Jakarta. The European Union’s (EU) decision to delay the enforcement of its anti-deforestation regulation by a year is expected to ease the policy’s impact on trade with Indonesia, according to an EU envoy.

The European Union Deforestation Regulation (EUDR) aims to block Indonesian palm oil originating from deforested areas from entering the EU market. Once in force, Indonesian farmers must prove that their palm oil is free from deforestation by providing the exact coordinates of their plantations. European customs officials would then verify these coordinates using satellite imagery. 

As the world’s largest palm oil producer, Indonesia has strongly opposed the EUDR, arguing that it will place undue pressure on smallholder farmers.

The EUDR was initially scheduled to take effect by the end of this year. However, the EU decided to push the implementation back by one year. Large and medium companies are now required to comply with the new rules by the end of 2025, while micro- and small enterprises have until June 30, 2026.

“We have delayed the [EUDR] by a year, so it will not be in force this January. The extra year should allow us to be able to find common grounds, so it has minimum impact on our trade flow with Indonesia,” EU Ambassador to Indonesia Denis Chaibi told reporters in Jakarta on Monday.

According to Chaibi, Europe accounts for 10 percent of Indonesia’s palm oil exports. He noted that most of these shipments originate from large plantations, indirectly downplaying concerns over the regulation’s adverse effects on smallholders.

“These big plantations have adapted to the EUDR. We are looking at a very small part of the overall trade, but we understand the sensitivity around the smallholders’ concerns. But we already have some projects to prepare the [Indonesian] small-scale farmers. We are also working with the Indonesian government,” Chaibi said.

Government data shows that Indonesia-EU trade reached $30.8 billion in 2023, with Indonesian exports totaling $16.7 billion and imports from the EU amounting to $14.1 billion. Palm oil remains one of Indonesia’s main exports to Europe.

Since 2016, Indonesia and the EU have been negotiating a comprehensive economic partnership agreement (CEPA). Chaibi argued that this overdue trade pact could help better integrate Indonesia into the global value chain, and he denied that the EUDR had caused any setback in the negotiations.