ANALYSTS have mixed views on the possible launch of the Malaysian Sustainable Palm Oil (MSPO) standard next year.
Maybank IB Research views the latest development as a step in the right direction.
MSPO, which is the Malaysian standard of sustainable palm oil certification, is expected to be introduced by next year, three years later than Indonesia's Sustainable Palm Oil initiative.
"While we are long-term positive on the MSPO, we are neutral on the sector on a 12-month view," said analysts in a note last week.
The research firm believes the MSPO could lead to a better branding for Malaysian palm oil and recognition, as the industry has not been affected by non-governmental organisations' (NGOs) concerns such as open burning, deforestation, clearance of rainforest habitat and breaching of indigenous land rights.
"We believe the MSPO will help rebrand Malaysia's palm oil as a premium palm oil which will be more acceptable to developed countries. This is a step in the right direction with minimal compliance cost with potential benefits in terms of marginally higher pricing or greater preference vis-a-vis other palm oil-producing countries," added Maybank IB analysts.
While Maybank IB is optimistic, RHB Research has a neutral view on the potential impact as most of the larger listed companies have obtained or are in the midst of obtaining Roundtable on Sustainable Palm Oil (RSPO) certification.
"The MSPO will essentially benefit medium and small oil palm planters that are non-RSPO compliant, given the cost involved to obtain the certification and the absence of a premium fetched for RSPO-certified sustainable palm oil in exporting markets," it said.
Local plantation giants, such as Sime Darby Bhd, Felda Global Ventures Bhd and IOI Corp Bhd, have been RSPO members since 2004.
The RSPO has been criticised by some of its members lately over the concern of being manipulated by NGOs.
With this in mind, Plantation Industries and Commodities Minister Datuk Seri Douglas Uggah believes there is a need for the palm oil industry in Malaysia to have its own standard as there are various disadvantages in complying with the RSPO.
"Also, the RSPO keeps changing its goal post and imposing stringent conditions, making it tougher for oil palm producers," he said at a press conference last week.