Malaysia is set to enhance its regulatory framework to combat fraud in the used cooking oil (UCO) export sector, as confirmed by Deputy Plantation and Commodities Minister Chan Foong Hin. This initiative comes in response to growing concerns from Western governments investigating whether shipments from Asia contain genuine recycled oil or are instead mixed with cheaper virgin oil.
The Malaysian Palm Oil Board (MPOB) is currently reviewing its standards and policies regarding UCO and sludge palm oil (SPO) to improve differentiation and prevent discrepancies in exports. Chan emphasized the importance of strengthening enforcement mechanisms to maintain the integrity of the industry and uphold Malaysia’s reputation as a responsible exporter.
“Traceability is at the heart of this issue. We need to ensure that the entire supply chain is transparent to combat fraudulent practices,” Chan stated in a recent interview.
The European biodiesel sector has raised alarms over a surge in imports from China, suspecting that these supplies, labeled as recycled, are actually produced from less sustainable virgin oil. Similarly, Indonesia, the largest palm oil producer globally, has taken steps to limit UCO and palm oil residue exports, citing concerns that recent shipments have exceeded production capacity, suggesting contamination with virgin crude palm oil (CPO).
In August, the U.S. Environmental Protection Agency initiated investigations into the supply chains of at least two renewable fuel producers, amid suspicions that some may be using fraudulent biodiesel feedstocks to obtain government subsidies.
Despite these challenges, Chan noted that Malaysia’s palm oil industry, the second-largest in the world, should not view the European Union’s forthcoming deforestation regulation negatively. He highlighted the country’s commitment to anti-deforestation efforts, with approximately 87% of Malaysia’s palm oil plantations certified under the Malaysian Sustainable Palm Oil (MSPO) standards.
The EU recently approved a one-year delay for its landmark deforestation law, which mandates that importers of commodities like soy, beef, cocoa, coffee, palm oil, and timber prove their supply chains do not contribute to deforestation or face significant penalties.
Chan also addressed a recent decline in palm oil shipments to India, which fell to a 14-year low in January, describing it as a “short-term” issue. He remains optimistic about future demand, citing India’s large population of 1.45 billion as a permanent factor driving consumption. In 2024, India imported 3.03 million metric tons of Malaysian palm oil, reflecting a 6.5% increase.