MALAYSIAN palm oil producers are daunted by the prospect of a boycott of their products by their biggest customer, India, in response to the prime minister’s statements on the Kashmir situation.

Between January and September this year, Malaysia exported 3.9 million tonnes of local crude palm oil (CPO) to India, more than double what sold to China, its next biggest buyer, at 1.6 million tonnes, according to the Malaysian Palm Oil Council.

“We are very concerned about talk of India halting imports as that will be a blow to plantation companies as well as smallholders,” said Malaysian Agricultural Producers Association (Mapa) director Mohamad Audong.

“If (India) goes ahead and stops palm oil imports we will have to look for alternative buyers.”

Mapa members include palm oil plantation giants, such as Sime Darby and Felda, and growers of rubber, coconut and pineapple.

“We hope that Indian businesses will not allow one statement to ruin decades of trade ties between our two countries,” Mohamad said.

Prime Minister Dr Mahathir Mohamad recently criticised Indian policy in the disputed Kashmir region, which drew New Delhi’s ire. Indignant social media users called for a boycott of Malaysian goods with #BoycottMalaysia among the top trending Twitter hashtags in India.

New Delhi is reported to be considering banning certain imports from Malaysia, including palm oil.

Earlier this week, India’s top vegetable oil trade body, Solvent Extractors’ Association of India (SEAI), urged its members to stop importing CPO from Malaysia.

The Narendra Modi administration has denied having anything to do with SEAI’s actions. Indian commerce minister Piyush Goyal told the Times of India that “the government has no view” of SEAI’s stand on the matter.

Data from the Malaysian Palm Oil Council shows that India was also the biggest export destination for Malaysian palm oil products in 2018.

India imported 2.5 million tonnes compared to second biggest importer, China’s 1.86 million tonnes.

In 2018, Malaysia exported a total 16.5 million tonnes of palm oil products worth RM44.7 billion, Malaysian External Trade Development Corporation said in a statement on trade performance.

The Malaysian Palm Oil Association (MPOA) has also appealed to the SEAI to reconsider its call to ban Malaysian CPO.

“We are on the same page as the (primary industries) minister on this and we hope that they will reconsider the directive,” said MPOA chairman Franki Anthony Dass.  

Primary Industries Minister Teresa Kok urged SEAI to allow the governments of India and Malaysia to resolve their differences.  

“While we try to understand the underlying sentiment associated with the SEAI advisory with respect to Malaysian palm oil imports, we feel this is a major setback in our progressing cooperation and working relations,” she said in a statement.  

“Let’s work together for the long-term benefit of all the stakeholders in the vegetable oil industry,” she said, adding that Malaysia and India have many historical and cultural commonalities on top of a good diplomatic and trade relationship.

“We have regularly looked towards India to provide technology innovations particularly in the processing of palm oil and I acknowledge wholeheartedly the pioneering role played by Indian entrepreneurs when the Malaysian refining industry was at its infancy,” she said.

PKR president Anwar Ibrahim has also urged India and Malaysia to settle the issue amicably as it will have an impact on the economy.

DAP’s P. Ramasamy also entreated Putrajaya to mend ties with New Delhi.

The Penang deputy chief minister II said Dr Mahathir need not apologise to India but positive overtures on the part of the Malaysian government could reverse the deteriorating relationship. – October 25, 2019.