India has finally announced that it is cutting trade with Malaysia pertaining to palm oil. The government issued the warning last week, prompting refiners to not trade with Kuala Lumpur.
“Officially there is no ban on crude palm oil imports from Malaysia, but nobody’s buying due to government’s instructions,” said an Indian refiner that currently shifts to Indonesia’s palm oil industry.
Regarding the ban, Malaysian Prime Minister Mahathir was concerned of India’s decision. However, the PM remains defensive about his stance against India on Kashmir.
“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,” PM Mahathir said. “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.”
“That’s something that we have to find a solution for, but the fact is what’s happening in India today is causing a lot of unhappiness among the people there, and the whole world feels that it’s wrong to discriminate,” he added.
India is currently among top three biggest buyers of palm oil industry in Malaysia. Hence, it is no wonder that India’s decision right now will truly jeopardize the industry.
To prevent further losses, Malaysian government is trying to strengthen palm oil trades to other countries. Among them are Pakistan, the Philippines, Myanmar, Vietnam, Ethiopia, Saudi Arabia, Egypt, Algeria and Jordan.
Also Read: PM Mahathir Warns of Possible Trade Sanctions on Malaysia
What Happens between India-Malaysia Palm Oil Trade
The India-Malaysia palm oil trade has been worsening since PM Mahathir’s comment on Kashmir during his UN speech in September 2019. India rejected the criticism and argued that it was factually inaccurate.
As a result of growing tensions, Indian refiners were cautious that the government might apply the ban at any moment. Despite signalling no follow-ups, the refiners were afraid that continuing to purchase from Malaysia would result in great losses.
Being nationalistic, The Solvent Extractors’ Association of India (SEAI) took a drastic measure to prevent its members from buying Malaysian palm oil. Yet, Indian government had not announced any official regulations.
To regain its customers, Malaysia offered huge discounts for Indian refiners following the nationalistic ban. Afterwards, the attempt worked and Indians went back to purchase Malaysian palm oil products.
However, last week Indian government finally hinted a warning. The refiners, despite being under the discount contract, become cautious and go back to restrict trades.
Also Read: Malaysia to Resolve Spat with India, Hopes RCEP Deal Pushes Through
