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Malaysia: The Case of Environmental Regulations on Palm Oil Production

      During the initial year of the enforcement of the regulations, the palm oil industry regarded effluent treatment as an additional cost of production. Compliance with discharge standard of 5,000mg/l BOD was not mandatory during the first year. Many mills chose to pay the fees rather than treat their effluent to meet the standard. As a result, 67.8% reduction in BOD level was reduced. During the second year of enforcement, it was mandatory for mills to reduce their BOD discharge to 2,000mg/l and the license fee was charged RM 10 per ton BOD. In two years of mandatory enforcement, the total BOD load discharged was reduced by 94.2% despite the increase in the number of mills. It appeared that the motivation to comply with the standard was not the fee, but rather the risk of being shut down.