Stance needed on foreign investment
No call for foreign expertise, says rice chief
Published: 14/01/2010 at 12:00 AM
Newspaper section: Business
Thailand should take a clear position on foreign investment in the rice industry as concern over food security is expected to increase pressure from abroad, an industry association chief says.
Chookiat Ophaswongse, the honorary president of the Thai Rice Exporters Association hands over the job to his successor Korbsook Iamsuri.
With the recent rise in fossil fuel costs, food security has become a critical issue for many countries. The dynamic makes Thailand, a major producer and exporter of food, particularly rice, very attractive to overseas farm investors.
Foreign investors, especially from the Middle East, have made many approaches to invest in businesses such as rice processing.
"The government should consider carefully in opening the door wider for foreign investors, and which parties could be hit most by the inflow of foreign funds - farmers, traders or exporters," said Korbsook Iamsuri, the president of the Thai Rice Exporters Association.
The government should also make clear whether it needs foreign expertise in rice business or not, she said.
"In my perception, the Thai rice industry is strong and advanced with no need of technologies and know-how from outside. As the world's leading rice exporter, it has proven this," said Mrs Korbsook .
Foreigners are not excluded from the rice processing business, but companies cannot be more than 49% owned by foreign shareholders, said Prasert Kosalwit, director-general of the Rice Department.
In recent years, several foreign companies have sought permission from the government to operate rice processing businesses in Thailand, he said.
Processing covers hulling, milling, colour sorting, grading and packing for sale, he said.
"The Foreign Business Act prohibits [foreign involvement in] farming and paddy exports but not processing operations," he said.
The government has to establish effective tools to prevent the use of Thai proxies and nominee shareholders, said Mr Prasert.
Mrs Korbsook, also CEO of Kamolkij Co, one of the country's leading rice exporters, said inefficient logistics was a major problem for the Thai rice industry today.
The government should improve logistics to help secure lucrative exports, she said.
Last year, Thailand earned about 160 billion baht from exports of 8.57 million tonnes of rice. Exports are expected to pass 9 million tonnes this year.
This year should bring a strong market and high prices, driven by lower global output, she said.
The US Department of Agriculture forecasts that world paddy rice output this year will slip to 433.65 million tonnes, from 445.67 million last year. Accumulated world stockpiles are expected to fall to 85.9 million tonnes from 90.71 million tonnes.
"Falling supply and concern over food security will increase rice transactions in government-to-government deals this year," she said.
The Commerce Ministry should participate more in bids to sell rice to foreign governments, she said.
The association this year will co-operate with the government to recover market share lost to other rice exporting countries in markets such as the Philippines.
Source - The Bangkok Post
Comments - This seems to be getting more of a hot topic as time goes by. When I went to Isaan recently, last week actually, the farmers are getting under 20 baht a kilo for their rice, it's the millers that make the money which ironically is the opening in the law for foreign businesses to exploit, a 5 kilo bag of decent rice in Tesco etc is over 200 baht a pop. Also, this nonsense about owning land or a majority in a business is going to progressively come under attack as time goes by as every country that borders Thailand and many beyond are starting to allow it, look at Cambodia and Vietnam, all possible now and it's being snapped up which lets these countries catch up. Need I say more and there are many investment options other than Thailand now. The question is "Have the Thais got what they want and are unwilling to compete in the future with the surrounding countries that will soon have parity with Thailand, or advantages over, regarding business/tourist/expat friendly environments/ownership etc? I know the arguments for being here but things are changing and options are materialising elsewhere, especially if you are a businessman, there are many opportunities springing up elsewhere.
