While the new ruling will most likely affect exports to the EU as there will be more requirements to fulfil, it only applies to new planted areas, according to plantation industries and commodities minister Zuraida Kamaruddin.

Malaysia is focusing on “increasing productivity of the existing planted area rather than expansion”, she said in response to a query from Bloomberg.

Malaysia is not worried about the new ruling as it has taken proactive measures to address issues on sustainable forest management, Zuraida said.

Malaysia, which is the world’s second-biggest palm oil producer, is committed to keeping at least 50% of its forest cover.

The EU wants to regulate imports of soy, beef, palm oil, wood, cocoa and coffee, as well as some derived products such as chocolate, leather and furniture, in a bid to curb global deforestation. Malaysia is home to the world’s oldest rainforests.

The country will maintain good trade relations with the EU and will continue working with the bloc to ensure that Malaysian-produced agri-commodities meet sustainability requirements “as long as these new rules imposed by the EU do not go against” UN Sustainable Development Goals or create trade barriers, Zuraida said.

“Producing countries that have made efforts towards conservation and sustainability should not be unfairly penalised just to progress the protectionism efforts of the EU,” she said.

Malaysia has previously retaliated against the EU’s plan to curb palm-based biofuels, calling it discriminatory towards the tropical oil that’s used in many products, from cooking oil to chocolate and detergent.

Its case at the World Trade Organization in relation to the treatment of palm oil as a biofuel feedstock in the EU’s Renewable Energy Directive II (RED II) is expected to be heard in January 2022.