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Government seeks to stabilize supply of staple in move against inflation

📷Chicken rendang with white rice served at a restaurant in Selangor: The Malaysian government has taken new initiatives to support restaurants in the face of rising rice prices.

© Reuters

NORMAN GOH, Nikkei staff writerOctober 11, 2023 12:02 JST

KUALA LUMPUR -- The Malaysian government has taken new steps to stabilize rice supplies as prices rise, allowing restaurants to buy imported white rice at a lower cost.

With locally produced rice meeting only 70% of domestic demand, Malaysia relies on imports to make up the difference. However, prices for imported rice have risen in tandem with the recent global price surge, disrupting rice distribution.

In Malaysia, many restaurants use imported rice, such as fragrant rice from Thailand, as customers often prefer it. Many restaurant operators have continued to buy imported rice to meet customer demand, absorbing the higher cost.

In response, Mohamad Sabu, Malaysia's agriculture and food security minister, earlier this week revealed in parliament that the government has begun issuing permits to restaurant owners and food and beverage business associations that allow them to purchase imported white rice at wholesale prices from millers.

With these permits, food service businesses can buy imported white rice for 160 ringgit ($34) per 50 kilograms, roughly half the 300 to 400 ringgit they currently pay to wholesalers or other suppliers.

The government says it took the step to ensure an adequate supply of rice at restaurants and food-related businesses, and to stabilize food prices, easing the burden on consumers.

Jeremy Lim, vice president of Malaysia's Restaurant and Bistro Owners Association, told Nikkei Asia the announcement is good news for food service businesses. The new initiative will "help many businesses that are dealing with rising cost pressures, poor consumer sentiment and eroding margins.

"One cannot switch between imported and local rice depending on the cost. Your customers can taste the difference and [you] will definitely lose them," he said. "So, many operators are biting the bullet, holding prices steady and letting margins erode. Hopefully, the market will stabilize, and customers will return to spending."

According to Lim, member companies in his association saw a drop of up to 30% in profit as they absorbed the rising cost.

The agriculture minister told parliament on Monday that global rice price rises will persist until the end of the year, aggravated by the weakening of the ringgit against the dollar.

Rising imported rice prices have prompted Malaysian consumers to hoard cheaper locally grown rice. The government has taken a number of measures to stabilize prices and supplies over the past few weeks, including intervening in the distribution of domestic rice in areas that face shortages.

Earlier, Prime Minister Anwar Ibrahim announced a subsidized price for imported rice of 31 ringgit per 10 kilograms in Sabah and Sarawak, the two states on Borneo Island. Anwar also said the government will pay for a 400 million ringgit subsidy for government facilities to use imported rice, freeing up 5% the domestic rice supply to serve the commercial market.

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