15 November 2001 (Business Times) - FOR Malaysia, money literally grows ontrees. The country has bought everything from battle tanks to supersonicfighters, and signed contracts for major infrastructure projects, all tobe paid for with palm oil.The commodity, versatile as it already is, being able to be used forcooking, lubrication, fuel and soap-making, has of late acquired addedsignificant “currency”.Malaysia has entered into barter trade deals with various countries, andsome quarters are now proposing that this be expanded to cover moreactivities.Malaysian Palm Oil Association chief executive M.R. Chandran, for one,feels that the same approach can be adopted to develop ports and roads inSabah, as well as for the purchase of food items from abroad.“The use of palm oil as a currency is also an effective way to gain accessto both traditional and non-traditional markets,” he told Business Times.Trade and investment links with China, for example, will benefit under thestrategy, he said.Beijing imposes an import quota on palm oil and is reportedly willing tobuy more from Malaysia — and at a fixed price — if Chinese companies aregiven an active role in the construction of the RM9 billion BakunHydroelectric project. In fact, Beijing officials have been lobbying theMinistry of International Trade and Industry for a share of the Sarawakdam’s main civil works.And considering Malaysia’s high food import bill of about RM13 billion ayear, the country should consider exchanging palm oil for food instead ofpaying in cash, Chandran said .Analysts agreed, saying that by offering palm oil in exchange for goodsand services from abroad will also allow Malaysia to secure long-termdemand for the commodity. Barter trade deals executed through bilateraltrade arrangements can help keep the level of palm oil stocks manageableand the commodity’s price reasonable, they said.“Malaysia can lock up future demand for palm oil,” said a plantationanalyst with a foreign research house.Another analyst said given the intense competition in the global edibleoils market, barter trade agreements would certainly give the commodity anedge over its rivals.Malaysia has entered into several billion ringgit worth of sucharrangements with, notably, India, China and the US. They include payingfor contracts to double-track the peninsula’s railway network and and thepurchase of new locomotives.Malaysia had also bought 18 MiG-29 Fulcrum fighter jets from Russia for atotal of US$600 million under an offset programme, a deal signed in 1994.Palm oil and palm oil products worth US$95 million were shipped aspart-payment.And the Primary Industries Ministry is now trying to get the Russians toaccept 20 per cent of the payment for a proposed purchase of 10-16 SukhoiSu-30MK fighter jets in palm oil. “I hope to see part of the totalcontract estimated at between US$350 million and US$560 million to be paidin palm oil,” its minister Datuk Seri Dr Lim Keng Yaik said early lastmonth.In September last year, US firm General Electric International agreed tosell KTM Bhd 20 “Blue Tiger” high-power locomotives worth US$60 millionunder a similar arrangement. The locomotives are to be delivered beginningApril 2003 in exchange for 200,000 tonnes of palm oil and palm oilproducts.