IOI Corp Sees No Major EUDR Compliance Challenge, Expects Premium For European Sales
PUTRAJAYA, Nov 4 (Bernama) -- Compliance with the European Union Deforestation Regulation (EUDR) is unlikely to pose a major challenge to IOI Corporation Bhd, given its established experience in supplying certified palm oil products, said its group managing director and chief executive officer Datuk Lee Yeow Chor.
He said the additional requirement for land verification information could be addressed based on the group's existing systems and experience in supplying Roundtable on Sustainable Palm Oil (RSPO)-certified palm oil and palm oil fractions.
"We have been able to supply RSPO-identified palm oil and palm oil fractions for several years, so going one step further to comply with the EUDR is not that difficult," he told a media conference after the company's Annual General Meeting here today.
Lee said the group did not expect a significant increase in sales volume to Europe following the implementation of the regulation, but it anticipated commanding a premium for EUDR-compliant products in recognition of the additional efforts required to meet the regulatory requirements.
He said smallholders accounted for less than 0.5 per cent of the group's supply, adding that their level of readiness was unlikely to significantly affect IOI Corp's exports to Europe.
On the haze situation in Indonesia, he said prolonged dry weather had disrupted plantation operations, particularly in Kalimantan, where some areas had gone about three months without rainfall.
The situation was compounded by haze and reduced sunshine, which had contributed to lower production at the group's Indonesian operations, he added.
In a separate development, Lee said IOI Corp was confident that its associate company, Bumitama Agri Ltd, would be able to demonstrate the effectiveness of its fire prevention and firefighting measures to assessors appointed by the Singapore authorities.
He said the assessment would examine whether plantation companies had allocated adequate resources to prevent fires from occuring or spreading within their concessions.
Bumitama had deployed various technologies, including artificial intelligence-powered closed-circuit television (CCTV) cameras and drones, to monitor potential fire hotspots, he noted.
Lee said he was confident the company's efforts would be reflected in the assessment and did not anticipate any financial or environmental, social and governance implications for Bumitama or IOI Corp.
IOI Corp holds an indirect 32.1 per cent stake in Bumitama Agri Ltd, an upstream oil palm producer listed on the Singapore Exchange.
Meanwhile, Lee said Malaysian oleochemical producers had gained a competitive advantage in the United States market following differences in the anti-dumping and countervailing duties imposed on fatty acid imports.
He said Malaysian exports faced duties of about 10 per cent, compared with 30 to 31 per cent for Indonesian products, depending on the company.
The difference of about 20 percentage points gave Malaysian producers a relative advantage in the US market.
However, he said IOI Corp did not consider other general import tariffs to have a significant impact on its oleochemical business.
-- BERNAMA