Malaysia is planning to use palm oil to buy military equipment, including European fighter jets, as part of a move to reinstate an exchange practice that the Southeast Asian country used in the 1990s.

Along with a number of emerging economies, Malaysia’s national currency, the Ringgit, is in freefall which has forced the government to abandon its major infrastructure projects. While bartering palm oil with military equipment was a practice that allowed Kuala Lumpur to procure Soviet-made military surplus from Russia and Ukraine in the 1990s, there is no precedent of carrying out similar transactions with the European defence sector.

Malaysia currently depends on a fleet of obsolete Russian-made MiG-29s and Sukhoi fighter jets that are for the most part grounded. The Malaysian government, however, is negotiating a new fleet with MRCA, Dassault Aviation, the Saab Group, and Italy’s Leonardo. Chinese JF-17s and J-10s could also be an option, as they are low-cost, but China is seen as a major security concern by Malaysia.

European companies prefer leasing plans and export-credit deals to barter deals. particularly in this case as the EU is planning to phase out palm oil from transport fuel whose production is linked to deforestation.