KUALA LUMPUR (April 19): The Defence Ministry is currently in talks with several countries, including Russia, China and Pakistan on the possibility of acquiring new assets in exchange for palm oil.

Defence Minister Mohamad Sabu said he is leaving for Russia today to further discuss the proposal.

“I will be heading to Moscow for an event and to meet with the Defence Minister there. We will be bringing up the topic of barter trading, because several countries have indicated that they are open for discussions.

“We are working hard on this. If this works out, palm oil could see stronger prices in the future,” Mohamad said at a press conference yesterday.

Asked if the Ministry will be purchasing new assets in the near future, he said it will depend on the need for such assets and the country’s fiscal situation, pointing out that the Government has already allocated a lot of funds towards the restructuring of agencies such as the Federal Land Development Authority and Lembaga Tabung Haji.

According to a report in the New Straits Times last month, Russia had indicated that it will consider the proposed barter arrangement of palm oil with Malaysia, for the procurement of defence and security assets, including military aircraft, armaments and software.

Quoting a top Russian defence procurement official, the report said Russia is committed to increase its purchase of palm oil from Malaysia via an offset deal which will see the Royal Malaysian Air Force (RMAF) disposing of 18 decommissioned jets.

This is also timely as there have been calls for the country to expedite the purchase of new fighter jets, with the Minister himself previously stating in Parliament that the Malaysian military is lagging behind neighbouring countries such as Indonesia and Vietnam.

The assets-for-palm-oil deal, if it works out, could also lend some assistance to Malaysia’s palm oil industry, which is facing headwinds amid the European Union’s planned restriction on the use of palm oil in biofuel, citing environmental concerns.

Besides the barter proposal, China has also hinted at a possible increase in the purchase of palm oil and palm oil-related products from Malaysia soon.