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 was still early days and the matter would 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 the world's third-largest rice consumer, consuming about 30 million tons a year. Indonesia plans to import more than 3.6 million tons of rice by 2024.
Speaking before parliament on June 20, Indonesian Agriculture Minister Amran Sulaiman shared that 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 advocates importing rice to maintain stable prices for consumers.
Rice is a staple food for many Asian countries. In May, Mr. Widodo said that Indonesia imports 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 in fifth place.
Under the bilateral rice trade memorandum of understanding to be renewed in 2023, Indonesia can buy up to 250,000 tons of rice from Cambodia each year, between 2024 and 2028. In the first four months of 2024, Indonesia imported 2.26 million tons of rice, of which 25,000 tons 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 percent 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 that at present, Bulog has not yet considered the export-related issues that the acquired company will face.
Instead of looking abroad for solutions, Indonesia can address the current problems that are hampering rice production, Bhima said. These include inadequate storage and handling, which affects 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 creating new rice fields where possible, optimizing existing fields, and improving irrigation systems.
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