India’s state-owned rail company Ircon International is in talks with the government of Malaysia over plans to build a $1bn rail line on the west side of the peninsula, with some $700m of the cost to be paid in palm oil.
SK Chaudhary, the chairman of Ircon, told Indian business website MoneyControl: “We are looking at this project in Malaysia and checking whether they can pay 70% of the project cost in the form of palm oil.”
He added that the talks, which were at a preliminary stage, involved the design and construction of a line running along the west coast of the country, with one terminus near Kuala Lumpur.
The deal is unusual, but not unprecedented. In 2001, the Times of India reported that Ircon agreed a similar deal, and built a 31km link between Ulai to Tanjung Pelapas in return for palm oil.
A huge volume of palm oil typically flows between the two countries: Malaysia is the world’s second largest exporter after Indonesia, shipping around 17 million tonnes a year, whereas India is the world’s largest importer, buying some 9 million tonnes, worth around $5.4bn, a year.
However, in January last year all trade in the edible oil ceased between the two countries after then-Malaysian prime minister Mahathir Mohammad attacked India’s policy on Jammu and Kashmir. Trade was restored in March, when Muhyiddin Yassin came to power.
Another notable palm oil deal was struck by China in 2019. It agreed to accept palm oil worth nearly $150m from Malaysia in exchange for construction services and civilian and defence equipment.
Image: A Malaysian palm oil plantation. The product is used in everything from biscuits to shampoo (Craig/Public Domain)