Indonesia, Malaysia Sign Border Agreements, Pledge Joint Action on Palm Oil

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Indonesia, Malaysia Sign Border Agreements, Pledge Joint Action on Palm Oil

President Joko Widodo and Prime Minister Anwar Ibrahim signed a number of important agreements during a meeting in Putrajaya yesterday.

Indonesia, Malaysia Sign Border Agreements, Pledge Joint Action on Palm Oil

Malaysian Prime Minister Anwar Ibrahim (left) and his Indonesian counterpart Joko Widodo sit down for a meal at Jalan Raja Alang Market, Kuala Lumpur, Malaysia, June 8, 2023.

Credit: Twitter/Anwar Ibrahim

Malaysia and Indonesia announced yesterday that they have settled a longstanding maritime border dispute and vowed to bolster cooperation against European regulations that are likely to impact their economically pivotal palm oil industries.

The announcement came on the first day of Indonesian President Joko “Jokowi” Widodo’s two-day visit to Malaysia, reciprocating the trip that Prime Minister Anwar Ibrahim made to Indonesia in January – his first as prime minister.

In a ceremony yesterday, the two leaders signed a number of agreements covering plans to improve border crossings, strengthen border trade, and promote investment. Far eclipsing these in significance, however, was the signing of two treaties, many years in negotiation, on the delimitation of the nations’ territorial seas in parts of the Straits of Malacca and the Sulawesi Sea.

“After 18 years of negotiations … praise be to God, it has finally been resolved,” Jokowi told a joint news conference, in reference to the treaties, The Associated Press reported.

Maritime borders have been a source of actual and latent bilateral tension since Konfrontasi in the 1960s. After the conflict cooled, Jakarta and Kuala Lumpur signed agreements partly delimiting their continental shelf boundary and territorial sea boundary around the Straits of Malacca in 1969 and 1970, respectively. But these did not cover the entire sea border, while the countries’ maritime border in the Celebes Sea, which laps the shores of Borneo and Sulawesi, as well as the southern Philippine islands, remained undemarcated.

In 1998, Indonesia took Malaysia to the International Court of Justice over its claim to two islands, Sipadan and Ligitan, which it claimed fell within its territorial waters. Four years later, the ICJ ruled that the islands belonged to Malaysia, but did not settle the maritime boundary in the surrounding waters.

The border agreements, which followed painstaking negotiations, remove a potential source of friction between the two neighbors whose relations have been shadowed by the legacy of Konfrontasi. In a joint statement issued after their meeting, the AP reported, Anwar and Jokowi said that the signing of the treaties will provide a strong foundation for future maritime boundary negotiations. They pledged to resolve other land boundary issues by next June.

In addition to border issues, Anwar and Jokowi also made a public pledge to fight what their joint statement described as “highly detrimental discriminatory” measures against palm oil imposed by the European Union.

In December, the EU approved the European Union Deforestation Regulation (EUDR), which is intended to “ensure that a set of key goods placed on the EU market will no longer contribute to deforestation and forest degradation in the EU and elsewhere in the world.” Given palm oil’s connection to widespread rainforest destruction and wildlife loss, imports from Indonesia and Malaysia – the world’s two largest producers of palm oil – are likely to be hit hard.

The two nations have not held back in their criticism of the EU measures, with one Malaysian official even suggesting that it might cut off exports to the European bloc.

Yesterday, Anwar and Jokowi pledged to cooperate closely to fight against the EU regulation, urging Brussels to work toward a “fair and equitable resolution.”

“We need to strengthen this collaboration,” Jokowi told the news conference. “We don’t want commodities produced by Malaysia and Indonesia to be discriminated against in other countries.” Anwar added, “We will speak in one voice to defend the palm oil industry.”

Representatives from Malaysia and Indonesia undertook a joint trade mission to Brussels late last month, after which they described the EUDR as “inherently discriminatory and punitive in nature.”