New Straits Times (12/09/2025) - KUALA LUMPUR: The European Union's recognition of the Malaysian Sustainable Palm Oil (MSPO) certification will lead to positive ripple effects for smallholders and settlers especially those under Felda.

Industry experts also said the recognition also affirms MSPO's alignment with the European Union Deforestation Regulation (EUDR), easing tensions surrounding the regulation.

However, Malaysian Palm Oil Board (MPOB) director general Datuk Dr Ahmad Parveez Ghulam Kadir said the move does not immediately change Malaysia's risk status from "standard" to "low."

"We are, however, optimistic that this recognition, coupled with our continuous efforts in providing transparent and verifiable data, will pave the way for a 'low-risk' designation in the near future.

"We are actively engaged with our EU counterparts to address any remaining gaps and demonstrate the full compliance of our national standards with the EUDR," he told Business Times.

Ahmad Parveez said MPOB expects the recognition to provide Malaysia with a distinct advantage in negotiating mutual recognition, technical cooperation, and capacity-building assistance, particularly in the ongoing Malaysia-EU free trade agreement negotiations.

He added that Malaysian companies exporting to the EU may face lower friction, easier market access and reduced compliance burdens, which could also apply outside the EU market to global markets.

He said since MSPO certification is mandatory, all importing countries are assured of legality, transparency, inclusivity and accountability at every stage of the supply chain, satisfying the stringent sustainability requirements and guaranteeing credibility.

"Both Malaysia and Indonesia are currently benchmarked as 'standard risk.' Malaysia and Indonesia work closely as the world's largest palm oil producers, often presenting a united voice on international regulations like the EUDR, such as our collaborative efforts through platforms such as the Council of Palm Oil Producing Countries (CPOPC)," he added.

Ahmad Parveez said Malaysia will continue its efforts in making the country the forefront of sustainable palm oil production.

He noted that the mandatory implementation of the MSPO certification has given Malaysia a strong foundation to meet the stringent requirements of the EUDR.

Nusantara Academy of Strategic Research senior fellow Professor Dr Azmi Hassan said smallholders and settlers will benefit from the acknowledgement of the certification by the EU.

"With MSPO now recognised and FGV going private, it's a good day for those in the palm oil sector, especially Felda settlers," Azmi said.

Industry players also believe the EU's endorsement of MSPO, coupled with structural reforms in Malaysia's palm oil sector, will open new market opportunities, improve income for smallholders and boost investor confidence.

Universiti Putra Malaysia head of department of Social and Development Sciences, Faculty of Human Ecology Associate Prof Dr Nik Ahmad Sufian Burhan said the acknowledgement by the EU could boost palm oil exports, stabilise CPO prices and strengthen the country's trade balance.

It would also enhance investor confidence while attracting foreign direct investments in sustainable farming, green technologies and downstream processing industries.

"More than 500,000 smallholders will benefit from greater inclusion in international supply chains, helping improve rural livelihoods and support local economies.

"Beyond palm oil, this recognition enhances Malaysia's credibility in sustainability-driven industries, opening doors to new opportunities in renewable energy, biotechnology, and agri-tech innovation. It also positions Malaysia to play a bigger role in shaping global sustainability standards, which can drive long-term economic resilience and strengthen the country's competitive edge in emerging markets.

"It promotes more inclusive economic growth, ensuring that small producers are not left behind while positioning Malaysia to play a bigger role in shaping global sustainability standards," he added.

Read more at https://www.nst.com.my/business/economy/2025/09/1273867/win-smallholders