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On inset Malaysian Prime Minister Mahathir Mohammad, Picture: Collected[/caption]
GFMM desk: Malaysia is concerned over India's new tightening of palm oil imports following diplomatic disputes. On Tuesday (January 14, 2020), Malaysian Prime Minister Mahathir Mohammad said he would speak out against "wrong things" even though his country was financially spent.
India, the largest consumer of goods changed the rules last week. Traders say India has banned the import of refined oil from Malaysia, the world's second largest producer and exporter of palm oil.
New Delhi has taken this step after criticizing Mahathir over India's new religion-based citizenship law. The 94-years-old leader had earlier accused India of invading a disputed Muslim-majority region in Kashmir.
India's Citizenship Amendment Act (CAA) makes it easier for "persecuted" minorities from three neighboring countries to get citizenship but not if they are Muslims.
Last month, Mahathir said "people are dying" because of the law. India rejected Mahathir's remarks, calling them "factually inaccurate".
On August 5, India's Parliament, in a shock move, revoked Articles 370 and 35A of its constitution, which gave Kashmir partial autonomy and barred non-residents from buying property or settling in the region. India said it did it to boost development in the region and integrate it into India.
As Malaysian palm refiners stare at an enormous loss of business, Mahathir said his government would find a solution.
"We are concerned of course because we sell a lot of palm oil to India, but on the other hand we need to be frank and see that if something goes wrong, we will have to say it," he told reporters. "If we allow things to go wrong and think only about the money involved, then I think a lot of wrong things will be done, by us and by other people."
The benchmark palm oil contract for March delivery was down 0.9 percent in afternoon trade in Asia.
Reuters reported on Monday the Indian government had informally instructed traders to stay away from Malaysian palm oil. Indian traders are instead buying Indonesian crude palm oil at a premium of $10 tons over Malaysian prices.
India's foreign ministry said the palm curbs were not country-specific but that "for any commercial trading, the status of relationship between any two countries" is something a business would consider.
India was Malaysia's biggest buyer of palm oil in 2019, with 4.4 million metric tons of purchases. In 2020, purchases could fall below 1 million tons if relations do not improve, Indian traders say.
Malaysian officials have said that they are trying to sell more oil to Pakistan, the Philippines, Myanmar, Vietnam, Ethiopia, Saudi Arabia, Egypt, Algeria and Jordan.
Malaysia's primary industry ministry, backed by the Foreign Ministry, has been involved with its Indian counterparts to try and resolve the matter, a Malaysian official said, aware of the talks. He is reluctant to be named because he is not allowed to speak to the media.
However, replacing the top buyer will not be easy. This is why the Malaysian Trade Union Congress has called on the two countries to discuss the issue.
Source: Online/SZK
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