SHAH ALAM: Palm oil for arms. It appears that we will have to resort to barter trade to buy new stuff for the military like back in 1993 and 2003 when we bought the Fulcrums and Flankers, respectively.
Defence Minister Mohamad Sabu said this in an interview on April 19.
From NST, from a Bernama report.
Defence Minister Mohamad Sabu said these countries had shown their readiness to accept palm oil in exchange for military equipment.
“We have been working towards a barter system and have received a positive response,” he told a press conference here today.
Mohamad said the acquisition of defence assets through barter could be a way to reduce the country’s financial burden.
The minister said he would be leaving for Russia tomorrow for a bilateral meeting with the Russian Defence Minister and barter trade would be among the issues to be discussed, adding that if successful, the barter trade could potentially raise the price of palm oil.
Commenting on Prime Minister Tun Dr Mahathir Mohamad’s statement last month on the possibility of Malaysia selecting non-European nations to procure military jets, Mohamad said the decision was not set in stone.
From the story, one might assumed that such purchases will be made purely by barter trade, which is not totally correct, of course. For example when we bought the Flankers back in 2003, we paid part of the deal with palm oil and a deal to blast a dentist into space and the rest with cash.
Sukhoi Su-30MKM from the 11th Squadron – M52-09 and M52-18.
There is nothing wrong in this of course but one has to wonder whether it is good to show our hands at this moment especially when the Defence Ministry is putting up a white paper.
Mig-29s over Subang as part of the flypast training on Dec. 19, 2016.
It must be noted that Russia already bought -either cash or barter trade- 90 per cent of its palm oil from Indonesia, which left us not much room to maneuver in this regard. Furthermore, if we buy from Russia, it is likely we will be slapped with sanctions from the US.
Yakovlev Yak-130 Mitten performing a display at LIMA 2019.
I guess we have not yet learnt the lessons we had for the last 30 years or so. And we are likely to repeat it.
— Malaysian Defence
If you like this post, buy me an espresso. Paypal Payment
View Comments (21)
You can get creative if you want to avoid buying from "russia", like routing it through india for example.
As of now, another country that has officially said to take malaysian palm oil for defence hardwares is china.
Hoping to hear more countries willing to do the same, like south korea, turkey, japan and india for example.
At least AFAIK we have never borrowed money from banks etc to buy our military hardware, unlike a few of our neighbours.
Agreed..don't make any loan for defence procurement like our neighbour did.
That Malaysia style.
"There is nothing wrong in this of course but one has to wonder whether it is good to show our hands at this moment especially when the Defence Ministry is putting up a white paper."
The only purpose I can think of for this announcement is as a warning to suppliers who ban palm oil, to reconsider the ban or blame themselves for putting us in the position.
I also think there is a silver lining there. It implicitly says we are reluctant to buy Russian or Chinese in the first instance and notwithstanding the palm oil issue. If we intended to do so, we wouldn't be announcing it because doing so would weaken our bargaining position with them. As others have said, the question of what we can or can't afford is a complex one.
If you ask me, we shouldn't be entrenching ourselves with whoever buys our palm oil because they can always reduce imports later on, which China did earlier this year in favour of Indonesia. We ought to be reducing our dependence on the commodity, not increasing the area under cultivation.
Barter trade or cash, it’s the same. There is absolutely no disgrace in that
Reply
As in others, cash king of course, one can dictate terms much better when using cash.
And ctually it will be both actually as the barter trade usually will not amount more than 30 per cent. The problem is that how much input the military will be getting in the selection of arms. Those who do not learnt from history are doomed to repeat it.
@ am
Unlike during the previous govt, China actually recently increased imports of palm oil in favour of malaysia.
https://www.nst.com.my/news/nation/2019/04/480685/china-injects-rm37bil-palm-oil-deal-more-come
@... And @ Rock
Actually LMS is a loan too. There is nothing wrong borrowing money for military equipments. At the end of the day, All loans made by the gov will be reflected in national budget as budget deficit and accumulated as public debt.
At this moment, there are no many options available. Just act like a beggar, build defence strength in small numbers and batches. Trade barter with palm oil is a good opportunity.
Dont be shy to learn succes from neighbours. After 1998 crisis, Indonesian starts building defence sector step by step and they are start to run fastly. Yes, they will build other 3 subs with the last unit will completely locally built (asean first nation assemble and built sub). They are on initial talk for next batch sub (type 214) to complete 12 subs needed. Not to mention they on progress on getting hundreds medium tanks and iver huitfeldt heavy frigate.
Btw, indonesian starts making IFV pandur II 8x8 too, I wonder how they can do all of these?
I think the barter trade should be open up to not only on our palm oil products but also others such as oil and LNG gas from Petronas if possible, albeit at a preferential pricing. This is to avoid our over dependency on only the Russian arms market so that we can entice Boeing or Lockheed to explore this alternative financing which priority should be at RMAF’s needs and requirements.
@ romeo
Do not confuse staggered payments (which is a norm) with loan.
AFAIK have never taken defence export credits, or have a loan from banks etc written in the contract for our weapons buy.
Money do not come from the sky we have to make do with what we have