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Cambodia may be pressed by new EU palm oil regulations

A worker rests near harvested oil palm fruits at a factory in Sepang, Malaysia, in 2014. Mohd Rasfan/AFP
A worker rests near harvested oil palm fruits at a factory in Sepang, Malaysia, in 2014. Mohd Rasfan/AFP

Cambodia may be pressed by new EU palm oil regulations

New proposed rules from the European Union restricting the import of palm oil would likely affect Cambodia’s nascent palm oil sector, but the country’s main exporter is hoping that demand from India and China will cushion the blow.

Cambodia’s palm oil exports rose by a whopping 143 percent last year, according to Ker Monthivuth, a sanitation expert at the Ministry of Agriculture. The country exported more than 44,000 tonnes of crude palm oil in 2017, up from nearly 19,000 tonnes the year before, he said.

But the booming industry could slow down due to a decision from European lawmakers last Wednesday to reform the bloc’s regulations surrounding palm oil imports, and specifically ban the use of palm oil in biofuels by 2020.

Environmental groups have long been critical of the deforestation and ecological consequences caused by many palm oil plantations globally.

The EU’s new rules could have a devastating effect on the global demand for palm oil if they are ratified by European governments, and the move has elicited protests in major palm oil exporting nations such as Malaysia.

Cambodia’s largest exporter of palm oil, a joint venture between the Mong Reththy group and Thailand’s TCC Group, exported around 37,000 tonnes of crude palm oil last year, mainly to Asian nations but with 15 percent of the exports headed to the EU as well, according to Prachak Kongtanomtham, vice president of sales and marketing at the Mong Reththy Investment Cambodia Oil Palm Co Ltd.

While the company’s exports grew by 73 percent last year, Prachak cautioned yesterday that the EU ban would likely decrease the price for palm oil and could present challenges for the industry.

“We will look to what happen in India and China, if they increase [consumption] volume,” he said. “We should find how can reduce our production cost, especially logistic cost and utility,” he added, noting that costs were “very high” in Cambodia.

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