This study specifically examines Malaysian laws related to the timber and rubber industries to identify the key areas operators must consider for European Deforestation Regulation (EUDR) compliance. EUDR Article 2 on ‘relevant legislation of the country of production’ specifies the areas of laws applicable in the country of production concerning the legal status of the area of production in terms of: (a) Land Use Rights, (b) Environmental Protection, (c) Forest-Related Rules, (d) Third-Party Rights, (e) Labor Rights, (f) Human Rights, (g) The Principle of Free, Prior, and Informed Consent (FPIC), and (h) Tax, Anti Corruption, Trade, and Customs Regulations. With the exception of Forest-Related Rules, Tax, Customs Regulations, and environmental protection, which have specific application to the timber and rubber industries in Malaysia, all the other due diligence requirements apply to both industries and thus will be considered together to avoid repetition.
The EUDR takes a flexible approach by listing a number of areas of law without specifying particular laws, as these differ from country to country and may be subject to amendments. However, only the applicable laws concerning the legal status of the area of production constitute relevant legislation pursuant to Article 2 of the EUDR. This means that generally the relevance of laws for the legality requirement in Article 3(b) of the EUDR is not determined by the fact that they may apply generally during the production process of commodities or apply to the supply chains of relevant products and relevant commodities. Instead, the relevance of legislation is determined by the fact that these laws specifically impact or influence the legal status of the area in which the commodities were produced.
Additionally, Article 2 of the EUDR must be read in the light of the objectives of the EUDR as laid down in Article 1(a) and (b). That means that legislation is also relevant if its contents can be linked to halting deforestation and forest degradation.
This study clarifies which existing laws operators are required to follow to access the EU market. The goal is to provide guidance to help operators sourcing from Malaysia to meet EUDR due diligence requirements and reduce risks and inform policy makers in Malaysia on their options to enhance the enabling environment.
