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Kuala Lumpur barters away Delhi`s goodwill: The Pioneer
New Delhi, Nov 15: India has decided to curb its palm oil imports from Malaysia after the rail-for-oil barter agreement signed between Prime Minister Atal Bihari Vajpayee and former Malaysian Prime Minister Mahathir Mohammed in May 2001, fell through recently.
New Delhi, Nov 15: India has decided to curb its palm oil imports from Malaysia after the rail-for-oil barter agreement signed between Prime Minister Atal Bihari Vajpayee and former Malaysian Prime Minister Mahathir Mohammed in May 2001, fell through recently.
The Malaysian Government's move to keep the Indian Railway Construction Company (IRCON) out of its $3.8 billion rail project has prompted the Centre to look at Indonesia as the next stop for India's palm oil imports.
Of the total project cost, the IRCON was to be awarded work worth Rs 7,000 crore. And India was to import palm oil from Malaysia to the tune of Rs 7,000 crore as well.
Since India was Malaysia's second largest buyer of palm oil after China, Kuala Lumpur hoped that New Delhi would not stop the imports, with or without the rail project, recent reports from the Malaysian Capital indicated. But New Delhi's opinion seems different.
Well-informed sources in the Government told The Pioneer on Friday: "Since the IRCON did not get the rail project, the barter deal India had agreed to, does not exist. We will not import palm oil."
The sources added that Indonesia, so far India's "second choice" in Asia, could replace Malaysia as the palm oil supplier in the long term. Commercial and technical aspects of an India-Indonesia palm oil trade enhancement are currently being surveyed by the Centre. "Malaysia may be the largest producer of palm oil but not the sole supplier," the sources said.
The IRCON's bid, intensely pursued by New Delhi over the past 18 months, is understood to have been rejected at the last Cabinet meeting Mahathir Mohammed held before he resigned as the Prime Minister on October 31.
At the Cabinet meet, it was decided that two local companies - Gamuda BHD and Malaysia Mining Corporation - will be awarded contracts on the projects, which until mid-2003, were expected to go to the IRCON and China Railway Engineering Corporation (CREC). The contract is for doubling existing rail lines, laying new tracks and electrifying the network across a 400-km route.
The official explanation of the Malaysian Transport Ministry, after Abdullah Ahmad Badwani took over in November as the new Prime Minister, attributed this turn-around to "irresistible" quotes by the Malaysian firms.
The IRCON's office in Malaysia, established in 1999, is now trying to negotiate with the Malay companies for sub-contracts.
The government officials, however, appear peeved over Kuala Lumpur's position and said political compulsions could be the reason for this volte-face. "It is difficult to understand why IRCON's presence in Malaysia or the Indian Railways' competence index could not clinch the deal... Mahathir Mohammed himself had shown support to India after Mr Vajpayee's visit in 2001?" they asked.
On May 15, 2001, Mr Vajpayee had said in Kuala Lumpur: "While Malaysia has expertise in building roads, India has considerable expertise in railways. Some of our companies like the IRCON have been working in Malaysia for some years, we hope it will soon have the opportunity to demonstrate its capability in executing the major rail project, for which we signed an MoU."
Equally hopeful had been the Railway Board and the IRCON officials. The last review meeting between the board and the IRCON two months ago had made them believe that things were moving in the right direction. "We were hopeful the Malaysian deal would materalise," the board members had said.
According to trade bodies like the Central Organisation of Oil Industry and Trade, India's output in nine major oilseeds have been 142.4 lakh tonnes this year against a drought-hit 88.1 lakh tonnes last year.
Analysts feel the scenario could help the Government if it considered curbing palm oil import from Malaysia. India's aggregate vegetable oil import is 4.5 million tonnes at a cost of $1.8 billion. Of which, about 70 per cent of palm oil came from Malaysia.
Mahathir Mohammed's urge to make India a strong trade partner over the past few years has been interpreted by analysts as Malaysia's requirement to decrease its dependence on the Dollar. They also felt that after the Asian meltdown in the mid '90s, regional trade had become imperative.
Of the total project cost, the IRCON was to be awarded work worth Rs 7,000 crore. And India was to import palm oil from Malaysia to the tune of Rs 7,000 crore as well.
Since India was Malaysia's second largest buyer of palm oil after China, Kuala Lumpur hoped that New Delhi would not stop the imports, with or without the rail project, recent reports from the Malaysian Capital indicated. But New Delhi's opinion seems different.
Well-informed sources in the Government told The Pioneer on Friday: "Since the IRCON did not get the rail project, the barter deal India had agreed to, does not exist. We will not import palm oil."
The sources added that Indonesia, so far India's "second choice" in Asia, could replace Malaysia as the palm oil supplier in the long term. Commercial and technical aspects of an India-Indonesia palm oil trade enhancement are currently being surveyed by the Centre. "Malaysia may be the largest producer of palm oil but not the sole supplier," the sources said.
The IRCON's bid, intensely pursued by New Delhi over the past 18 months, is understood to have been rejected at the last Cabinet meeting Mahathir Mohammed held before he resigned as the Prime Minister on October 31.
At the Cabinet meet, it was decided that two local companies - Gamuda BHD and Malaysia Mining Corporation - will be awarded contracts on the projects, which until mid-2003, were expected to go to the IRCON and China Railway Engineering Corporation (CREC). The contract is for doubling existing rail lines, laying new tracks and electrifying the network across a 400-km route.
The official explanation of the Malaysian Transport Ministry, after Abdullah Ahmad Badwani took over in November as the new Prime Minister, attributed this turn-around to "irresistible" quotes by the Malaysian firms.
The IRCON's office in Malaysia, established in 1999, is now trying to negotiate with the Malay companies for sub-contracts.
The government officials, however, appear peeved over Kuala Lumpur's position and said political compulsions could be the reason for this volte-face. "It is difficult to understand why IRCON's presence in Malaysia or the Indian Railways' competence index could not clinch the deal... Mahathir Mohammed himself had shown support to India after Mr Vajpayee's visit in 2001?" they asked.
On May 15, 2001, Mr Vajpayee had said in Kuala Lumpur: "While Malaysia has expertise in building roads, India has considerable expertise in railways. Some of our companies like the IRCON have been working in Malaysia for some years, we hope it will soon have the opportunity to demonstrate its capability in executing the major rail project, for which we signed an MoU."
Equally hopeful had been the Railway Board and the IRCON officials. The last review meeting between the board and the IRCON two months ago had made them believe that things were moving in the right direction. "We were hopeful the Malaysian deal would materalise," the board members had said.
According to trade bodies like the Central Organisation of Oil Industry and Trade, India's output in nine major oilseeds have been 142.4 lakh tonnes this year against a drought-hit 88.1 lakh tonnes last year.
Analysts feel the scenario could help the Government if it considered curbing palm oil import from Malaysia. India's aggregate vegetable oil import is 4.5 million tonnes at a cost of $1.8 billion. Of which, about 70 per cent of palm oil came from Malaysia.
Mahathir Mohammed's urge to make India a strong trade partner over the past few years has been interpreted by analysts as Malaysia's requirement to decrease its dependence on the Dollar. They also felt that after the Asian meltdown in the mid '90s, regional trade had become imperative.