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Malaysia aims to conclude its free trade agreement (FTA) negotiations with the European Union before the end of June 2027, with palm oil among the main issues still to be resolved, Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani said.
Speaking to reporters at the EU-Malaysia Business Day 2026: Selangor in Focus, Johari said roughly 80% of the issues on the table have already been settled, with both sides in agreement, describing the deal as 'almost 80% already done'. The remaining differences, he said, centre on palm oil and automotive matters.
On palm oil, Johari stressed that compliance with the EU Deforestation Regulation (EUDR) is not a red line for Malaysia, as the country's major plantation groups are already preparing to meet its requirements. He named United Plantations, Sime Darby, Kuala Lumpur Kepong Bhd and IOI Corporation among the companies working toward compliance.
He noted that six or seven major producers account for about 60% of Malaysia's crude palm oil output, which stands at around 20 million tonnes a year. The EUDR requires that relevant products placed on the EU market are not linked to deforestation, with compliance built on traceability and due diligence. Malaysian producers are preparing ahead of the finalisation of the regulation's implementation framework.
EU Commissioner for International Partnerships Jozef Síkela congratulated Malaysia on its leadership in this area and acknowledged the considerable effort the country has made to comply. He said the delay in implementing the EUDR was partly driven by pressure from other partner countries that were not yet meeting the requirements.
The agreement would be Malaysia's 18th FTA and would give businesses in both regions greater market access. Johari said the aim, once the FTA is signed, is to establish free market access between the two sides.
Negotiations were first launched in 2010, suspended in 2012 and resumed in January 2025. The EU held the fifth negotiating round in September 2026, and the sixth round is scheduled to take place in Malaysia in January 2027. According to the European Commission, progress has been slower on services and investment, export duties, motor vehicles, geographical indications and raw materials, while more than half of the product-specific rules-of-origin chapters have been agreed.
Bilateral trade in goods between Malaysia and the EU reached €48.9 billion in 2025, comprising Malaysian exports of €30.3 billion and imports from the EU of €18.6 billion. EU Ambassador to Malaysia Rafael Daerr said Malaysian exports to the EU rose 28% in the first half of 2026, while imports from the EU grew 12%.
Síkela also highlighted the planned investment of about €950 million (RM4.34 billion) by Dutch semiconductor company NXP, including up to €429 million in financing from the European Investment Bank. The expansion in Petaling Jaya will add 500,000 square feet of space, with the production ramp-up expected in the second quarter of 2028. He said the project goes beyond expanding production capacity to creating skilled jobs.
Source: The Sun Malaysia