EUDR Explained: What It Means for Indonesian Palm Oil

The EUDR (EU Deforestation Regulation) is Regulation (EU) 2023/1115 on deforestation-free products. It allows palm oil, cattle, cocoa, coffee, rubber, soy, wood and their derived products to be sold on the EU market or exported from the EU only if they meet three conditions: deforestation-free after 31 December 2020, produced legally under the laws of the country of production, and covered by a due diligence statement. After two delays, its obligations apply from 30 December 2026 for large and medium companies and from 30 June 2027 for micro and small enterprises. Indonesia is currently classified as a standard-risk country.

What is the EUDR regulation?

Regulation (EU) 2023/1115 was adopted by the European Parliament and the Council on 31 May 2023, published in the Official Journal on 9 June 2023, and has been in force since 29 June 2023. It replaces the EU Timber Regulation (EUTR, Regulation 995/2010). Unlike the RED, which is a directive, the EUDR is a regulation and applies directly in every Member State.

Article 3 sets three conditions for placing a product on the market or exporting it:

• Deforestation-free: produced on land not deforested after 31 December 2020. Deforestation means converting forest to agricultural use. Forest means land of more than 0.5 hectares with trees taller than 5 metres and canopy cover above 10%.
• Legal: produced in line with the relevant legislation of the country of production.
• Due diligence: covered by a due diligence statement or, for certain operators, a simplified declaration.

Which palm oil products does the EUDR cover?

Annex I of the EUDR lists palm products by HS code, including:

• palm nuts and kernels (1207 10);
• palm oil and its fractions, including CPO and refined oil (1511);
• palm kernel oil (1513 21 and 1513 29) and palm kernel cake (2306 60);
• glycerol of 95% purity or more (2905 45);
• palmitic and stearic acid, their salts and esters (2915 70), plus industrial fatty acids and fatty alcohols (3823 11, 3823 12, 3823 19, 3823 70).

Delegated Regulation (EU) 2026/2102 of 13 July 2026, published in the Official Journal on 17 September 2026, adds palm derivatives used in the oleochemicals industry from 30 December 2027. The additions include hydrogenated or interesterified palm oils, chemically modified palm oils, crude glycerol, fatty alcohols and oleic acid esters synthesised from palm. The same act clarifies that palm oil qualifying as waste under the EU Waste Framework Directive is out of scope. Biodiesel (HS 3826) is not listed in Annex I. The EUDR text asks the Commission to pay specific attention to its possible inclusion in a review.

Due diligence and geolocation requirements

Operators, meaning whoever first places a product on the EU market or exports it, must carry out due diligence before it enters the market. There are three steps:

1. Collect information (Article 9), including the geolocation of every plot of land where the commodity was produced. Coordinates need at least six decimal digits. Plots larger than 4 hectares must be described with polygons that trace the boundary.
2. Assess risk (Article 10), for example the country's risk level, the presence of forests and the complexity of the supply chain. Information from certification schemes can be used as a complement, but under recital 52 it does not replace the operator's responsibility.
3. Mitigate risk (Article 11) until it is no or only negligible, then submit the due diligence statement through the EU information system.

Amending Regulation (EU) 2025/2650 simplified obligations further down the chain. Downstream operators and traders no longer file their own due diligence statements. They only keep supplier and customer records, and those that are not SMEs must register in the information system. Micro or small primary operators in low-risk countries submit a one-time simplified declaration and may use a postal address instead of geolocation. That relief does not apply to producers in standard-risk countries such as Indonesia.

EUDR country benchmarking: Indonesia is standard risk

The EUDR uses three categories: low, standard and high risk. Implementing Regulation (EU) 2025/1093 of 22 May 2025 lists four high-risk countries (Belarus, North Korea, Myanmar and Russia) and a list of low-risk countries that includes China, India, Thailand, Vietnam and Papua New Guinea. Indonesia and Malaysia appear on neither list, so they are standard risk. We found no amendment to the list on EUR-Lex as of late October 2026.

The classification sets how intensively products are checked. Member State authorities must check at least 1% of operators for products from low-risk countries, 3% for standard-risk countries, and 9% of operators and 9% of volumes for high-risk countries. Simplified due diligence is available only for products from low-risk countries.

