Malaysia moves to lower its risk classification under new EU deforestation law

Malaysia’s commodities ministry has unveiled comprehensive contingency measures designed to safeguard its agricultural exports – covering palm oil, coffee, cocoa, soy, beef, timber and rubber – once the European Union Deforestation Regulation (EUDR) takes effect in December.

Currently classed as a “standard‑risk” nation, alongside Indonesia and Brazil, under the EUDR’s risk categorisation system, Malaysia will see roughly 3% of its relevant export shipments randomly inspected upon entry to the EU, unless it is reclassified. 

Since May, the European Commission has used three risk categories – low, standard and high – to classify countries according to the likelihood that they will produce EUDR-covered commodities that are not deforestation-free. A country’s categorisation determines the level of compliance its products are expected to meet to get into the EU. 

For high-risk countries, at least 9% of shipments are inspected, while shipments from low-risk countries face only a 1% inspection rate. These checks focus on traders, though they may also require evidence linked to production sites.

Malaysia says its classification as standard-risk is based on old data and has requested that the Commission reclassify it as low risk. Europe and Central Asia accounted for around 13% of Malaysia’s total palm oil exports in 2024 (amounting to 2.2mn tonnes), underlining the importance of the EU market to the sector.

The Malaysian government has established a Special Committee for EUDR Implementation, bringing together the ministries of Plantation and Commodities, Natural Resources and Environment, and Investment, Trade and Industry to coordinate forest monitoring, traceability and regulatory compliance workstreams.

At an event in Singapore in May, Malaysia’s Commodities Minister Johari Abdul Ghani said, “We are fully committed to working with the [European] Commission to ensure fair recognition of our progress,” adding that Malaysia has widely participated in international sustainability efforts.

Improving traceability and compliance is a key focus, particularly for Malaysia’s smallholders. Authorities plan to strengthen transparency across supply chains and submit updated, science-based monitoring data ahead of the Commission’s reassessment in 2026.

“Malaysia has implemented strict no-deforestation policies and developed our own certification system ... which ensures traceability, compliance and inclusivity,” Johari said, according to an official transcript.