Indonesia considers buying Cambodian rice company to increase supply

Farmers work in a rice field in Japakeh, near Banda Aceh, Indonesia. Photo: AFP/TTXVN

Indonesia's state logistics agency Bulog has begun talks with several Cambodian rice companies and Indonesian banks on the acquisition plan. Bulog CEO Bayu Krisnamurthi told The Straits Times (Singapore) that it is still early days and the matter will be discussed in stages with all parties involved.

Earlier on June 10, outgoing President Joko Widodo asked Bulog to consider acquiring a rice producer in Cambodia to ensure the country's rice reserves are at a safe level.

Indonesia is the world's fourth-largest rice producer and third-largest rice consumer globally, consuming about 30 million tonnes a year. Indonesia plans to import more than 3.6 million tonnes of rice by 2024.

Speaking before Parliament on June 20, Indonesian Agriculture Minister Amran Sulaiman said the 2024 harvest is expected to decline due to weather changes and the cultivated area will decrease by 36.9% to 6.55 million hectares between October 2023 and April 2024. The Southeast Asian country has been relying on rice imports to maintain stable prices for consumers.

Rice is a staple food for many Asian countries. In May, Mr. Widodo announced that Indonesia imported less than 5% of its total national needs. From January to May 2024, Indonesia imported the most rice from Thailand, followed by Vietnam, Pakistan and India, with Cambodia ranking fifth.

Under the bilateral rice trade memorandum of understanding to be renewed in 2023, Indonesia can buy up to 250,000 tonnes of rice from Cambodia each year, between 2024 and 2028. In the first four months of 2024, Indonesia imported 2.26 million tonnes of rice, of which 25,000 tonnes were from Cambodia.

President Widodo recently suggested that it would be better for Indonesia to invest in a rice producer in Cambodia rather than simply importing from neighboring countries. While the process of acquiring a rice producer is relatively straightforward – Cambodia allows foreign ownership of up to 100% of companies operating in the country – there are other factors at play.

“If the Cambodian government decides to prioritize rice for domestic consumption, the company cannot maximize exports to Indonesia. Bulog must take such constraints into account,” said Bhima Yudhistira of the Jakarta-based Center for Law and Economic Studies.

Mr Bayu Krishnamurthi said Bulog has not yet considered the export-related issues that the acquired company will face.

Instead of looking for solutions abroad, Indonesia can address the current problems that hinder rice production, Bhima said. These include inadequate storage and handling, affecting the quality of stored rice, and a lack of investment in equipment and technology to help farmers grow rice.

Minister Sulaiman said on June 20 that the buyback proposal should be implemented in conjunction with domestic efforts to maximize local food resources, such as forming new rice fields where possible, optimizing existing fields and improving irrigation systems.

baotintuc.vn

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