ASEAN KEY DESTINATIONS
Thai rice plan escalating into diplomatic rowBy David Swartzemtruber
The plan of the new Thai government to raise the price of rice paid to its farmers is now causing trouble beyond its borders and could result in a diplomatic row with Asean partner, Indonesia.
Indonesia is the world’s third-largest rice consumer in the world. Indonesia signed an agreement with the previous Thai government for 300,000 tons of Thai rice.
Thai Commerce Minister Kittiratt Na Ranong canceled plans for the sale as reported by Bloomberg, citing that the price was too low. The contract calls for shipment of the rice to Indonesia this year.
Indonesia has not received a response to two letters sent to Thailand’s Commerce Ministry in early September. The Indonesians are hopeful that Thailand will fulfill its obligation, however, Vietnam is surely willing to step up to meet Indonesia’s rice needs and Indonesia notes that the Vietnamese have never canceled a rice deal.
The Indonesian Trade Ministry, its Foreign Ministry and the Indonesian Embassy in Bangkok are all trying to get the new Thai government to honor the contract.
The attitude of the new Thai government on the rice contract is yet another misstep of the new Thai government of Prime Minister Yingluck Shinawatra.
Today, The Federation of Thai Capital Market Organizations, a six-member grouping that includes the Stock Exchange of Thailand and Association of Investment Management Companies, urged the government to reconsider its minimum wage boost in line with the decline of US and European markets.
If the new Thai government remains intransigent in its positions, there could be widespread economical, social and political repercussions in the Land of Smiles.
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