Malaysia should not expect too much from Pakistani Prime Minister Imran Khan’s pledge to buy more palm oil. This was stated by Malaysian economists and analysts in an interview with a Malaysian publication.
They doubt the pledge to buy additional palm oil from Malaysia due to Pakistan’s lack of money and weak internal demand.
Nazari Ismail, from the Business and Accounts faculty of Universiti Malaya, said the gesture by Khan sounded strange and that it might just be “to please Prime Minister Dr. Mahathir Mohamad”.
“Food is not something that you can increase easily. You cannot ask all Pakistanis to increase their consumption of chapatis or creamers or other food that use palm oil to help Malaysia boost its export of palm oil,” he told the media.
Prime Minister Imran Khan, during a call on Mahathir in Putrajaya, said that his country will increase imports of palm oil to compensate for Malaysia’s loss in the Indian market. India had imposed general restrictions on refined palm oil imports and had reportedly asked traders informally to stop buying from Malaysia. This move was in retaliation for Mahathir’s criticism of the new citizenship law and New Delhi’s policy on Kashmir.
Analyst Sathia Varqa said even if Pakistan honored its commitment to increase palm oil imports from Malaysia, it would not be enough to fill the void left by the Indian market.
Sathia, who runs Singapore-based Palm Oil Analytics, said in that 2019, Pakistan bought 1.08 million tonnes of palm oil from Malaysia, while India bought 4.40 million tonnes. “Pakistan will need to buy an additional 3.309 million tonnes to fully compensate for the loss,” he said.
He further added that such a dramatic increase is unlikely as Pakistan’s market is much smaller than India and as such does not require that much edible oil.
Also, 80% of Pakistan’s palm oil comes from Indonesia, and the main reason for this is their lower price.
“They want to buy but they do not have the money,” he told FMT, referring to Pakistan’s total 2019 external debt and liabilities of $106.9 billion in the first quarter, as the country continues to borrow more, mainly from the International Monetary Fund (IMF), to improve its international payment capacity.
But Ahamed Kameel Mydin Meera, former dean of the Institute of Islamic Banking and Finance at the International Islamic University, said that Malaysia and Pakistan can work something out.
“We could buy rice, meat, and other food items from them and they could pay the balance after buying palm oil,” he said, referring to netting, an accountancy term to offset the balance.