Indonesia and Malaysia will delay trade talks with the European Union (EU) while they seek fairer treatment for small palm oil producers, the Financial Times reported on Wednesday.
Deputy Prime Minister Fadillah Yusof said the EU's recently adopted law banning the import of products that come from land cleared of forests was "punitive and unfair treatment towards us and to smallholders in particular", the report added.
Indonesia's Coordinating Minister for Economic Affairs Airlangga Hartarto said the policy favoured "large corporations or multinationals" which could afford the level of bureaucracy that the regulation will demand, the FT reported.
Indonesia and Malaysia earlier this month sent top officials to the EU to voice concern over the deforestation law, which they believe could be detrimental to small farming businesses.
The two countries are the world's biggest palm oil producers and account for about 85% of global palm oil exports. The EU is their third-largest market.
The EU's landmark deforestation law would also ban imports into the bloc of coffee, beef, soy and other commodities unless companies could provide "verifiable" information the products were not grown on land that was deforested after 2020.
Fadillah and Indonesia's coordinating ministry for economic affairs, did not immediately respond to a Reuters request for comment outside regular business hours.