Malaysia

Outlook on forest fires, market indicators, farmers, and EU trade compliance

The Shift from Low to Medium Haze Risk in 2025 (Transboundary Haze in Sumatra)

The Haze Outlook 2025 has raised the regional risk level from green (low risk) to amber (medium risk), citing elevated agricultural prices, an uptick in deforestation, and economic and policy shifts driven by pressure to boost agricultural output for food security as attributes to this change.

Key points to note from the report:

  • While deforestation declined between 2017 and 2022, it has increased again from 2023 into 2024, particularly in Sumatran provinces near Singapore and Peninsular Malaysia, where fire activity surged in July 2025.

  • Despite forecasts of a shorter dry season, hotspots and smoke haze in parts of Sumatra in mid-July have already affected air quality in parts of Peninsular Malaysia, indicating that fire risk remains elevated even under average weather conditions.

With climate trends pointing to another unusually dry season between 2027 and 2030, and structural drivers like land clearing and commodity demand continuing to fuel haze episodes, the report recommends prioritizing sustainability measures “to avoid creating more fire-prone conditions.”

The surging of commodity prices with deforestation on the uptick (Most especially, palm oil prices surpassing soybean)

Linked to these structural pressures, the Outlook notes that agricultural commodity prices, especially for palm oil, have surged due to supply failing to keep pace with rising global demand.

According to the report, palm oil from Indonesia and Malaysia, typically the world’s cheapest vegetable oil, has traded above soybean oil prices at key destinations for nine consecutive months, an unprecedented trend. This price surge is significant because historical spikes in commodity prices have often preceded increased deforestation in subsequent years. 

Although the rate of primary forest loss between 2015 and 2019 remained largely flat or declined despite fluctuations in commodity prices, the report notes that the current cycle may differ: “estimates show some uptick in deforestation in Indonesia from 2023–2024.”

Will EUDR be further delayed to 2028? How will smallholders cope with these regulations

The report also highlights the approaching enforcement of the European Union’s Regulation on Deforestation-free Products (EUDR), scheduled to take effect for large companies on 30 December 2025. The regulation targets seven commodities, palm oil, soy, wood, cocoa, coffee, cattle, and natural rubber, and requires proof that imports are not linked to deforestation after 31 December 2020.

According to the report, key developments related to the EUDR include:

  • The regulation imposes strict reporting requirements, which critics argue may exclude smallholder farmers unable to meet compliance standards.

  • In response, the EU has simplified some administrative rules, allowing annual submissions and reuse of due diligence statements for reimported goods, cutting estimated compliance costs by 30%.

  • Indonesia and Malaysia have developed national digital platforms to provide legality and traceability data, while respecting data protection laws. These systems aim to support smallholders and enable international buyers to file EUDR-compliant submissions through national dashboards.

  • Indonesia has urged the EU to postpone full implementation until 2028 to allow more time for preparation and alignment across all stakeholders.

The report suggests that while the EUDR aims to curb deforestation linked to commodity trade, its real-world impact will depend on how effectively origin countries and the EU implement and enforce these measures, especially regarding smallholder inclusion.

The Annual Haze Outlook Report can be found here.

Reach us at khorreports[at]gmail.com

PalmTrack—Sep 2022 Wrap Up

Here is a wrap up of the some of the issues PalmTrack covered in Sep 2022:

  1. Malaysia plantation labour issues seem to be escalating. There is now worrying talk about destination market checks and signs that at-risk suppliers are facing buyer jitters. Indonesia suppliers may gain. This is amidst heightened problems for authorities to deal smoothly with migrant labour recruitment compliant with Indonesia, Bangladesh, and other requirements.

  2. Going by Malaysia’s palm oil production in the last 15 years, it is clear that yield-productivity management is in a major rut, a warning to producers in other countries. The more recent ups-and downs seem to be driven more by the climate cycle of El Niño dry/La Niña wet than anything else, at least at the aggregate level. Read more on PalmTrack.

