Arising from Malaysia’s recent tumultuous election, several aftershock effects were felt firstly in the country, as well as the region. One battle-cry often heard was ‘The Rule of Law.” Wrong-doings of the highest levels were open to investigation and persecution. The government of the day began to look at seemingly unfair practices, a move that has kept all SEA watching developments closely.
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There have been calls to end Malaysia’s rice importer monopoly of rice imports and established a committee to explore alternative options to tackle our staple food. This move was touted as a means to provide cheaper rice for consumers.
What is the practice in the region? Thailand is a 100% net exporter of rice and does not import. The industry is monitored by Thai Rice Exporters Association and there are moves to intervene by the government as G2G exports are more competitive than the offers made by private companies. This will help boost struggling farmers in Thailand. Singapore, on the other hand, imports 90% of all its food supplies including rice through International Enterprise Singapore. Singapore stockpiles three months’ supply of rice at any one time. And in Indonesia, the import of rice is handled by the procurement and logistics agency, BULOG, the government’s rice-trading monopoly. So it seems, in these three countries, a central importer or exporter situation is deemed best.
With the removal of the sole importer status and subsidy to Bernas in Malaysia, one would expect that the revenue of the government will be increased further. Will the government then utilise this savings to subsidise the price of rice for the end consumers?
A sole importer would also have to address the issue of local farmers. If Malaysia’s Bernas is to be removed, this would not help protect the interests of an estimated 300,000 farmers in the nation who would have lost both their ready buyer and subsidy in which Bernas was obligated to serve.
The truth was, BERNAS was heavily controlled by middleman and trades. Rightly or wrongly, the Malaysian government then privatised BERNAS to clean it up from these heavyweight rogues. Unfortunately, the same government used BERNAS as a scapegoat for its inability to sustain the farmers of Malaysia as well as the rice industry.
Come 2018, the Pakatan Harapan government sees it in their best interest to do away with the monopoly - thus, unwittingly put a stop to BERNAS' efforts to break away from the middleman's clutches over the paddy farmers.
In addition, if a monopoly or a central importer framework is removed, there will be no stockpile as that would not serve a business interest.
In any country, government policies are mainly focused on poverty elimination and sectoral growth. Throughout the world practice some form of central importer framework to stop rogue traders from extreme profiteering. As poverty among paddy farmers is a real situation that has to be addressed, the Malaysian government should regard this as an important and sensitive issue to protect the domestic industry and for food security purposes.
The way Malaysia solves this issue will have an impact on the region’s rice industry.
We await developments.