Malaysia looks to Pakistan after Indian palm oil controls

Malaysia may expand its palm oil trade with Pakistan following controls imposed by the Indian government on refined palm oil imports. (Shutterstock)
Short Url
Updated 13 January 2020

Malaysia looks to Pakistan after Indian palm oil controls

  • India is world’s biggest palm oil importer and in 2018 imported $5.1 billion worth
  • Palm oil restrictions are seen as New Delhi retaliation following Malaysian criticism

KUALA LUMPUR: Malaysia may expand its palm oil trade with Pakistan following controls imposed by the Indian government on refined palm oil imports. 
“Pakistan is one of Malaysia’s most regular and dependable buyers of local palm oil and products,” Malaysian Primary Industries Minister Teresa Kok said on Sunday.
Kok met Pakistan’s Adviser for Commerce, Textiles, Industry and Production and Investment Abdul Razak Dawood on an official visit to Pakistan.
“In 2018, Pakistan imported 1.16 million metric tons of palm oil from Malaysia valued at RM2.97 billion ($730 million). Avenues were discussed to further expand Malaysian palm oil share in this growing market,” said a statement by the Ministry of Primary Industries in Malaysia on Sunday following the minister’s visit.
India’s Directorate General of Foreign Trade (DGFT) last week announced restrictions on the import of refined palm oil and palm olein, a liquid form of palm oil. Importers will now be required to apply for licenses. 
Indian media reported that while the announcement was “not country-specific, but product-specific,” Indian Prime Minister Narendra Modi’s government had “informally” requested palm oil refiners and traders forgo Malaysian palm oil. 
India is the world’s biggest palm oil importer and in 2018 imported $3.8 billion worth of palm oil from Indonesia, and $1.3 billion from Malaysia. The two Southeast Asian countries are the world’s main producers in the palm oil industry.
The Indian import controls came after remarks by Malaysian Prime Minister regarding India’s actions on Kashmir and the new citizenship law last year.
A Malaysian political analyst from the Singapore Institute of International Affairs, Dr. Oh Ei Sun, said that the restriction “doesn’t help to improve bilateral relations” and is seen as New Delhi’s retaliation to a series of remarks made by Malaysian Prime Minister Mahathir Mohamad regarding India’s widely criticized citizenship laws and Kashmir lockdown.
“We speak out our minds and we don’t retract and change,” said the 94-year old leader at a press event in October regarding his UN speech last year calling for a UN resolution on the Jammu and Kashmir conflicts.
He also spoke out against the new citizenship legislation last year during the KL Summit in December, claiming that the new law would “deprive some Muslims of their citizenship.”
Mahathir’s decision to allow controversial Indian preacher Zakir Naik to remain in Malaysia also upset Modi.
“As India is a major buyer of Malaysian refined palm oil, palm oil refining industry will, of course, be significantly affected,” Dr. Oh said, adding that it remains to be seen if the broader crude palm oil-producing industry will be affected.

G7 backs extension of G20 debt freeze, calls for reforms 

Updated 25 September 2020

G7 backs extension of G20 debt freeze, calls for reforms 

  • Group of Seven ‘strongly regret’ moves by some countries to skip participation in debt relief for world’s poorest nations

WASHINGTON: G7 finance ministers on Friday backed an extension of a G20 bilateral debt relief initiative for the world’s poorest countries, but said it must be revised to address shortcomings hindering its implementation.

In a lengthy joint statement, the ministers from the Group of Seven advanced economies said that they “strongly regret” moves by some countries to skip participation by classifying their state-owned institutions as commercial lenders.

Two officials from G7 countries said the reference was clearly targeted at China, which has refused to include loans by the state-owned China Development Bank and other government-controlled entities in its official bilateral debt totals when dealing with countries seeking debt relief.

The ministers also acknowledged that some countries will need further debt relief going forward, and urged the Group of 20 major economies and Paris Club creditors to agree on terms by next month’s meeting of G20 finance ministers.

“Everyone was disappointed by China’s lack of transparency and commitment,” said one official, who asked not to be named.

At an online meeting hosted by US Treasury Secretary Steven Mnuchin, the ministers underscored their commitment to work together to support the poorest and most vulnerable countries, which have been hard hit by the coronavirus pandemic.

They asked the International Monetary Fund and World Bank to provide regular updates on the financing needs of low-income countries and propose solutions for expected financing gaps, including through instruments to leverage access to private finance.

They said the Debt Service Suspension Initiative (DSSI) approved in April by G20 countries, including China, had helped 43 countries defer $5 billion in official debt service payments to free up money to respond to the pandemic.

But the total is far short of the $12 billion in savings that were initially projected, and represents just over half of the 70-plus countries that were eligible.

The ministers said the initiative should be extended, “in the context of a request for IMF financing,” and called for a new term sheet and memorandum of understanding to improve its implementation.

The ministers said claims classified as commercial under DSSI would also be treated as such in future debt treatments and for implementation of IMF policies, delivering a stern reminder to China and others that have not been fully transparent about the scope and terms of government lending to poor countries.

The ministers also called again on private lenders to implement the debt relief initiative when requested, noting that the absence of private sector participation has limited the potential benefits for several countries.