Pak to ‘compensate’ Malaysia by importing more palm oil

Pakistan will buy more palm oil from Malaysia, Prime Minister Imran Khan said on Tuesday, to try and compensate after top buyer India put curbs on Malaysian imports last month amid a diplomatic row.

India imposed general restrictions on refined palm oil imports, and informally asked traders specifically to stop buying from Malaysia, the world’s biggest producer of the edible oil.
Sources said the move was in retaliation after Malaysia criticised India’s new religion-based citizenship law and its policy on Kashmir.

Malaysian Prime Minister Mahathir Mohamad said on Tuesday that he discussed palm oil with Imran who was on a visit to Malaysia and that Pakistan had indicated it would import more from Malaysia.

“That’s right, especially since we noticed India threatened Malaysia for supporting the Kashmir cause, threatened to cut palm oil imports,” Imran told a joint news conference, referring to India’s Muslim-majority region of Kashmir.

“Pakistan will do its best to compensate for that.”

India is a Hindu-majority country while Malaysia and Pakistan are mainly Muslim. India and Pakistan have been mostly hostile to each other since the partition of British India in 1947, and have fought two of their three wars over competing territorial claims in Kashmir.

Pakistan may have bought around 135,000 tonnes of Malaysian palm oil last month, a record high, India-based dealers who track such shipments told reporters on condition of anonymity.
The figure is close to estimates of 141,500 tonnes from Refinitiv, which says sales to India in January may have plunged 80% from a year earlier to 40,400 tonnes.

Malaysia will release official export data on Monday.

Pakistan bought 1.1 million tonnes of palm oil from Malaysia last year, while India bought 4.4 million tonnes, according to the Malaysian Palm Oil Council.

India has repeatedly objected to Mahathir speaking out against its move last year to strip Kashmir’s autonomy and make it easier for non-Muslims from neighbouring Muslim-majority Bangladesh, Pakistan and Afghanistan to gain citizenship.

At the news conference, Mahathir did not refer to Kashmir but Imran did.

“The way you, PM, have stood with us and spoken about this injustice going on, on behalf of Pakistan I really want to thank you,” Imran said.

He also said he was sad he could not attend a summit of Muslim leaders in Malaysia in December.

Pakistan will come under pressure to convince the International Monetary Fund (IMF) it can bring down a ballooning fiscal deficit, as a review on the future course of its $6 billion financial aid programme gets under way.

An IMF team sent to review benchmarks set as part of the deal began formal meetings in Islamabad on Tuesday that will continue until Feb.13, a top finance ministry official said.

The Fund agreed the three-year rescue package last year — its 13th bailout programme for Pakistan since the late 1980s — as the South Asian country of 208 million people wrestles with a balance-of-payments crisis.

Even after cutting its revenue collection target, Pakistan is facing a shortfall of Rs387 billion ($2.51 billion).

By the end of the fiscal year in June, that could have virtually doubled, former finance secretary Waqar Masood — who was instrumental in past negotiations with the IMF, told reporters on Tuesday.

That would be “alarmingly high,” making the review potentially very critical given the already hard-pressed state of the economy. So the mission would ask for details of measures to narrow the shortfall, he said.

With energy and gas prices already high and citizens facing double-digit food-led inflation and interest rates, the government might be forced into introducing news taxes via a mini-budget.
“You might be hearing already that the government has no (other) option,” he said, though that would be politically risky.

The IMF board met in December to approve second aid tranche of $450 million after the mission’s team completed its first review in November, saying the fiscal deficit was narrowing.
Reuters