When the European Union announced its Deforestation Regulation, many agricultural nations saw it as a threat. The law required that no product entering the EU be linked to deforestation after December 2020. For countries dependent on crops like coffee, cocoa, soy, or palm oil, the regulation sent ripples of anxiety through their economies.
While some governments bristled at what they saw as European overreach, one nation quietly began rewriting its future. In the humid lowlands of Malaysia, where palm oil once stood accused of driving deforestation, policymakers decided that the best way to deal with this sudden change was to adapt accordingly.
How Malaysia Transformed Its Palm Oil Industry
Malaysia’s palm oil industry had faced years of scrutiny from the European Union, environmental groups, and global buyers. Rather than react defensively, the country’s leadership recognised that switching towards sustainable agriculture would help them to boost their trade.
Thus, in 2015, the government launched the Malaysian Sustainable Palm Oil (MSPO) certification scheme. What began as a voluntary initiative soon evolved into a nationwide mission. By 2020, MSPO certification became mandatory for all palm oil producers, from large plantations to smallholders with just a few acres of land.
Very soon, Malaysia created a full ecosystem to make MSPO work. Training programmes, subsidised audits, and data collection systems were put in place to help smallholders trace every step of their production. The Malaysian Palm Oil Certification Council (MPOCC) and the Malaysian Palm Oil Board (MPOB) worked in tandem to build what few developing economies had at the time: a government-backed, traceable certification network.
At the same time, Malaysia developed digital traceability tools like MyTrace and GeoTrace, which mapped plantations using GPS coordinates and verified supply chains through digital logs. Every tonne of palm oil could be traced back to its origin. This was a feature that later aligned seamlessly with the EUDR’s requirement for geolocation data.
Collaboration with the European Union
While many nations criticised the European Union for introducing the EUDR, Malaysia chose to open a dialogue. Through a Joint Working Group between Malaysia and the European Union, both sides began discussing how the MSPO could align with European sustainability principles. The EU recognised Malaysia’s efforts, engaging with its certification bodies and supporting initiatives through platforms like the Sustainable Trade Initiative (IDH) and the Tropical Forest Alliance (TFA).
EU delegations visited Malaysian plantations, reviewed traceability systems, and publicly acknowledged the progress made. This ongoing cooperation helped Malaysia transition from being the target of deforestation debates to a credible partner shaping the solutions.
By 2024, reports from both sides pointed to a remarkable shift: over 96% of Malaysia’s palm oil plantations were certified under MSPO, and most export shipments to the EU were already meeting due diligence expectations.
India’s Future Exports are at Risk
The EUDR is just one part of a larger transformation in global trade. Every regulation emerging from the European Union, from the Green Deal to the Corporate Sustainability Due Diligence Directive, is pushing supply chains towards greater transparency.
For India’s farmers and exporters, waiting for mandates to arrive will only raise compliance costs later. Acting early, as Malaysia did, can help shape the terms of engagement. Moreover, India doesn’t need to replicate Malaysia’s path, but it can learn from its foresight. The next step is to move from fragmented efforts to a national sustainability strategy, one that combines digital traceability, certification, and farmer engagement.
If Malaysia could turn palm oil from a global controversy into a benchmark of collaboration with the European Union, there’s no reason India’s tobacco, cotton, or coffee sectors can’t follow a similar path. But achieving this will require intent and a coordinated effort across multiple layers of government, the active participation of European partners, and the commitment of large corporations to build a shared framework for sustainable trade.
