Malaysia in talks with Pakistan, others to barter arms with palm oil

KUALA LUMPUR:

Malaysia is in talks with at least six countries, including Pakistan, on the possibility of using palm oil to pay for arms, as Southeast Asia’s third-biggest economy seeks to replace old equipment to boost its defence capabilities.

Malaysia has struggled to update its defence equipment over the years and a cut in its defence budget this year all but derailed efforts to replace navy ships, some of which have been in service for 35 years or more.

Costs have been a big hurdle but using palm oil to help pay for equipment could open new avenues to upgrade, Defence Minister Mohamad Sabu said on Monday.

Mohamad said discussions on paying with palm oil had started with China, Russia, India, Pakistan, Turkey and Iran.

“If they are prepared to accept a palm barter trade, we are very willing to go in that direction,” Mohamad told Reuters in an interview.

“We have a lot of palm oil.”

Malaysia and Indonesia, the world’s two largest palm oil producers, are embroiled in a dispute with the European Union over a plan to phase out the commodity from renewable fuels used by the bloc by 2030 over deforestation concerns.

The two countries supply about 85% of global palm oil, much of which is used in food but also in items such as lipstick and soap.

Mohamad said he could not put a figure on how much palm oil Malaysia was looking to trade for defence equipment.

Besides new ships, Malaysia was also keen to acquire long-range surveillance aircraft, unmanned aerial vehicles and fast intercept boats, the minister said.