Indonesia (see MPPU Sep.’15) resulted in plans to set up an intergovernmental organization of palm oil producers named Council of Palm Oil Producing Countries (CPOPC). Meant to foster cooperation between producing countries, the new body would be tasked to control production and manage stocks across participating countries, with the goal to stabilize prices. Malaysia and Indonesia, who control 85 percent of the global palm oil market, said that other producing countries, notably Thailand, would be invited to join the new body. Reportedly, the council would also support the development of downstream industries, promote the image of palm oil, and foster the harmonization of production standards. Regarding the widely debated issue of environmentally and socially sustainable production practices, the Council would advocate the creation of standards that also take into consideration the welfare of smallholders, said Indonesian government officials – reflecting concerns that zero-deforestation pledges recently signed by leading palm oil companies could hurt smallholder producers who are not ready to adopt sustainable forestry practices. In Indonesia, smallholders account for about 40 percent of total palm oil production.