Palm Oil Monitor Special Edition Exclusive: PM Mahathir’s letter to Macron

Two weeks ago, Malaysian Prime Minister Mahathir took the step of writing directly to French President Emmanuel Macron to protest the National Assembly’s Finance Bill – and the President signing it into law.

The new law ‘declassifies’ palm oil under the country’s renewable energy scheme, meaning it will no longer receive a renewable energy subsidy. This will make the palm-based biodiesel around 30 to 40 per cent more expensive than other biodiesels.

POM has obtained a copy of PM Mahathir’s letter.

There some vital aspects to the letter.

First is that PM Mahathir has taken the step of writing to a fellow world leader. In diplomatic circles, this is a significant escalation.

Matters are normally handled by the bureaucracy. If matters can’t be resolved, they might go to an elected official such as a Minister. When they go via country’s leaders, this is a massive step.

Second, PM Mahathir is a heavyweight in global terms. He has more than two decades of leadership experience under his belt. By way of comparison, when Mahathir took office, Macron was just four years old.  This isn’t a new leader in a small developing country asking France to drop it; this is a highly respected elder statesman with global support flexing his muscle.

Third, Malaysia took the step of publicising the letter via its foreign minister, escalating the matter further. This means that this isn’t simply a matter of sending the letter and hoping for the best; this is now a public battle that the PM will want to win.

Fourth, the content of the letter lays out the Malaysia’s position, and sends volleys across France’s bow.

These are straightforward, and have already been expressed in no uncertain terms by Primary Industries Minister Theresa Kok:

  • The action will breach WTO rules; and
  • Other commodities – such as soy and beef – have a bigger deforestation footprint.

But there are two new points made by Mahathir. He makes an explicit threat to suspend any free trade negotiations, and undertake retaliatory action on France’s sizeable exports to Malaysia.

The kicker, though, right from the outset is that he calls out the French action for what it is: an unfair, politically motivated attack on palm oil:

“We can agree that the motivation and the effect is to make biofuels uneconomical, excluded from the national renewable energy and mandate, and therefore aims to discontinue palm oil’s future use in France.”

PM Mahathir’s letter is not an endpoint; it’s the beginning.  Malaysia and the palm oil producer countries have optionality here; old Europe does not.