(Adds dropped title, name of minister in paragraph 3)
KUALA LUMPUR, Sept 3 (Reuters) - Malaysia will launch agreen scheme for palm oil firms by 2014, a government officialsaid on Tuesday, as the world's No.2 producer looks to boostdemand and counter criticism its tropical oil supply harms theenvironment.
The Malaysian Sustainable Palm Oil (MSPO), which will beused as the national standard from 2014 onwards, will outlinecriteria that industry players need to meet before theirproducts can be certified as "sustainable".
"To move forward in the palm oil industry, we decided tohave our own Malaysian standard. This will be the branding thatwe hope to make for Malaysian palm oil," Malaysian plantationindustries and commodities minister, Douglas Uggah Embas, toldreporters in Kuala Lumpur after talks with industry players.
"The MSPO will address a lot of anti-palm oil sentiment inthe European and U.S. markets," he added.
At the moment green standards are set by the Roundtable onSustainable Palm Oil (RSPO), an international body made up ofplantation firms, consumers and green groups that promote palmoil supply from estates that do not harm wildlife or cut foreststo expand.
But the RSPO is expensive to comply with and posesdisadvantages to local stakeholders, Embas said.
"The RSPO is more of a burden to the industry. It hascertain conditions that are too stringent, it is very costly,and they keep changing their goals. The premium that we get isalso minimum," he added.
Indonesia, the world's top palm oil producer whose output isexpected to hit around 28 million tonnes this year, willintroduce its own mandatory certification system by the end of2014.
The Indonesia Sustainable Palm Oil (ISPO) scheme aims toregulate, audit and examine Indonesian palm oil firms, forcingthem to adopt green standards and sustainability policies as thecountry faces intense international pressure to limitdeforestation and destruction of its carbon-rich peatlands.
Malaysia's scheme will be voluntary but the government plansto make it a compulsory standard for all industry players instages, Embas said.
Malaysian palm oil stocks currently stand at 1.66 milliontonnes, having eased 37 percent from the record 2.63 milliontonnes hit at the end of 2012. Industry regulator the MalaysianPalm Oil Board will release data on August inventories on Sept.10.
By 0644 GMT, the benchmark November contract on theBursa Malaysia Derivatives Exchange had eased 1.0 percent to2,404 ringgit ($730) per tonne as a stronger ringgit lowered thetropical oil's appeal for overseas buyers.
($1 = 3.2740 Malaysian ringgit) (Reporting by Anuradha Raghu; Editing by Michael Perry)
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