18/01/2018 (Nikkei Asian Review) - KUALA LUMPUR (Jan 18) -- Malaysia will take necessary actions to secure the future of palm oil sector, the plantation industries and commodities minister said Thursday after the European Union's parliament voted to exclude palm oil in its bio-fuel mix.

The decision drew sharp criticism from Malaysian authorities who termed it as trade protectionist and discriminatory move.

"It is a black day for trade because (the move) discriminates against palm oil," Mah Siew Keong said at a palm oil conference. "They are not stopping other oils but only palm oil."

A large part of palm oil shipments to the E.U. are used as a substitute for the crude oil to make bio-fuel. A curb on such usage threatens the palm oil industry as it could potentially choke global demand for the edible oil that is used in everything from lipsticks to ice creams. The E.U, which was the second largest export destination of Malaysian palm oil in 2017 after India, accounted for 12% of the commodity's overseas shipments.

The E.U. lawmakers approved draft measures to reform the local power market that seek to lower energy consumption to meet broader climate goals. The plan includes a ban on the use of palm oil in motor fuels from 2021.

The EU move comes despite heavy protests from Malaysia and Indonesia, the world's top two palm oil producers, which together account for more than 80% of global palm oil output.

"Palm oil producer countries have to take action," Mah said. "If you discriminate and ban palm oil then you can't expect us to continue buying European products. It is very disappointing."

The commodity exporting Southeast Asian nation has in the past threatened to cut of trade ties with countries that decided to reduce palm oil consumption. Last year, Malaysia warned of reviewing its trade with France after Paris decided to limit the use of palm oil in bio-fuels. 

The E.U. has long criticised palm oil industry for potential destruction of forests due to largescale plantations. However, the recent rules endorsed by the E.U. parliament aren't final yet. The E.U. parliament, the European Commission and EU member nations must now agree on a final draft legislation and approve it to become a law.

Mah said he will write to all the energy ministers of the E.U. member states and ask Malaysia's ambassadors to those nations to convey the country's objection to the palm oil ban move.

Still, the ban if legalized, cold influence other nations to follow suit as "Europe is considered a trend setter," said Malaysian Palm Oil Board's Director General, Ahmad Kushairi Din. "People will start shying away from it."

That could potentially weigh on the price of the commodity with supplies sloshing in the global market, and hurt small land owners who account for about 40% of Malaysia's total palm oil production.

Earlier this week, hundreds of Malaysian small palm planters had marched to the E.U.'s mission in Kuala Lumpur to petition against the push to curb use of palm oil in the bio-fuel program.