Indonesia, Cambodia Fix Rice Deal

By Dion Bisara |  

The Jakarta Globe
August 29, 2012
   

A Cambodian farmer works in a rice field in the Kandal province. (EPA Photo/Mak Remissa)  

Siem Reap, Cambodia. As Indonesia seeks to boost trade and investment in Cambodia, the country on Tuesday signed a deal to import as much as 100,000 metric tons of rice annually from the Indochina country.

Gita Wirjawan, Indonesia’s trade minister, and Cham Prasidh, the Cambodian minister of commerce, signed a nonbinding agreement on Tuesday. The deal allows Indonesia to import rice each year from 2012 through 2016 up to the specified cap. The import cap could be increased if needed.

Gita said that Indonesia will benefit from a more stabilized rice price and secure supply, as it would have various sources from which it can import. As a result, Indonesian companies must capitalize on this by investing more in Cambodia, thus improving more trade between both countries.

“It is our goal to not only exchange trade with trade, but also trade with investment,” Gita said. “Other countries have made success stories by investing in Cambodia. We can do the same.”

Cham Prasidh said that he would like to see Indonesian companies invest in Cambodia’s agricultural sector to help it turn its surplus of paddies into rice.

“We need Indonesian companies to come,” he said. “They can invest in processing rice. Later on, they can export rice to Indonesia.

“Cambodia is open. They can set up companies to sell fertilizer and seeds.”

Cham Prasidh also encouraged Indonesia to benefit from cheaper rice storage in the country.

Officials of Galuh Prabu Trijaya, an Indonesian trading company operating in Cambodia, welcomed the signing.

The deal will help it secure its $1 billion deal of rice processing machinery, which is imported from Indonesia, over the next five years.

“This agreement will spur rice production here,” said Mohamad Helmi, a business development director of Galuh.

The firm has been supplying fertilizer for 1.2 million farmers, covering 1.2 million hectares of land in Cambodia.

Helmi is confident that Galuh can double its deal in the next few years.

“We can supply this country fertilizer, machinery and processing machines,” he said. “That’s a big plus.”

Tan Tze Hao, an Indonesian commodities trader, recently set up a company called Padi Tonle, because he was looking for an opportunity to sell rice out of Cambodia.

“We found out not so long ago that Cambodia has stabilized,” he said. “We want to try our best here. In the long run we would like to acquire a rice field as well.”

Indonesia’s exports to Cambodia last year were worth about $220 million. That is a small fraction of the $12.3 billion in total trade that Cambodia did last year.