  3. HCPO or high FFA CPO is the big new trend at palm oil mills. The processing of loose and rejected fruits gives a product with 35-40% FFA that suits HVO and more. But Malaysia’s unfavourable pricing for loose fruit is likely to hinder its supply. Indonesia prices a premium for loose fruits and buyers should see better prospects here. We talked to specialists to find out more.

  4. BOM officially declared a La Niña on 13 Sep 2022. However, the meteorological agency has stated that projections indicate this third dip to be short-lived and is expecting the phenomenon to peter out by early 2023.

  5. The EU Parliament has adopted the proposal on deforestation-free products. The regulation aims to eliminate deforestation in the import supply chain for the EU for several key commodities and products, including palm oil and soy.


Khor Reports’ PalmTrack is an independent research service that tracks palm tanker movements and reports trade of palm products (and shipments, upon request) for selected trade routes. It features a forward-looking market topic and sharp analysis every quarter, e.g. palm biofuels issues & opportunities for Jan–Mar 2022. Subscribe now!

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More Public Attention on Malaysia Flood and Climate Change

In December 2021, heavy rainfall had resulted in severe flooding in numerous areas within Peninsular Malaysia. Regarded as one of the worst flood disasters the country has seen in the recent years, the flood effectively displaced an estimated tens of thousands of residents and was further proof that Malaysia is not—and will not be—spared from the growing effects of climate change.

Malaysia has yet to forget the devastation the floods had caused—topic of climate change is becoming an increasingly important and popular one, particularly online. Accordingly, activists and environmentalists have taken the opportunity to highlight the gravity of the situation, oftentimes working hand-in-hand with the media as a platform where the public can be kept abreast about the matter.

Kini News Lab is one such platform and its most recent article is “When the Water Rises: A Malaysian Climate Change Story,” which described how climate change has adversely impacted the livelihoods, standards of living, and psychology of Malaysians across the country. The article also allows readers to see annual temperature and rainfall changes in various locations since 1952.

A part of the article also covered rising sea water levels, yet another threat Malaysia is facing as a direct result of climate change. In the worst case scenario for Malaysia, sea levels could very well rise up to 0.74 metres by the 2100 year, plunging low lying and coastal areas underwater.

Khor Reports did a short review several years ago comparing between the best and worst case scenarios for key areas where the land is at risk of coastal flooding by 2050: Land Reclamation Projects and Sand Dredging/Mining Sites in Peninsular Malaysia ver. Oct 2019.

We also wrote a piece on the politics of floods, with criticism about land development coming from businessmen and bureaucrats interviewed: Malaysia - the Political Economy of Land Development (or the Politics of Flood). While attention on coastal and flash floods is gaining attention, we would also like to highlight the issue of ground water flooding that can worsen flood woes (see box below).

PalmTrack—Aug 2022 Wrap Up

Here is a wrap up of the some of the issues PalmTrack covered in Aug 2022:

  1. The rise and fall of key agri-food commodity prices feels like a blast from the past, but many prices remain at multi-year elevated levels, notably fertilizers and also the likes of palm oil. In this two-part series, we look at recent news views from The Economist, FAO, and what some say about the 2008/09 price bubble and food speculation in Part 1 before moving on to what commodity traders say about the role of "non-commercial traders” in the recent early 2022 food price bubble in Part 2.

  2. PalmTrack has been updating on recent and upcoming palm oil sustainability issues. There are three parts to this series, and each highlight the following points of interest gathered from close observers: greenwashing, legality, product pricing for smallholders (fair trade), traceability to farms, carbon emissions, and political-policy challenges.

  3. In our posting ‘Sarawak CPO production to overtake Sabah’, we covered the forecast for Sarawak to be the biggest CPO producing state in Malaysia, the timber-to-palm transition of its big state suppliers, and the decline of its timber business segment, especially downstream amidst log supply woes. Now, we look at market access and dip into some issues for Sarawak timber and palm supplies.

