The EU releases its risk assessment list for deforestation: Myanmar as “high risk”, Cambodia, Malaysia, and Indonesia as “standard-risk”.
As part of the EU’s Deforestation Regulation, a benchmarking of deforestation risk across all commodity producing countries has been done. The process ranks countries as either high, standard, or low risk, based on a set of quantitative and qualitative indicators. This includes historical rates of deforestation and forest degradation, agricultural land expansion, transparency of data, and cooperation agreements between the countries and the EU or its Member States (MS).
The category of risk given to a country then determines how strict due diligence rules will be for companies exporting commodities such as soy, beef, palm oil, wood, cocoa and coffee, in addition to some downstream products like leather, chocolate and furniture. For operators sourcing from low-risk countries, due diligence requirements will be simplified. By contrast, those sourcing from standard- or high-risk countries must meet the full scope of EUDR obligations, including the assessing of risks for legal production, deforestation and forest degradation, as well as the mitigating of non-negligible risks.
About the risk classification
The EUDR entered into force on 29 June 2023. Under Article 29, the Commission was required to develop a risk classification system for assessing the risk level of countries or parts of countries, based on three main quantitative criteria:
- The rate of deforestation and forest degradation,
- The rate of expansion of agriculture land for relevant commodities,
- The production trends of relevant commodities and of relevant products.
Initially, the Regulation set a deadline of 30 December 2024 for the publication of the first list. However, following stakeholder concerns around the regulation, including delays in the development of the country benchmarks, the European Parliament and Council of the European Union adopted an amending regulation in late 2024, extending the publication deadline by six months to 30 June 2025.
The EU released its list in May 2025, which placed all EU member states, as well as around 120 other countries such as the US, China, Australia, Thailand, Philippines, and Canada in the low-risk category. Four countries were labelled “high risk” – Belarus, Myanmar, North Korea and Russia. About 50 countries, including ASEAN’s Cambodia, Indonesia and Malaysia, were given the “standard risk” classification.
Initial reactions from Malaysia criticised the EU’s favoritism towards its MS, alleging that its own deforestation mitigation measures were stronger than several EU MS. Malaysia also argued that the EU’s risk assessment methodology is based on outdated data and a narrow focus on general forest loss rather than specific palm oil-related deforestation. Meanwhile, Indonesia’s exclusion from the high-risk group was welcomed by businesses, although some noted that having a “low-risk” classification would ease due diligence and cut export costs, particularly for small players.
Since the list was published, Malaysia and Indonesia have publicly stated that they aim to have their palm oil supply chain labelled as “low risk” in the next review, which is planned for 2026. Barring a diplomatic breakthrough, this seems unlikely as a hard cutoff point for “low risk” categorisation is an annual deforestation rate of 70,000 hectares per year, with Malaysia’s 2024 figures standing at 101 kha and Indonesia’s at 259 kha [1]. This is unfortunate and looks to unfairly punish both countries as the past decade saw both countries making significant progress in reducing their deforestation.
Both countries, who are in the midst of negotiating Free Trade Agreements with the EU, will continue to engage with the EU to address identified gaps and improve its forest governance and monitoring practices. This can be further enhanced by leveraging the EU’s Global Gateway Initiate in capacity building and technical assistance. Malaysia is already making contingency plans for its agricultural exporters to ensure they can comply with the EU’s requirements in the event that a “low risk” status is not achieved.
[1] Global Forest Watch (GFW) is a service of the World Resources Institute
