With cash and credit hard to come by, barter is making a return. The trend is growing on an inter-governmental level, as developing economies sign barter trade deals with other governments.
FT: Last week, Malaysia’s commodities minister, Datuk Peter Chin Fah Kui, said Kuala Lumpur had already signed a barter deal swapping palm oil for fertiliser and machinery with North Korea, Cuba and Russia. He said Malaysia was talking to Morocco, Jordan, Syria and Iran about other barter deals.
“[Bartering] could be used for contracts with other countries that do not have the cash,” Mr Chin told the local press. “We can set the conditions for them to supply us with the raw materials that we need.”
Thailand, the world’s largest exporter of rice, is discussing barter deals with Middle Eastern countries, including Iran.
Of course, this isn’t necessarily going to work long-term. Trading oil for rice is a crude trade, and ultimately barter, just like credit, requires trust. Nobody will barter with Malaysia if there fears grow it can’t deliver palm oil as promised.