Indonesia may reject Thai rice scam

Indonesia will seek to buy rice from other countries if Thailand does not honor an earlier agreement to sell the grain, Trade Minister Mari Pangestu said yesterday.

The Indonesian ambassador to Thailand and an official from state grain procurement agency Bulog were to discuss the reported cancellation of a proposed government sale of rice to Indonesia, said Ms. Pangestu.

Tikamporn Nardworatat, who oversees government-to-government contracts at the Department of Foreign Trade, said there was a non-binding memorandum of understanding (MoU) to export 300,000 tonnes of rice to Indonesia, but no firm deal.

"An MoU is not legally binding. There is no cancellation on any deal," he said. Commerce Minister Kittiratt Na-Ranong said the agreement had been signed by the Public Warehouse Organisation (PWO) during the caretaker term of the Abhisit Vejjajiva government. It was not endorsed by the cabinet and neither he nor his predecessor Porntiva Nakasai signed the deal.

The PWO chief who had signed the MoU resigned earlier this month to pave the way for a reshuffle of political officials by the new government.

Under the deal, the PWO agreed to sell 15 percent-grade white rice to Bulog at US$560 a tonne. The market price today is $590-600 a tonne.

Ms. Pangestu said Indonesia still had several alternative rice sources instead of Thailand, such as Vietnam, Pakistan and India.

"We will discuss rice issues with the Indian minister who will visit Indonesia on October 4," she said.

Deddy Saleh, director-general of Foreign Trade at the Indonesian Trade Ministry, said the Jakarta government expected the Thai side not to cancel any contract that had previously been agreed by the two parties, even though the deal was signed under the former Thai government.

"A government succession does not mean that the new government can cancel any agreement just like that," he said.

"If the reason is like that, how about the other previous agreements which have been signed a long time ago? Can they be cancelled directly after the new government comes to power?" Mr. Deddy also said he had not received official information on the matter from the Thai government, adding that this involved trust between two parties and there could be wide-ranging consequences if it was true.

"First, it has to be confirmed and clarified to Thai government before we take any necessary actions," he said.

The confusion will add to the controversy surrounding the Pheu Thai government's rice intervention policy, which has sent prices surging.