23 October 2001 (Business Times) - MALAYSIA’S purchase of several mainbattle tanks (MBT) may come under a countertrade arrangement in which partof the payment may be made in the form of palm oil and palm oil products.Industry sources say the countertrade initiative is being looked into asone of the options available besides cash payments to help promote thecommodity’s standing overseas.“The countertrade can help promote palm oil in arms and weaponry-producingcountries such as Russia, Turkey, the UK, Italy, France and the US,” anindustry source told Business Times in Kuala Lumpur yesterday.“However, it is too soon to say. The agreement will be conducted ongovernment-to-government basis,” he said.He said, the purchase would also look at long term development programmessuch as transfer of technology, mutual maintenance programmes and otherdevelopment programmes rather than a one-off deal.Defence Minister Datuk Seri Najib Abdul Razak said Malaysia would buy theMBT as part of its efforts to boost the firepower of the Royal MalaysianArmy and beef up national security and defence.The purchase has been approved by the Government under the Eighth MalaysiaPlan (8MP) 2000-2005. Under the 8MP RM2.5 billion has been allocated forvarious development programmes for the Malaysian Armed Forces.He, however, refused to give details of the cost and other information,but it was learnt that the MBT would replace the Scorpions, the first tankbought by the Armed Forces more than 20 years ago.It is also understood that arms producers from countries such as Russia,Turkey, the UK, Italy, France and the US are being shortlisted.However, it is not immediately known whether the countertrade arrangementalso involves other purchases of defence equipment and weaponry.Najib said the arms purchase that had been approved included the 155mmtowed Howitzer G5 cannons from South Africa to be delivered by December,and multiple rocket launcher system from Brazil by early next year.Others include submarine, an air defence system and helicopters for thearmed forces under the 8MP.Najib said the order for the Howitzer G5 cannons and multiple rocketlaunch system were made early this year, while orders for the newsubmarine and air defence system would be made next year.The countertrade arrangement is not new for Malaysia.In 1994, Malaysia bought 18 MiG-29 Fulcrum fighter jets for a total ofUS$600 billion (US$1 = RM3.80)under an offset programme. It involved acash payment of US$450 million,palm oil and palm oil products (US$95million) and supply of other Malaysian products (US$55 million).The palm oil was to be delivered to Russia over a period of five yearswhich incidentally ends this year.Last month, US multinational, General Electric International signed aUS$60 million agreement with Keretapi Tanah Melayu Bhd involving thepurchase of 20 high-powered “Blue Tiger”.Under the deal, the locomotives are to be delivered beginning April 2003in exchange for 200,000 tonnes of palm oil and palm oil products valued atUS$60 million, to be delivered by the Pasir Gudang Edible Oils Group.The Government is also eyeing fighter jets from both the US and Russia.The Royal Malaysian Air Force is evaluating two multi-role combataircraft, Boeing Military and Missile Systems’ F/A-18E/F strike fightersdubbed the Super Hornets.The Russian-made Sukhoi Su-30MK multi-role long-range twin-seater fighterbomber which is priced at about US$35 million a piece is also underevaluation.Primary Industries Minister Datuk Seri Dr Lim Keng Yaik had said earlythis month his ministry was attempting to squeeze palm oil into 20 percent of the payment in Malaysia’s proposed purchase of the figher jets.