Malaysia: Malaysia Says It Has No Plans To Raise Rice Price; Will Boost Stockpiles

Malaysia has no plans to raise the retail price of rice but efforts are under way to ensure adequate rice stockpiles in case of a shortage of supply, Deputy Prime Minister Najib Razak said Monday (31 Mar).

The government regulates the price of rice, which is one of the essential items it subsidizes. It also gives financial aid to rice farmers, who produce about 70% of the country's rice needs.

Najib acknowledged that global rice prices have surged sharply but said the government has no immediate plans to cut the rice subsidy. He didn't say how much the government spends on subsidies for the grain each year.

Rice prices on world markets have jumped 50% in the past two months and at least doubled since 2004.

"At the moment, there is no plan to increase the price of rice but obviously, we have to look in terms of supply to make sure there is enough stockpile in the country," he told reporters.

Malaysia imports rice from neighboring countries such as Thailand, Vietnam and Cambodia. But rising prices and worries over domestic supply have forced major rice exporters including Vietnam, Cambodia and India to curb overseas sales recently.

"We are monitoring the situation very closely," Najib said.

"We know the market is tighter now. We'll have to step up our efforts to increase the supply of rice as part of our stockpile. We will have to source around the region."

The government will also boost efforts to increase domestic production of rice, he said, without giving further details.

Malaysia stockpiles rice through Padiberas Nasional Berhad, the country's sole rice importer and distributor. Critics say the agency has not built a sufficient reserve to meet a possible shortage. No data is immediately available on the country's rice stockpile.

The government last year spent 43.4 billion ringgit (US$13.6 billion) on subsidies for gasoline, rice, cooking oil, steel, cement and other items deemed essential. The bulk of the subsidies goes to fuel, which in Malaysia is among the lowest priced in Asia.

Experts blame the rise in rice prices on costlier fuel and fertilizer, as well as harvests curtailed by disease, pests and climate change. There are concerns prices could rise a further 40% in coming months.