Politics
Indonesia plans to boost rice supplies from Cambodian companies, but plan may fail due to export quotas and local laws
JAKARTA Indonesia's recent plan to acquire Cambodian rice companies to boost its supplies could face obstacles due to export restrictions and local land ownership laws, experts say.
Bulog, a state-owned logistics agency, has started discussions with several Cambodian rice companies and some Indonesian banks about acquisition plans. Bayu Krisnamurthi, Bulog's chief executive officer, told The Straits Times that it was still early days and the matter would be discussed in stages with all parties concerned.
Things were set in motion after outgoing President Joko Widodo on June 10 asked Bulog to consider acquiring a rice producer in Cambodia to ensure that the country's rice reserves were at a minimum. safe level.
Indonesia, the world's fourth largest rice producer and third largest rice consumer, plans to import more than 3.6 million tonnes of rice in 2024, in anticipation of a smaller harvest due to droughts and to keep prices stable for consumers, officials said.
In 2023, Indonesia produced 31.1 million tonnes of rice, an increase of 1.4 percent from 2022, according to Statistics Indonesia. The world's fourth most populous country consumes around 30 million tonnes of rice per year.
Rice is an essential staple food for many people in Asia. Indonesia imports less than 5 percent of its total domestic needs, Widodo said in May. From January to May 2024, Indonesia bought the most rice from Thailand, followed by Vietnam, Pakistan and India, with Cambodia a distant fifth, according to Statistics Indonesia.
Although the vast archipelago has plenty of land, the most suitable rice planting areas are in Java, which is already heavily planted, experts say. Padi cultivation on the other main islands of Sumatra, Kalimantan, Sulawesi and Papua is less productive due to factors such as climate and soil fertility, as well as lack of infrastructure such as proper irrigation canals.
Furthermore, as urbanization expands in Java, home to 56 percent of the country's approximately 280 million people, the conversion of agricultural land into more profitable industrial and residential developments is occurring at a rapid pace.
Agriculture Minister Amran Sulaiman told Parliament on June 20 that a smaller rice harvest was expected in 2024 due to climate change and a drop in temperatures. cultivated areas, which decreased by 36.9 percent to 6.55 million hectares between October 2023 and April 2024.
Mr. Widodo had recently said that it would be better for Indonesia to invest in a rice producer in Cambodia, rather than only importing from neighboring countries.
But even though acquiring a rice producer is a fairly simple process, Cambodia allows up to 100% foreign ownership in companies operating in the country, but other factors come into play.
Mr Bhima Yudhistira, executive director of the Center for Economic and Legal Studies, a Jakarta-based think tank, said there was no guarantee such an acquisition would boost Indonesia's rice supply , because a Cambodian company, even a foreign one, would be subject to local laws and directives.
If the Cambodian government decides that its rice should be prioritized to meet its domestic needs, the company will not be able to maximize its exports to Indonesia. Bulog must take these restrictions into account, he told ST.
Dr. Bayu de Bulogs said that for now, the agency is yet to address the export-related issues that the acquired companies will face.
Under a memorandum of understanding on bilateral rice trade renewed in 2023, Indonesia can purchase up to 250,000 tonnes of rice from Cambodia per year from 2024 to 2028. Bilateral rice trade is carried out at both as part of a government-to-government agreement between Bulog and Cambodia Green. Trade Co., as well as a business-to-business program between Indonesia's state-owned food company ID Food and the Cambodian Rice Federation.
But this annual export allocation is small compared to Indonesia's overall rice needs, said Mr. Khudori, an agricultural expert with the Indonesian Political Economy Association, who noted that Cambodia's rice comes from a surplus in national production.
For the first four months of 2024, Indonesia imported 2.26 million tonnes of rice, including 25,000 tonnes from Cambodia.
Mr Khudori, who goes by one name, said Increased rice consumption around the world, particularly in regions like Africa, has added to global supply chain uncertainties. At the same time, he noted that major rice exporting countries, such as India, have imposed export restrictions in the face of their own supply crisis or production disruption.
Therefore, he suggested that Bulog consider purchasing agricultural land in Cambodia to improve food security.
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Sources 2/ https://www.straitstimes.com/asia/se-asia/indonesia-eyes-cambodia-rice-firms-to-pad-reserves-but-plan-may-falter-on-export-quota-local-laws The mention sources can contact us to remove/changing this article |
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