Malaysia’s PM addressing 74th UNGA, said that “Now, despite the UN resolution on Jammu and Kashmir, the country has been invaded and occupied”. The criticism by Malaysia’s PM Mahathir Mohamad on India’s actions on Kashmir sparked a controversy. Vegetable oil trade body urged all importers to boycott import of palm oil in future.
Trade Body Reaction
Reacting on rage, India’s solvent Extractor’s Association President, Atul Chaturvedi advised its members to stop buying palm oil and its products from Malaysia. The boycott was a sign of protest in contradiction of Malaysian PM’s remarks on Kashmir conflict. Related to the Indian government annulling Jammu and Kashmir’s legally self-governing status and execute many unique safety procedures.
Importance of India to Malaysian Palm Oil Exports
India is the world’s largest importer of edible oil, relying on Indonesia and Malaysia. Malaysia’s exports to India in 2019 stood at USD 10.8 billion. Thus, India was the third-largest consumer of Malaysia’s Palm oil and palm-based products in 2019. Supporting this, statistics from the Malaysian Palm Oil Board depicted 3.91 million tonnes of palm oil exported to India which is 107% higher than the preceding year.
Malaysia’s Stand on the Issue
Despite the emerging strain by Indian traders boycotting palm oil, Malaysian PM refuses to withdraw his statement. While this standoff could aggravate a trade war between India and Malaysia, he still believes that we must abide by UN resolutions. However, Primary Industries Minister, Teresa Kok advised to avoid mere unilateral judgments and the issue should be resolved by the governments by addressing the official stance of each government. Further, local industry experts consider the ban to be unlikely and short-termed. However minimal, the ban will surely negatively impact Malaysia by an increase in the accumulation of palm oil stocks.
India’s take on the Boycott
As of now, India is importing palm oil from Indonesia. Yet, due to their B30 bio-diesel production and the increased demand from India, they would shift to become a monopoly. Thereby, increasing the price so India would pay much higher than the current levels. As far as Malaysia is considered, India still has the upper hand. For instance, Indian Ban will impose pressure on the Malaysian government and thereby, raise the import tax on Malaysia Palm oil.