Kuala Lumpur, 3 October 2023: Agriculture and Food Security Minister Datuk Seri Mohamad Sabu recently indicated that breaking BERNAS’ national rice monopoly would require a “solid reason” and “time”. Given the government’s 10-year concession with BERNAS from 2021 to 2031, the Institute for Democracy and Economic Affairs (IDEAS) urges a phased approach to implementing reforms that must be well underway by 2031 to facilitate the transition to an open market and the deregulation of imports. Rice supply security can be achieved through higher productivity and production, and a more competitive industry instead of the current monopolistic practice.

IDEAS Senior Fellow Prof Fatimah Mohamed Arshad commented that, “After the 2008 rice price crisis, Malaysia has not taken steps to seriously revamp its paddy sector to build up resiliency against market vagaries and uncertainties. Malaysia continues its half a century old protectionism policy on the industry despite the apparent deindustrialisation impact and overall slow growth, particularly in productivity. The industry is trending downward, overwhelmed by climatic factors, high input costs, inflation and structural deficiencies. As production declines, the dependency on import increases together with imported inflation. India’s export-ban shock plunged the country into ‘rice shortage and price crises’, which is avoidable if Malaysia had been able to ensure rice supply security through higher productivity and production and a more competitive industry. Clearly the industry is in need of systemic change for resiliency rather than short-term firefighting strategy.” 

Controlling the prices of rice, with the intention to achieve food security through price stabilisation, has led to gradual monopolisation of the paddy and rice supply chain.  IDEAS has outlined a roadmap in Policy Ideas No. 71, entitled “Paddy and Rice Sector Policy Roadmap: Towards Equity and Sustainability” that envisions both the deregulation of the farm subsidies and import monopoly of BERNAS among other institutional reforms. With the extension of BERNAS’ concession until 2031, issues besetting the agriculture industry such as slow growth as well as the low investment of new capital and new entrants of young farmers continue to prevail. 

“Lastly, the call to ban foreigners from buying local rice by certain groups scapegoats vulnerable communities and redirects the cause of the issue at hand. We urge the government to use the next eight years to implement the reforms that would encourage competitiveness, efficiency and innovation within the local rice market so that the supply chain challenges and import costs can be overcome in tandem with rising prices of essential goods globally,” ends Dr Tricia Yeoh, CEO of IDEAS.

— TAMAT —

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