On 27th October 2019, Malaysian Prime Minister Mahathir Bin Mohamad carelessly criticized India at UN event by stating that “India invaded and occupied” Jammu & Kashmir and asked New Delhi to work with Pakistan in resolving the issue.
This thoughtless criticism from Mahathir ignited the anger in New Delhi and in retaliation to this, Indian oil refiners had stopped buying Malaysian Palm Oil for upcoming November and December.
In a response, one of Malaysia’s leading news portal Malaysia Chronicle came up with an article stating that “Mahathir triggered his own Downfall”. So discuss this.
Has Mahathir triggered his own Downfall ?
Malaysia is second biggest producer of Palm Oil in the world after Indonesia. Production of Palm Oil is the biggest agriculture practice in Malaysia. Millions of Malaysians are totally dependent upon Palm Oil for their livelihood.
As of 2016, palm oil plantation accounted for a total land use of 57,400 square km in Malaysia which is around 15% of their total land.
India is the second-largest buyer of Malaysian palm oil with 150,000 tons of import monthly. But after the absurd statement from Mahathir, New Delhi is planning to substitute Malaysian palm oil with the supplies of edible oils from other countries like Indonesia, Argentina and Ukraine.
If India stops purchasing Palm Oil from Malaysia it will kill the livelihood of millions of Malay farmers who is dependent on palm oil for their already thin income.
When Reuters first break the story that New Delhi is planning to slash the import of Palm Oil from Malaysia, Prime Minister Mahathir said that he had not received “anything official” from India about reports that Malaysian palm oil was about to get a hit.
This unofficial news created confusion whether India is about to slap any new tariff on Malaysian palm oil or not. Such uncertainties has forced Indian buyers to switch to buy from Indonesia ( Neighbor of Malaysia ) to avoid unnecessary problems due to the possible impact of higher taxes.
Pouring oil on the fire, Mahathir, stated that his government will “study the impact of the action taken by India” but added, “They are exporting goods to Malaysia too. It’s not just one-way trade, its two-way trade.”
Innuendo Mahathir is trying to warn India that this decision could lead to start a Trade War with Malaysia.
Can Malaysia really start a Trade War with India ?
India is the fifth largest economy in the world with a total GDP of US$3.16 Trillion whereas Malaysia stand eleventh in the list with a total GDP of US$402.61 Billion.
Malaysia exports to India stood US$10.8 Billion in 2018-19 fiscal year, while India Exports amount of US$6.4 Billion to Malaysia which is about 0.2% of India’s GDP, hence Malaysia has surplus of US$4.4 Billion.
Malaysia’s total import of Indian products constitutes only 0.2% of India’s GDP. However, India’s total import of Malaysian products was 2.7% of Malaysia’s GDP. Palm Oil export to India accounts 15% of Malaysia’s total export.
In short, if Malaysia stop purchasing goods from India, it wouldn’t be able to impact hard, whereas if New Delhi does the same with Malaysia the outcome will be just opposite.
Now what can Malaysia do ?
In order to dilute the issue, Mahathir government needs to change their stand on Kashmir issue and try to clean his mess which he spread at UN Assembly.
Malaysia can also handover India’s fugitive Zakir Naik to New Delhi.
Whereas on the other hand New Delhi is trying to set an example in the world to show what will happen if anyone try to interfere in India’s internal matter.
Now only time will tell, which direction this matter will go.