  4. Our latest discussion with labour experts revealed a wider regional competition for agricultural workers rising and expanding. We expect the Covid recovery to drive change toward a more formal and compliant agricultural labour supply. We case study Australia, who are reportedly now focusing on Indonesia and Oceania, and Taiwan who has opened up for agricultural labour workers from Southeast Asia in 2020.

  5. BOM raised a La Niña alert on 16 Aug, the final step before an official La Niña. In the meantime, BMKG on 12 Aug revealed that while the dry season in Indonesia is expected to last from August to October, La Niña may still result in heavier-than-usual rainfall within the country.


Khor Reports’ PalmTrack is an independent research service that tracks palm tanker movements and reports trade of palm products (and shipments, upon request) for selected trade routes. It features a forward-looking market topic and sharp analysis every quarter, e.g. palm biofuels issues & opportunities for Jan–Mar 2022. Subscribe now!

$380.00
Every year
$38.00
Every month

PalmTrack—Jul 2022 Wrap Up

Here is a wrap up of the some of the issues PalmTrack covered in Jul 2022:

  1. The 2022 Trafficking in Persons (TIP) Report was released recently, and Malaysia remains at Tier 3 for a second year. In this two part-series, we look at key excerpts of the report, which should give a sense as to what national policy and implementation could or should be as well as other non-Western labour standards Malaysia is struggling with.

  2. Palm oil price is looking to find a footing with the ramp up of Indonesia domestic demand via an expanded biodiesel mandate whereby Indonesia plans to implement B35 in biodiesel by end of July. In another two part-series, we contemplate two questions: with demand side worries abound amidst inflationary and other concerns, what are some of the economic issues and is there demand destruction with 4–10% contractions?

  3. Malaysia made a confusing price control lift, with rapid response among politicians on maintaining subsidies. But there is little regard on the leakage from the billions that go into food subsidies. Read our post for our full analysis.

  4. BOM reported on 5 Jul that there is about a 50% chance of La Niña occurring later in 2022. BMKG made similar a forecast, warning that Indonesia may face heavier-than-usual rainfall up until the end of 2022.


Khor Reports’ PalmTrack is an independent research service that tracks palm tanker movements and reports trade of palm products (and shipments, upon request) for selected trade routes. It features a forward-looking market topic and sharp analysis every quarter, e.g. palm biofuels issues & opportunities for Jan–Mar 2022. Subscribe now!

$380.00
Every year
$38.00
Every month

Malaysia, Singapore, and the Chicken Problem - Part #2

Following the previous post on Malaysia, Singapore, and the Chicken Problem - Part #1 late last week, here are our thoughts and observations on the matter.

Observations. The aspect I know a bit more about is for Malaysia, it seems clear that producing chickens for the domestic market at the target price is/was loss making per bird. The government was looking at suggestions on palm-based chicken feed to help lower cost but that is unlikely as palm kernel expeller/cake/meal, while well established, is primarily used as feed for ruminants, mostly dairy cows. While the industry hope and experiments for wider use for chickens, that is still a work in progress.

(Inside story: policy analysts were a bit surprised that some plantations made this suggestions when, with basic research, it becomes obvious that palm material not an immediate solution).

Instead, the Malaysians went with a cash handout to B40s and buffer stock policy for now, as the mechanism to help poultry breeders seems uncertain no subsidy support plan has been announced. Governments are likely to be struggling with industries to supply export products to domestic consumers as the high international prices attract big volumes out. Export restrictions can tighten global/regional supply even more and distort export prices upward even more.

Another example is the cooking oil conundrum in Indonesia that has pitted their President against an alleged 'cooking oil mafia.' There is worry about a 'chicken cabal' in Malaysia. While politicians and policy makers figure out chicken suppliers, and with more money in the pocket, B40 consumers may have to find other proteins for their rice.

Further observations. Malaysia observers have noted that even the likes of KFC are resorting to selling more patties as fresh chicken is in acute shortage locally. They are not sure whether this issue can be easily resolved, as the government is still maintaining the price ceiling.

In the meantime, consumers in Singapore are not noticing chicken shortages. A banker friend told me: "We can get chicken everywhere, I just had a curry chicken toastie for lunch." Economists there are not worried about supplies at present, as Singapore can pay for chilled and frozen chickens from other nearby countries such as Thailand and further from Australia.

