KUALA LUMPUR: China is committed to significantly increase the purchase of Malaysian palm oil, following the revival of the stalled East Coast Rail Link.
Following good demand from 300 million out of its 1.4 billion population, it is keen on not only doing that, but also assisting Malaysia in improving the crops’ yield.
Revealing this, China’s ambassador to Malaysia Bai Tian said the republic was going a step further by also eyeing bilateral offset deals that involve defence, aerospace, security, maritime, construction and financial services.
That includes the planned High Speed Rail project, linking Kuala Lumpur with Singapore, and possibly beyond the Thai border.
He reiterated that last month’s injection of US$890 million (about RM3.69 billion) into Malaysia’s economy by purchasing 1.6 million tonnes of palm oil was a starter.
That latest deal was struck on March 4 and it increased the palm oil sale to China by 500,000 tonnes.
China’s Yihai Kerry (Shanghai) International Trade Co Ltd, Yizheng Fangshub Industry Ltd Co and Yantai Tianmao Edible Ltd Co inked the sales with four Malaysian concerns.
Last year, Malaysia exported 3.07 million tonnes of palm oil and palm products with a total value of RM8.38 billion to China. This was 7.3 per cent more than 2.86 million tonnes of palm oil sold at RM9.39 billion in 2017.
“And that is not all. There are plans for Chinese concerns to continue purchase even more palm oil from Malaysia.
“This will not only boost Malaysia’s economy but rejuvenate the palm oil industry which is suffering with low prices and the livelihood for many,” he said at a media roundtable at the China Embassy in Jalan Ampang.
He was echoing Prime Minister Tun Dr Mahathir Mohamad’s call for China to consider purchasing more Malaysian palm oil, following the revival of the stalled East Coast Rail Link.
Dr Mahathir is scheduled to lead a high-level delegation, comprising several Cabinet ministers, for the Belt and Road Initiative (also known as the One Belt, One Road, or OBOR) summit in China on April 25-27.
Bai said that Dr Mahathir was expected to hold bilateral talks with Chinese president Xi Jinping and premier Li Keqiang in an attempt to woo more Chinese foreign direct investment (FDI) into Malaysia.
“We expect several mega deals to be inked during his visit,” said Bai, adding that China accounted for the biggest of RM20 billion in FDI into Malaysia last year
Bai said that China was also looking at upstream and downstream industries related to palm oil, including engaging in offset packages via barter trade.
These include the value-added products like oleo chemicals, pharmaceuticals, processed food, specialty and consumer products,
“We acknowledge that Malaysian palm oil is of very good quality and competitively priced.
“There is great demand back home for the product as it is ideal for consumption for nearly 400 million of our total population of 1.4 billion,” he said.
Bai added that China was the world’s biggest buyer of Malaysian palm oil and related products.
Last year, the export of Malaysian palm biodiesel to China increased significantly from 140 tonnes (RM5.0 million) to 41,450 tonnes (RM113 million) from 2017.
However, China stood at number three after Europe and India just for palm oil purchases alone from Malaysia.
“We are also looking at improving the crop’s yield so that there will be greater production in view of improved demand,” he said.
China’s initiative comes after Russia’s offer to purchase greater volumes of Malaysian palm oil via offset deals for defence equipment and aircraft procurement.
Defence Minister Mohamad Sabu is leading a high-level defence delegation to Moscow and is scheduled to meet Russian Defence Minister Sergei Shoigu and its President Vladimir Putin, during his four-day visit.
Mohamad is attempting to engage in billion-dollar trade-offs on defence and security procurement, including military aircraft, armaments and software, to spur palm oil sales via transfer of technology and job spin-offs.
Primary Industries Minister Teresa Kok revealed that several other countries from Africa, the Middle East, Europe and Asia have also expressed interest in offset deals involving Malaysian palm oil.