EU risks trade war with M’sia over palm oil, says PM

by REUTERS

THE European Union (EU) risks opening up a trade war with Malaysia over its “grossly unfair” policies aimed at reducing the use of palm oil, Prime Minister (PM) Tun Dr Mahathir Mohamad (picture) said yesterday.

This month, the European Commission concluded that palm oil cultivation results in excessive deforestation and its use in transport fuel should be phased out by 2030.

Malaysia, the world’s second-biggest palm oil producer after Indonesia, relies on the crop for billions of dollars in foreign-exchange earnings and hundreds of thousands of jobs.

Dr Mahathir said the EU’s increasingly hostile attitude towards palm oil, a commodity used in everything from chocolate spread to lipstick, is an attempt to protect alternatives that Europe produced itself, like rapeseed oil.

“To do that kind of thing to win a trade war is unfair,” Dr Mahathir told Reuters in an interview in Langkawi.

“Trade wars are not something we like to promote, but on the other hand, it is grossly unfair for rich people to try and impoverish poor people.”

Dr Mahathir, an architect of modern Malaysia and a trained physician, swept to power in a stunning election victory last year on a promise to revive a flagging economy and end the corruption that plagued the tenure of former PM Datuk Seri Mohd Najib Razak.

Najib is facing numerous corruption charges over the alleged misuse of billions of dollars from Malaysian state fund 1Malaysia Development Bhd (1MDB), some of which was raised by US investment bank Goldman Sachs Group Inc.

Najib is due in court next week in the first trial relating to 1MDB. He has pleaded not guilty and denied wrongdoing.

Goldman is facing charges in Kuala Lumpur over its role in helping raise US$6.5 billion (RM26.45 billion) for 1MDB. Goldman denied wrongdoing and said officials under Najib’s administration lied to mislead its staff.

Dr Mahathir, who was previously PM for 22 years from 1981 to 2003, said Goldman could only do business in Malaysia “if they pay us what we are asking for”, reiterating a figure of US$7.5 billion given by the Finance Ministry.

“Because they were not prudent…they are supposed to study the borrowers and lenders properly,” he said, adding that he is willing to negotiate with the bank.

Dr Mahathir said his government is also in talks with the US Department of Justice over Goldman. Goldman did not immediately respond to a request for comment.

In an effort to reduce Malaysia’s debt after the 1MDB scandal, Dr Mahathir is considering the listing or sale of stakes in state-owned enterprises, including Malaysia Airlines Bhd.

There has been speculation this could include selling a portion of Petroliam Nasional Bhd (Petronas) — Malaysia’s national energy behemoth and the world’s third-biggest exporter of liquefied natural gas. But Dr Mahathir said this is not on the cards.

“It has always given the government good returns. We have no plans to privatise or sell Petronas,” he said.

There is daily speculation in Malaysia about when Dr Mahathir, who is well into his 90s, will hand over power to one-time foe and former deputy PM Datuk Seri Anwar Ibrahim.

Dr Mahathir, whose five-year term will end in 2023, had originally promised to cede control to Anwar in 2020.

“I will step down when the time comes…but we have not fixed a date,” he said.

“I promised I will not go up to five years. I stand by my promise.” — Reuters