Land Reclamation Projects and Sand Dredging/Mining Sites in Peninsular Malaysia ver. Oct 2019

A few years ago, Khor Reports conducted a brief study on land reclamation in Peninsular Malaysia. We attempted to locate selected land reclamation projects and sand dredging/mining sites based on news reports and other publicly-available sources online before overlaying these locations with a map highlighting land areas at risk of coastal flooding.

We have also made brief case studies comparing the best and worst case scenarios for key areas where the land is at risk of coastal flooding by 2050.

Malaysia, Singapore, and the Chicken Problem - Part #1

In a move that sent exporters and vendors into a ruffle, Malaysia announced on 23 May that all exports of various chicken products, including live poultry and whole carcasses, are prohibited effective 1 June. The ban is part of the country’s efforts to address the domestic supply shortages and rising prices of poultry.

Food security concerns have been in the forefront of the minds of various nations within Southeast Asia following the Russia-Ukraine war. According to the United Nations, “global food prices have risen by nearly one-third, fertilizer by more than half, and oil prices by almost two-thirds” in the past year.

China Daily published an interesting article on the matter, in which Segi Enam Advisors were quoted:

“In Southeast Asia, there is an opportunity in the crisis in cooking oil,” said Khor Yu Leng, research head for Southeast Asia at Singapore-based consultancy Segi Enam Advisors.

Khor told China Daily that palm oil exports can fill the gap when other vegetable oils like rapeseed oil and sunflower oil, of which both Russia and Ukraine are key exporters, are in tight supply. 

“My check of vessel movements from Indonesia shows a big rise in palm oil tankers going to the Commonwealth of Independent States (and) Russian region,” said Khor. 

While Thailand, also a palm oil producer, pulled back on domestic use of the product in biodiesel to ensure food supplies, Malaysia and Indonesia are sticking to diverting it into domestic transport fuel with 20-30 percent biofuel blending mandates, said Khor. 

Read the full article here: Asian nations enhance food security amid Russia-Ukraine conflict

BFM: Can We Afford GE15 Right Now

There have been increasing chatter about GE15 in Malaysia. Many within UMNO are reportedly pressuring Prime Minister Ismail Sabri to call for a general election, with one source interviewed by the Malay Mail claiming that “the consensus of the top leadership of the party is that GE15 should be held sooner rather than next year.” Consequently, experts have began weighing the pros and cons of holding an election this year, especially given the last two years of regular pandemic-related lockdowns in Malaysia. Segi Enam Advisors Khor Yu Leng was invited to BFM to give her thoughts on the matter: Can We Afford GE15 Right Now

There have been calls from within UMNO for parliament to be dissolved and GE15 to be held as soon as possible. However, Prime Minister Datuk Seri Ismail Sabri has said that with inflation and the rising cost of goods, this isn't the right time. We look at where we are in our economic recovery and whether initiating an election could have repercussions.

Image Source: Gwoeii, Shutterstock; produced by: Natasha Fusil; presented by: Lee Chwi Lynn, Sharmilla Ganesan

BFM: The S in ESG in Malaysia is Sorely Lacking

On 13 May, the Malaysian government announced that the US through its Customs Border Protection (US CBP) has agreed to set up a joint working committee to address ht issue of forced labour in Malaysia. While a welcome piece of news, questions naturally arise on whether the committee will positively affect Malaysia’s labour challenges in a meaningful way. Segi Enam Adviser principal Khor Yu Leng was invited on BFM to discuss the matter: The S in ESG in Malaysia is Sorely Lacking

Following the announcement to setup a Malaysia-US working committee on labour issues, we ask Khor Yu Leng, Political Economist, Segi Enam Advisers whether this committee will help clean up Malaysia’s questionable reputation on labour practices?

Image credit: Shutterstock.com; produced by: Moh Heng Ying; presented by: Khoo Hsu Chuang, Tan Chen Li, Philip See