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NEWS UPDATES Asean Affairs    20 September  2012

Vietnam extends Indonesia rice sale agreement


Vietnam has extended an agreement giving Indonesia the option to buy 1.5 million tonnes of rice from its Asean neighbour until 2017.

Guaranteeing a supply of rice from Vietnam would boost Indonesia's food security programmes and keep local staple food prices in check, Trade Minister Gita Wirjawan said after the signing a memorandum of understanding (MoU) confirming the deal yesterday in Jakarta.

"We have also sealed similar MoUs with other rice producers in Asean, including Cambodia and Thailand, which aim to provide rice whenever Indonesia needs it," Wirjawan told reporters after signing the MoU with Vietnam Industry and Trade Minister Vu Huy Hoang in his office.

Wirjawan said that Indonesia would import rice from Vietnam only if it faced a shortage in local supplies.

The MoU, which was signed at the conclusion of Indonesia and Vietnam's 6th Joint Commission Meeting on Economic, Scientific and Technical Cooperation, extended a previous MoU that was set to expire at the end of 2012.

Indonesia has maintained agreements on rice sales with Vietnam under government-to-government arrangements since 2005. Under the arrangement, the State Logistics Agency has been given the option to buy rice from Vina Food, one of Vietnam's leading exporters of agricultural products.

A similar arrangement approved in 2009 stipulated that Vietnam would give Indonesia the option to import up to 1 million tonnes rice between 2010 and 2012 from its fellow Asean member nation.

That amount was increased to 1.5 million tonnes late last year, after Indonesia declined to buy rice from Thailand, citing higher prices.

Indonesia, the world's third-largest rice consumer by volume, was self-sufficient in rice production in 2008 and 2009.

The nation began to import the staple last year, as its stockpiles dropped and harvests fell short of targets, partly due to irregular weather.
Critics have said that the government should prioritise local rice procurement over rice imports.

Southeast Asia's rice-exporting countries — Thailand, Vietnam, Cambodia, Laos and Myanmar — have recently been in talks to form an alliance to boost prices and shore up their income from rice exports.

On energy, the Trade Ministry's director general for international trade cooperation, Iman Pambagyo, said that Vietnam expected to continue purchase of coal for its power stations from Indonesia, the world's largest thermal coal producer and a supplier of anthracite coal to Vietnam.

Both countries have aimed at developing cooperation in the energy sector and would finalise a MoU on energy by the year end, Pambagyo said.

Indonesia, Southeast Asia's largest economy; and Vietnam, the region's sixth-largest; have signed a tripartite oil and gas agreement between Pertamina and Petrovietnam and Malaysia's Petronas.

Bilateral trade between Indonesia and Vietnam has expanded rapidly in recent years.

Last year, trade rose by 53.40 per cent to US$4.74 billion, with Indonesia exporting $2.35 billion and importing $2.38 billion, according to the Trade Ministry.

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