On the 29th of November 2019, The Institute for Democracy and Economic Affairs (IDEAS) organised a public seminar discussing on the effectiveness of State Trading Enterprises (STEs) in Malaysia and Indonesia in achieving food security. The event featured presentations by all of the speakers who are Prof. Datin Paduka Fatimah Mohamed Arshad, Dr Tey Yeong Sheng (Dr John Tey), and Dr Larry Wong. After all the speakers had presented, a panel discussion moderated by IDEAS Research Executive, Azam Wan Hashim was then held.
The opening remarks were given by the CEO of IDEAS, Ali Salman. Ali mentioned IDEAS previous reports, The Evaluation of Agricultural Subsidies and the Welfare of Rice Farmers which raised similar questions on whether subsidies offered by the government are effective. Good intentions may be at work but what is more important is the analysis of intentions. He called for the broadening of this debate and question whether food security can be achieved by a state-led monopoly or are there other avenues to achieve the same objectives. Is food self-sufficiency equal to food security? He then summarised the main message of the latest study which is opening up the market will be good for both the industry and the consumers.
Dr John Tey gave the first half of the presentation. Dr Tey stated that the study is motivated by one of Pakatan Harapan’s election manifestos which is to end the monopoly of BERNAS by January 2021. However, there is not much progress in making the manifesto a reality. The rice and paddy sector is described as sluggish as the return to the farmers has been low in spite of the tripled amount of subsidies provided by the government. The study not only covered the situation of the industry but also on BERNAS’ performance over time in terms of industry structuring and how it has affected the conduct and performance in the industry and company per se. Dr Tey also expressed his regrets of not having representatives from the government during the seminar as he hoped to receive feedback in making viable proposals to the existing policies.
Prof. Fatimah Arshad then continued with her part of the presentation, focusing on the economics and ecosystem of the paddy and rice industry. First, she gave a caveat on the limitations of the study. According to her, the study was conducted in a very short timespan of three months and there were refusals from the industry players to attend interviews which would have been helpful for data gathering. Circling back onto the important points of her presentation, Prof. Fatimah explained that BERNAS and subsystems within the industry affect each other in what is known as “Causal Loops”. She elaborated that BERNAS’ actions are pervasive throughout the subsystems which then reinforces and consolidates BERNAS’ hold on the industry. The smaller players in the industry, such as farmers and small millers, suffer the most in this vicious circle. The miller industry has shrunk considerably in the time spanning from BERNAS’ privatization to the present day. Prof. Fatimah Arshad also went into detail on BERNAS’ socio-economic obligations, highlighting where they kept to the agreement, and where they have failed. On face value, BERNAS does deliver on their obligations. However, the means carried out to meet those obligations have underlying implications that tell a different story. She also talked about the distortions in the market caused by BERNAS’ activities that have widespread implications for consumers and producers alike. Towards the end of Prof. Fatimah’s presentation, she raised awareness on the changing dynamics of the economy overlooked by BERNAS, and the consequences that it brings. Prof. Fatimah closed her presentation by providing policy reform considerations and highlighting the need for change in the paddy and rice industry. She stressed that there needs to be equitable distribution of profits along the supply chain, as well as the importance of having practices that are economically and ecologically sustainable.
The author of the Indonesian chapter of the report, Dr Bustanul Arifin, unfortunately, could not attend the seminar. However, he provided a short video presentation that summarises the findings from the case study on Indonesia’s Bureau of Logistics (BULOG). Dr. Bustanul highlighted three main takeaways. First, Dr. Bustanul quickly elaborated on the recent ineffectiveness and inefficiencies of the food price band policy. Second, Dr. Bustanul briefly explained the changing social roles of Bulog when Indonesia shifted their policy from a direct food subsidy to a non-cash transfer. Third, Dr. Bustanul stressed the need for food policy reforms and closed his presentation by suggesting some recommendations on policy.
Dr. Larry Wong’s went up on stage to give his presentation in the form of a review on the case studies alongside sharp commentary on the reports. Drawing on his breadth of experience in the paddy and rice industry and depth of knowledge, Dr. Larry contrasted the current trends seen in BERNAS with their past practices and accomplishments. Dr. Larry commented on the lack of incentives for and an unconducive environment for innovations in the industry. Dr. Larry strongly advocated for innovations, improvements and agreed with Prof. Fatimah on the need for sustainability in the industry.
The seminar is bookended by a brief panel discussion, moderated by Azam Wan Hashim, IDEAS Executive researcher. The discussion centred on the rice industry and its future. Finally, the panel took questions from the audience, consisting of representatives of the public, private sector and the ministry.