In­done­sia, Myan­mar to set­tle rice agree­ment

The Myanmar Times - - Front Page -

In­done­sia and Myan­mar will sign an agree­ment next month to con­tinue rice ex­ports, fol­low­ing a ship­ment that failed to meet safety stan­dards.

THE gov­ern­ments of In­done­sia and Myan­mar will sign a mem­o­ran­dum of un­der­stand­ing next month to con­tinue a rice ex­port agree­ment. But the re­spec­tive com­merce min­is­ters will then have to tackle an un­re­solved is­sue over pay­ment for a pre­vi­ous ship­ment that failed to com­ply with In­done­sian reg­u­la­tions.

Com­merce Min­is­ter U Than Myint will travel to In­done­sia on Septem­ber 13 for an MoU sign­ing cer­e­mony, af­ter which he and his In­done­sian coun­ter­part will dis­cuss the terms of a new ex­port agree­ment, the ministry has con­firmed.

The new con­tract for rice ex­ports will in­volve pri­vate sec­tor ex­porters and buy­ers, thus of­fi­cials from the Myan­mar Rice Fed­er­a­tion (MRF) and MAPCO will be in­volved in dis­cus­sion about ex­actly how much rice Myan­mar will ex­port and at what price.

The orig­i­nal gov­ern­ment-to-gov­ern­ment agree­ment with In­done­sia was signed by Myan­mar’s pre­vi­ous gov­ern­ment in April 2013. But In­done­sia only ap­proached Myan­mar for rice im­ports in 2015.

Un­der the terms of the old agree­ment Myan­mar could have ex­ported 100,000 tonnes in the 2015-16 fis­cal year, but due to wide­spread flood­ing it man­aged only 20,000, ac­cord­ing to U Nay Lin Zin, joint sec­re­tary of the MRF.

The MRF ex­pects the new MoU to al­low Myan­mar to ex­port 300,000 tonnes of rice to In­done­sia each fis­cal year – more than 20pc of the to­tal rice ex­ports in 2015-16. Myan­mar ex­ported 1.3 mil­lion tonnes of rice that year, down from 1.5 mil­lion in 2014-15, ac­cord­ing to the MRF.

U Nay Lin Zin said ex­tend­ing the agree­ment with In­done­sia was a pos­i­tive move for the lo­cal in­dus­try.

“The Philip­innes also wants to sign an MoU with Myan­mar for rice ex­ports, but price ne­go­ti­a­tions are still on­go­ing,” he said. Myan­mar has been too re­liant on ex­port­ing rice to China, and it was time for the coun­try to broaden its trade re­la­tions to new mar­kets, he added.

But the com­merce min­is­ters will have to help set­tle a months-long dis­pute over pay­ment for a ship­ment that MAPCO made to In­done­sia in March, which a Myan­mar del­e­ga­tion to In­done­sia in June failed to re­solve.

MAPCO sent al­most 14,000 tonnes of rice to the port of Surabaya, which failed to meet new In­done­sian food safety reg­u­la­tions. The im­ported rice was not tested at an In­done­sian-gov­ern­ment ap­proved lab­o­ra­tory, be­cause MAPCO was un­aware of the new rules.

As a re­sult it sat un­loaded at the port for months, rack­ing up a de­mur­rage charge of around $1.8 mil­lion.

“De­spite two months of de­lays at the port, Myan­mar’s rice qual­ity is still good and per­haps good enough to sat­isfy In­done­sia. That’s why we are plan­ning to re­new the con­tract,” said U Khin Maung Lwin, deputy per­ma­nent sec­re­tary at the Ministry of Com­merce.

MAPCO’s ex­ec­u­tive di­rec­tor U Thaung Win said Myan­mar has pre­pared a sys­tem of lab­o­ra­tory cer­ti­fi­ca­tion and so sim­i­lar dif­fi­cul­ties in the fu­ture are un­likely. But In­done­sia’s state-run Bureau of Lo­gis­tics, known as Bu­log, has paid MAPCO for less than half of the $5.3 mil­lion ship­ment, and MAPCO has still not paid the de­mur­rage charge.

MAPCO is seek­ing a 70pc dis­count on the charge, but as of mid-Au­gust Bu­log had of­fered just 15pc to 20pc. The dead­line for Bu­log to pay was ex­tended from July 31 to Au­gust 31, and has now been ex­tended to mid-Septem­ber with the com­merce min­is­ters sched­uled to de­bate the mat­ter af­ter the sign­ing cer­e­mony, said U Ye Min Aung, MAPCO’s man­ag­ing di­rec­tor and the gen­eral sec­re­tary of the MRF, told The Myan­mar Times.

Once the dis­counted de­mur­rage charge is paid, Bu­log is ex­pected to pay for the rest of the ship­ment, he said. – Trans­la­tion by Zar Zar Soe

Photo: Kaung Htet

Farm­ers pre­pare paddy field for rice har­vest.



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