Kashmir row sparks Malaysia, India palm oil tensions

KAULA LUMPUR: Malaysia's mammoth palm oil sector faces a new threat after Indian traders were asked to halt purchases amid a diplomatic row over Kashmir, piling further pressure on the industry as Europe also plans cutbacks.

The Southeast Asian nation is the second-biggest producer after Indonesia of the oil, used in everything from food to cosmetics, in a sector long vilified by environmentalists who blame it for fuelling deforestation.

With Western companies reducing use of the commodity as green groups ratchet up pressure, the top two growers have increasingly come to rely on demand from India, the world's biggest buyer of edible oils, and China.

But a speech by Malaysian Prime Minister Mahathir Mohamad at the United Nations General Assembly last month, in which he said New Delhi had "invaded and occupied" Kashmir, has sparked a backlash in India that could badly hit the sector.

There has been sympathy in Malaysia for Kashmiris after the Hindu nationalist government in New Delhi revoked the Muslim-majority region's autonomy in August, and imposed a lockdown to quell unrest.

Mahathir's comments prompted calls for Indians to shun Malaysian products — with social media users posting angry messages alongside the hashtag #BoycottMalaysia — while rumours swirled New Delhi may hike tariffs on Malaysian palm oil.

Earlier this week, a major Indian vegetable oil trade body called on its 875 members to avoid buying palm oil from Malaysia, noting the government was mulling retaliatory measures.

"In your own interest as well as a mark of solidarity with our nation, we should avoid purchases from Malaysia for the time being," said Atul Chaturvedi, president of the Solvent Extractors´ Association of India.

'We speak our minds'

Tensions have also risen between India and Turkey after President Recep Tayyip Erdogan told the UN General Assembly that Indian occupied Kashmir was "besieged".

Reports have since said that Modi had cancelled a planned visit to Turkey as a result, and that India could axe a $2.3 billion order with a Turkish shipyard.

India's foreign ministry, however, denied that any such visit was planned.

Also read: Turkish President Erdogan raises Kashmir issue in UN speech

New Delhi has yet to take any formal measures against Malaysia or Turkey but Bloomberg News reported last week that India was considering placing curbs on some imports from both countries, citing people familiar with the matter.

Despite the furore, Mahathir has been unapologetic, reportedly telling journalists last week: "We speak... our minds and we don't retract and change."

"Sometimes what we say is liked by some and disliked by others," added the famously outspoken 94-year-old.

And with nationalistic anger growing in India, the row appears unlikely to end soon.

"It's not purely a palm oil issue," James Chin, a Malaysia expert at the University of Tasmania, told AFP. "It ties in with egos... and nationalism."