A proposal paper to replace the old monopoly model of Padiberas Nasional Bhd (Bernas) on the supply of rice will be tabled at the Cabinet next month.
A central body and three special committees under the Ministry of Agriculture and Agro-based Industry of Malaysia has also been set up under the government's effort to discharge one of Pakatan Harapan’s manifesto which is to end Bernas’s monopoly of rice supply. The model will then be used after the conclusion of Bernas concession as the sole importer of rice in the country by 2021.
The government's determination to address this Bernas matter appears far more expeditious, highly focused and even bolder surpassing that of keeping its promises to lower oil and, food prices and other manifesto promises.
Technically, the PH government has until 19 August to reach 100 days to fulfil all their promises even though it has now become clear that it is becoming more difficult to fulfil. Therefore when it comes to Bernas, the extraordinary speed and attention dedicated to it raises some questions and should be given focus by the public.
What is the issue with Bernas?
The claim that Bernas was in trouble was PH government's ploy to fish for the paddy farmers’ votes during the 14th general election on 9 May.
Who exactly is Bernas? Bernas is a company listed on the Kuala Lumpur Stock Exchange in 1994. It took over the role of the National Rice and Rice Board (LPN) when it was established in 1971 to control paddy prices which were previously ruled by intermediaries, looking into the interest of farmers and rice consumers.
Back then, LPN contributed hugely to the farmers in Malaysia which composed 99% of Malay population. It cannot be denied that LPN managed to eradicate unscrupulous middlemen and stabilized prices of paddy and rice, benefitting both the farmers and consumers.
Since then, Bernas continued to play a key role in monitoring the development of the country's paddy and rice industry, as well as taking over the social and commercial obligations that LPN has long been tasked to do.
This included representing the government in managing and paying subsidies to farmers, managing the Bumiputra Rice Manufacturing Scheme, buying paddy from farmers at a guaranteed minimum price and acting as the last resort buyer of paddy from farmers.
Bernas is listed
On August 25, 1997, Bernas recorded another historic event when they were listed on the main board of the Kuala Lumpur Stock Exchange. Bernas continued to expand through its supply chain integration with international entrepreneurs for wholesale, plantation, processing and distribution sectors.
As a corporate body, Bernas is responsible for ensuring the provision of sustainable rice supply at affordable prices to Malaysians by optimizing the supply chain, infrastructure and distribution network of the company.
The company also pays close attention to environmental management through the emphasis on the effective disposal of paddy husk. It also diversifies the company's products by maximizing the potential use of its ancillary products.
On 26 April 2011, Bernas announced that the federal government had extended its distribution of rice for another 10 years from January 11, 2011 to January 10, 2021.
On 30 July 2009, an investment company from Hong Kong, Wang Tak Co. Ltd. (Wang Tak) secured a 31% equity in Bernas through the open market. Nevertheless, Bernas gave its assurance that the interests of all parties comprising farmers, producers, wholesalers, consumers and shareholders were protected.
Subsequently, Tan Sri Syed Mokhtar AlBukhary through Tradewinds obtained 53.7% of Bernas equity which was equivalent to RM526 million in cash. A subsequent purchase of Bernas shares by Tradewinds eventually led to its ownership of 72.57% of equity interest in Bernas.
By taking over control over Bernas in 2009, Syed Mokhtar effectively saved the organization from being owned by a foreign entity. This act preserved and protected the interest of Malaysians even though he had to purchase it at a high cost.
Removing the intermediary
In the past, the rice industry was mainly controlled by greedy middlemen. It was then that the Malaysian government used Bernas to put an end to the under-handed dealings of these middlemen. Unfortunately, Bernas was often used as a scapegoat whenever an issue involving Malaysian farmers and the rice industry arose.
Today, the Pakatan Harapan government places focus on abolishing the monopoly - however, indirectly, this move may wipe out all of Bernas's efforts in liberating the paddy farmers from the vice-like grip of these middlemen.
In addition, if the concept of monopoly or central importer is abolished, there will be no rice stockpiling as this was not in the interest of the middlemen who manipulated the price of rice. As a matter of fact, 63 countries around the world are practising the concept of central importers to eliminate the chain of middlemen from profiteering.
The Syed Mokhtar Factor
In witnessing Bernas’ journey throughout the years, it is no secret that most of its evolution took place during the administration of Tun Dr. Mahathir Mohamad who shared a close relationship with Syed Mokhtar.
For Tun Dr. Mahathir, Syed Mokhtar was a prime example of a Malay entrepreneur who had succeeded as a result of the New Economic Policy (NEP) compared to others. Syed Mokhtar was diligent and successfully expanded his business into an empire covering various industries in the country.
What was evident from the close relationship between Dr. Mahathir and Syed Mokhtar was the latter sharing his vision and commitment to back up and support the Malays both in business and in education.
The relationship between these two personalities also raised many questions among industry observers. What is the real motive of the PH government in eliminating Bernas's monopoly? In fact, the word ‘monopoly’ is really a misnomer and misleading given Bernas’s original intention of replacing LPN in managing all matters related to paddy rice production.
The PH government had surely used the term ‘monopoly’ to win the sympathy and support of the people. The mere label of ‘monopoly’ would indirectly cast negative connotations that are very difficult to defend.
Industry observers are keenly monitoring the relationship between Syed Mokhtar and the current Prime Minister. Perhaps this billionaire will not do anything or maybe he will act behind the scenes. Syed Mokhtar rarely uses the media in his business dealings. This aspect is handled by managers of his respective companies. As to their effectiveness, that is another question.
Does The PM Realise?
As the current government is just two months old, the public has not seen any proper alignment or coordination on the matter. The comments on Bernas were initiated by the Minister in charge without any comments offered by the Prime Minister.
Will the Prime Minister take care of the interest of the businessman to whom he is close to? Only time will tell. But what is evident is that the Prime Minister should be aware that a call to abolish the so-called ‘monopoly’ of the rice industry will be equally met with the public’s call for the abolishment of other monopolies.
Rice should not be singled out. Monopolies in other industries must also be given the same expeditious and focused attention by the PH government, as it is accorded to Bernas. We really do not want the public accusing the PH Government of practising double standards.
By: Johardy Ibrahim
Bahasa Melayu version published on Utusan Malaysia