When does the EUDR apply? Dates after the delays

Date	Event
29 June 2023	EUDR enters into force. Original application dates: 30 December 2024 (large and medium companies), 30 June 2025 (micro and small)
December 2024	First delay via Regulation (EU) 2024/3234: to 30 December 2025 and 30 June 2026
19 December 2025	Regulation (EU) 2025/2650 delays by another 12 months and simplifies obligations
4 May 2026	Commission simplification review report: the EUDR will not be reopened and the dates stand
30 December 2026	Obligations apply to large and medium companies
30 June 2027	Obligations apply to micro and small enterprises established by 31 December 2024 (except timber products already under the EUTR)
30 December 2027	Additional palm derivatives from Delegated Regulation 2026/2102 come into scope

According to a summary by law firm Baker McKenzie, the 4 May 2026 report said changes would come through guidance, the information system and delegated acts rather than by rewriting the regulation.

EUDR penalties

Article 25 requires Member States to set penalties that are effective, proportionate and dissuasive. They include:

• fines with a maximum of at least 4% of the company's total annual EU-wide turnover;
• confiscation of the products and of revenues from the transaction;
• exclusion from public procurement and public funding for up to 12 months;
• a temporary ban on placing or exporting products for serious or repeated infringements.

Smallholder concerns

Indonesia's Coordinating Ministry for Economic Affairs says the palm sector directly employs 2.4 million independent smallholders. For them, plot polygons, proof of land legality and segregating traceable supply all add cost. Indonesian Palm Oil Association (GAPKI) chairman Eddy Martono asked the European Commission to exempt smallholders from reporting requirements and to recognise ISPO, Eco-Business reported in September 2025. Palm oil company Musim Mas said the EUDR's "all or nothing" design excludes smallholders rather than bringing them along. In April 2026, Foreign Ministry spokesperson Yvonne Mewengkang, quoted by ANTARA, said Indonesia would keep pushing for ISPO recognition and for rules that do not disadvantage smallholders.

How Indonesia and Malaysia are responding

• National Dashboard. Indonesia has built a National Dashboard of sustainable commodity data covering the commodities affected by the EUDR: palm oil, cocoa, rubber, coffee and wood. Coordinating Minister for Economic Affairs Airlangga Hartarto said in October 2024 that land legality and origin can in principle be shown through the plantation registration letter (STDB).
• Expanded ISPO. Presidential Regulation 16/2025 makes ISPO certification mandatory for plantations, downstream industries and palm bioenergy businesses. Plantation companies were covered from the start, downstream and bioenergy businesses after two years, and smallholders after four years (around March 2029). See our ISPO guide for smallholders and mandatory ISPO for biodiesel producers from 20 March 2027.
• Trade diplomacy. The Indonesia–EU Comprehensive Economic Partnership Agreement (IEU-CEPA) is targeted to take effect in January 2027. We found no official EU document recognising ISPO as proof of EUDR compliance as of October 2026.
• Malaysia. According to MSPO, an EU–Malaysia joint statement issued after Environment Commissioner Jessika Roswall's visit on 5 August 2025 acknowledged MSPO as a credible standard that can facilitate EUDR compliance. MSPO uses a deforestation cut-off date of 31 December 2019.

What it means for Indonesia

Analysis: because Indonesia is standard risk, EU buyers must run full due diligence on Indonesian CPO and palm derivatives. Plot geolocation and proof of land legality will therefore become a condition of trade rather than a selling point. Biodiesel itself is not yet covered, but CPO and many oleochemicals are, including glycerol, fatty acids and fatty alcohols. Traceability built for the EUDR also serves Indonesia's domestic ISPO requirement for bioenergy. The EUDR differs from RED III, the EU's revised Renewable Energy Directive: the EUDR governs market access, while RED III governs what counts towards EU renewable energy targets. For background, see the 2023 adoption of the EUDR, the first delay in December 2024 and the extension to palm derivatives.

Frequently asked questions

Does the EUDR ban Indonesian palm oil?

No. The EUDR does not ban palm oil from any country. It bans products that are not deforestation-free, not legal or not covered by due diligence.

Is Indonesia high risk under the EUDR?

No. Under Implementing Regulation 2025/1093, Indonesia is standard risk. Only Belarus, North Korea, Myanmar and Russia are high risk.