MALAYSIA will propose to Russia a deal to exchange palm oil for arms, Defence Minister Mohamad Sabu said today, ahead of a working visit to Moscow.

“We will raise this ‘barter trade’ system with them. There are countries that are ready to work with us on this system. If this works, palm oil demand and prices will go up,” he said in an interview at his office.

Mohamad will spend four days in Russia before proceeding to Iran.

He will meet his Russian counterpart Sergey Shoygu before attending an event in Moscow.

The Amanah president said Malaysia was exploring the possibility of buying arms from countries such as Russia and China, as an alternative to Europe following the EU’s anti-palm oil campaign.

According to the Stockholm International Peace Research Institute, in 2012-2016 Russia was the second biggest arms exporter at US$33.1 trillion (RM137 trillion). The United States was the biggest arms exporter at US$47 trillion and China was third (US$9 trillion).

“We are disappointed in France (which has received) a lot of procurement from Malaysia. Almost all the Air Asia aircraft are from AirBus and there’s a lot of procurement from the Defence Ministry too,” Mohamad said.

“The prime minister said that if they continue to campaign against palm oil, Malaysia may shift to  (buying from) other countries. But this is not definite yet.”

Mohamad said an arms-for-palm oil trade off would benefit the ministry as the government was currently cash-strapped.

“We will only buy new assets based on need and our financial capacity because a lot of funds are being channelled to save Malay institutions such as Tabung Haji and Felda.”

He was referring to Putrajaya’s bailout plans for troubled government agencies Tabung Haji and Felda, following years of mismanagement leading to substantial financial losses.

In its first budget last year, Pakatan Harapan cut the defence budget by 10% to RM13.9 billion.

Malaysia is no stranger to Russian weaponry and military equipment.

The Malaysian air force owns a fleet of 18 Sukhoi Su-30MKM and 10 MiG 29 jet fighters.

The MiG 29 were purchased in 1995 and the Sukhois delivered in two batches, in 2007 and in 2009.

Russia was the 11th biggest oil palm importer in 2017, accounting for 2.1% of the world market share at US$701.7 million. – April 19, 2019.