Malaysia’s edge over Indonesia if EU bans palm biodiesel
PETALING JAYA: Malaysia, with regulators more in control of land issues, is better positioned than Indonesia if the European Union bans certain biofuels derived from crops grown on forests, wetlands or grasslands, a research house said.
Credit Suisse research said yesterday that Malaysia’s land matters came under the 13 state governments unlike in Indonesia, where land matters were under district governments, with about 440 district governments in Indonesia.
“We also believe that the big plantation companies have too much to lose if they were to be caught directly violating environmental practices, as they have to answer to their multinational customers. Therefore, we believe these companies are more likely to adopt sustainable practices,” it said.
The research house was commenting on a report in The New York Times that in a sign of growing concern about the impact of supposedly ”green policies”, the EU officials would propose a ban on imports of certain biofuels, according to a draft law to be unveiled next week.
Credit Suisse Research said if approved by the EU, the law would ban importation of fuels derived from crops grown on certain kinds of land (including forests, wetlands or grasslands). The ban would primarily affect palm oil and possibly the Latin American imports.
It said a ban could cause a knee-jerk impact on plantation share prices, as the key plantation stocks have surged by 16% to 39% over the past month.
“We believe that underlying fundamentals for palm oil demand remain strong. Hence, any weakness in plantation share prices could provide an opportunity to buy,” it said.
The research house said if palm biodiesel was banned, the EU would still import palm oil as food.
Vegetable oil prices move in tandem with one another, it said, pointing out vegetable oils were substitutes for each other.
It said the EU appeared to be moving ahead with its biofuel policies (rape oil will be utilised as biodiesel), and therefore vegetable oil inventories would continue to be drawn down, which would support palm oil prices.
Credit Suisse research said yesterday that Malaysia’s land matters came under the 13 state governments unlike in Indonesia, where land matters were under district governments, with about 440 district governments in Indonesia.
“We also believe that the big plantation companies have too much to lose if they were to be caught directly violating environmental practices, as they have to answer to their multinational customers. Therefore, we believe these companies are more likely to adopt sustainable practices,” it said.
The research house was commenting on a report in The New York Times that in a sign of growing concern about the impact of supposedly ”green policies”, the EU officials would propose a ban on imports of certain biofuels, according to a draft law to be unveiled next week.
Credit Suisse Research said if approved by the EU, the law would ban importation of fuels derived from crops grown on certain kinds of land (including forests, wetlands or grasslands). The ban would primarily affect palm oil and possibly the Latin American imports.
It said a ban could cause a knee-jerk impact on plantation share prices, as the key plantation stocks have surged by 16% to 39% over the past month.
“We believe that underlying fundamentals for palm oil demand remain strong. Hence, any weakness in plantation share prices could provide an opportunity to buy,” it said.
The research house said if palm biodiesel was banned, the EU would still import palm oil as food.
Vegetable oil prices move in tandem with one another, it said, pointing out vegetable oils were substitutes for each other.
It said the EU appeared to be moving ahead with its biofuel policies (rape oil will be utilised as biodiesel), and therefore vegetable oil inventories would continue to be drawn down, which would support palm oil prices.