Last Friday, Malaysian Prime Minister Muhyiddin Yassin met briefly with Indonesian President Joko Widodo to discuss several ongoing regional issues, one of which included a reaffirmation of the two governments’ intentions to combat against palm oil discrimination. This follows Malaysia’s recent move of filing an official complaint with the World Trade Organisation (WTO) against the EU for its anti-palm oil campaign.

SCMP reported the meeting between the Southeast Asian two leaders, and Segi Enam Advisors principal, Khor Yu Leng, was quoted. Here are her full comments:

“In Indonesia and Malaysia, palm oil remains a popular and even a hot topic in high politics. So we won’t be surprised if Muhyiddin and Jokowi touched on it when they met in Jakarta this week. Palm oil producing countries have formally set up a Council in Jakarta (CPOPC), but we’ve yet to see its muscle. We now have an ASEAN-EU ministerial level Joint Working Group on Palm Oil, whose first meeting was attended by Indonesia, Malaysia, Cambodia, Thailand, Laos, Vietnam (Philippines and Myanmar are also rising producers of palm oil). Indonesia’s big palm oil production has shifted policy leadership to Jakarta, which influences the market with its biodiesel mandate.

“Talk of cooperation wafts through these lofty circles, but this floats above the reality of cut-throat competition for export between dominant producers, Indonesia and Malaysia. Malaysia eyes its monthly export market share by tweaking its export duty relative to Indonesia’s. Earlier, the duo were inking bilateral FTAs with big importers so that relative tariff advantages would flip annual majority market shares from one to the other. Malaysia’s recent problems with US Customs and Border Patrol is seen as a boon to Indonesia exports.

“Moreover, Indonesia is quite ahead of Malaysia in trade negotiation with the EU. Vietnam’s recently inked EU trade deal is now in force and it has acceded to stopping forced labour, and we should expect Indonesia to do similar. Neither have the big immigrant labour force conundrums faced by Malaysia. Even with CPTPP in the bag, Malaysia’s trade (and labour) policy needs to find better footing as its ASEAN powerhouse neighbours eye more big trade and FDI deals.”