Mahathir adopts palm-oil folly

When confronted with a challenge from an external party, human nature often pushes us into defensive mode. 

However, criticism should also force us to reflect on our actions and question our position. This was not the approach taken by new Malaysian Prime Minister Mahathir Mohamad yesterday (Friday). 

He said Malaysia would join Indonesia in opposing pressure from the European Union on the palm-oil industry. 

Mahathir, during a state visit to Indonesia, said the neighbours, which account for around 85 per cent of global production, faced “similar problems”.

In a blow to those who hoped the returning prime minister would relax the previous administration’s nationalistic stance on palm oil and prioritise the environment ahead of vested interests, Mahathir condemned the EU action. 

“We have to fight together. Their argument about deforestation by businesses is not valid … Our palm oil is threatened by Europe and we need to oppose them together,” Mahathir told the media beside Indonesian President Joko Widodo.

The European Union is their largest palm-oil export market after India but it has opted to cut back on its use to meet 2030 climate goals to ease rampant deforestation. 

Palm oil is used in biscuits, chocolate, shampoo and numerous other products but the EU specifically plans to phase out the use of palm oil in transport fuels by 2030. 

“European countries used to be covered with forests but they’ve cut them down and nobody argues with them about it. But when we clear land they say it pollutes the climate,” said the 92-year-old in reference to tree-felling that began in Roman times. 

Rather than trying to regulate an industry that has pushed Indonesia to third in the list of the world’s greenhouse-gas producers and removed the habitats of numerous endangered species, Mahathir has chosen to dig in. 

It is hard to quibble with Mahathir’s high profile attempts to investigate the 1MDB scandal by his predecessor and his other policies have presented a refreshing break with the previous administration. His decision to ditch former prime minister Najib Razak’s populist attempts to challenge Singapore’s ownership of the Horsburgh Lighthouse appeared to be a wise move. 

However, yesterday’s defence of palm-oil production is a disappointing continuation of a poor policy. 

A recent report on global deforestation said Indonesia has seen severe deforestation but this fell sharply last year, as heavier than average rainfall cut fire losses and government protection of peat forests took effect. “One year’s data does not make a trend,” said Putera Parthama, director general for climate change at the Indonesian Ministry of Environment and Forestry. “But we believe we are starting one.”

Indonesia and Malaysia reported bilateral trade last year at US$17.2 billion, making Malaysia its larger neighbour’s seventh-largest trading partner and its third-largest Asean trading partner, after Singapore and Thailand.

In 2017, Malaysia’s total investment in Indonesia reached US$1.2 billion and more than 2.5 million Indonesians live in Malaysia.

Mahathir and Joko agreed to resolve bilateral maritime and border issues, which include their overlapping claims to Ambalat, between Indonesia’s Sulawesi and Sabah in Malaysian Borneo. 

The grievances escalated in 2002 after contradictory maps were produced by both countries, but the two leaders pledged to solve the issue together.

“We decided that this problem cannot be [ended] alone, but we have already started the approach and we need to accept that Indonesia and Malaysia must cooperate, like how Malaysia is cooperating with Thailand, where we have a joint development area,” said Mahathir.

His conciliatory approach to Indonesia contrasts with the returning prime minister’s pronouncements on Singapore. These have been more inflammatory remarks to the media, rather than through diplomatic channels, questioning the current deal that supplies the city-state with water for a negligible charge and axing a high-speed rail link to Kuala Lumpur.

The full impact of last month’s surprise election victory for Mahathir has clearly not yet played out. 

Car diplomacy 

Mahathir said he and Joko had revived plans to jointly develop a car specifically for the Asean market. 

Proton was founded during his first term in office in 1983 and has failed to make much of an impact on the global car market. 

The “Asean car” was proposed years ago to be developed by Proton and Indonesia’s Adiperkasa but the plan was soon shelved. 

“In 2015 we could not proceed because of certain reasons but now we plan to continue this project again,” Mahathir told the media. 

Proton has struggled in recent years and Chinese automaker Geely bought a 49.9-per-cent stake last year. Mahathir might want to revive the manufacturer’s fortunes although the Malaysian market is too small to support a vibrant car maker. 

The prime minister will be keen to work with the Indonesians to take advantage of their far larger population but he should also be wary of channelling state subsidies into manufacturing and creating a carmaker that cannot cope in the cutthroat international market. 


Palm oil is obviously too big to fail for Malaysia. Picture credit: PXHere