ARMS-FOR-PALM oil in a barter trade for defence equipment and assets is an acceptable procurement method for cash-strapped governments but purchasing military equipment should ideally be done via cash once the country’s financial health is on solid footing, said the National Patriots Association (Patriot).

Malaysia purchased defence weaponry and equipment under similar barter deals, Patriot president Brig-Gen (rtd) Mohamed Arshad Raji said, adding that such arrangements are safe, as long as terms of the contract are balanced and clear.

“We have done that before the first make we bought was through barter trade. We gave them palm oil,” he told The Malaysian Insight.

Malaysia purchased 18 MiG-29 Fulcrum fighter jets from Russia for US$600 million in 1994 through a barter deal. Palm oil and palm products amounting to US$95 million made up part of the payment for the deal.

Defence Minister Mohamad Sabu said last week Putrajaya is proposing an arms-for-palm oil deal with Russia, where he is currently on an official visit.

Arshad said while an arms-for-oil arrangement is needed to ensure that the country’s military equipment are up to date and well maintained, Putrajaya should still seek to raise its budget for purchasing defence equipment.

“Cash is, of course, better than barter trade,” he said, but declined to elaborate.

Patriot director of public relations, Capt Wong Ang Peng, agreed that barter deals are good, especially during times of “stress on our national economy”.

“But when we are (financially) healthier definitely there is a need to spend money on new assets for security, especially on maritime,” he said.

Last November, Putrajaya slashed the defence budget by 10% year-on-year to RM13.91 billion for 2019.

The reduction means defence expenditure this year dropped to its lowest level as a share of the government budget since the 1980s. – April 23, 2019.