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Russia offers palm oil defence offset deals

May 02, 2019

Russia is committed to substantially increasing its purchase of Malaysian palm oil as part of defence offset deals, the Asia Palm Oil Magazine reported in its April-June issue.

, Russia offers palm oil defence offset deals

The country was already refurbishing the Royal Malaysian Air Force (RMAF)’s ageing fleet of 18 Sukhoi Su-30MKM Flankers, via its local partner ATSC Corp, reportedly for some RM2.2bn (US$500M), the magazine said.

“Russia is now even looking at offering the RMAF the fourth-generation Su-35 or its latest Su-57E (the equivalent of the United States’ F-22) if it wants to upgrade.”

Rostec State Corp international cooperation and regional policy director Viktor Kladov told the New Straits Times in March that Russia was willing to buy Malaysian palm oil in substantial amounts to improve the countries’ bilateral trade balance, with the possibility of trade-offs for arms and defence procurement and transfer of technology and job spin-offs.

“We are aware of the palm oil ban for biofuels in Europe, and Russia is ever ready to help Malaysia by buying more palm oil. At present, 90% of Russia’s palm oil is imported from Indonesia and we intend to change that (in Malaysia’s favour).

“I have personally spoken with Prime Minister Tun Dr Mahathir Mohamad on this matter at a private meeting. This can lead to improved defence offset packages that can greatly benefit Malaysia,” he said in an interview at the Langkawi International Maritime and Aerospace exhibition (Lima) 2019.

The New Straits Times said Kladov was a prime mover in enhancing Russia-Malaysia defence relations during Mahathir’s first 22-year tenure as prime minister, culminating in a palm oil offset deal, with Malaysia initially procuring 18 MiG-29N Fulcrum air superiority fighters in 1995.

The MiG-29Ns — two of which crashed in 1998 and 2005 — were decommissioned in 2017.

Subsequently, Malaysia purchased 18 Flankers in 2003 from Russia’s Irkut Corp for US$900M, also involving palm oil purchase.


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