By Joseph Sipalan
KUALA LUMPUR, Aug 26 (Reuters) - Malaysia is in talks with
at last six countries 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.
DEFENCE REVAMP
The planned barter is part of a 10-year defence policy to be
tabled in parliament this year, which Mohamad said would focus
on boosting naval capabilities, including in the disputed South
China Sea.
China claims historic jurisdiction over the sea via a
so-called nine-dash line on maps, but it overlaps with territory
claimed by Malaysia, China, Vietnam, Brunei and the Philippines.
Taiwan also claims most of the sea.
Recent Chinese naval deployments in the disputed sea,
through which over $3.4 trillion in goods are transported
annually, have reignited tension with Vietnam and the
Philippines. Malaysia had been critical of China's South China Sea
position, but has not been excessively outspoken recently,
especially after China pumped in billions of dollars into
infrastructure projects under its Belt and Road Initiative.
Malaysia regularly tracked Chinese naval and coastguard
vessels entering Malaysia's territorial waters, Mohamad said,
but added that China respects Malaysia and had "not done
anything that caused us trouble, so far".
However, Southeast Asian counties would need to work
together to make sure their interests are not drowned out by big
powers like the U.S. and China jostling for control, Mohamad
said.
"We want this region to remain peaceful and neutral,"
Mohamad said.