Rice Crisis! – How Bernas Profits From The People And Why It’s Time To End The Money-Making Monopoly

Rice Crisis! – How Bernas Profits From The People And Why It’s Time To End The Money-Making Monopoly



Anwar Ibrahim’s pledge to crack down on corruption had initially sent shivers down the spine of many corrupt politicians, including three former Prime Ministers – Mahathir Mohamad, Muhyiddin Yassin and Ismail Sabri. But they were not alone. Powerful politician-cum-businessman like Daim Zainuddin and super-rich cronies like Syed Mokhtar Al-Bukhary too were targeted.



When Anwar finally became the 10th Prime Minister in November 2022, the anti-corruption agency started investigations on the 84-year-old Daim in relation to his secret offshore accounts exposed in the Pandora Papers. Former backdoor Prime Minister Muhyiddin too has been slapped with corruption charges over the dubious spending of RM600 billion during his regime.



Syed Mokhtar, the billionaire and a crony of Mahathir, quickly agreed to share 30% of net profit from his cash cow, Padiberas Nasional Bhd (Bernas) – with paddy farmers, on top of RM60 million for rice smallholders. PM Anwar was targeting his Bernas’ monopoly of the rice industry, which made a whopping revenue of RM4.67 billion and RM182.25 million in net profit in 2021 alone.



Yes, it appears that tycoon Al-Bukhary can easily “kautim” (settle) Anwar by giving some crumb so that the most powerful man in Malaysia can brag about political victory. In June, the businessman and the prime minister were seen together at an art exhibition. Since then, the premier has stopped criticizing Bernas’ domination of the rice market, let alone slamming the crony capitalism.



In fact, during the art exhibition, not only Syed Mokhtar sucked up to Anwar, kissing his hands and calling him “abang” (elder brother), the billionaire also revealed how then-deputy prime minister Anwar introduced him with then-prime minister Mahathir Mohamad. Thanks to Anwar, Al-Bukhary started a long – and extremely profitable – business relationship with the government.



Syed Mokhtar knew that Anwar, like any other former premiers, isn’t a true reformer because he is a politician. And politicians just need to win votes, especially the Malays’. Narcissist Anwar isn’t any different. Problems that can be settled with money are not problems at all, so the tycoon did what he had done before – donating or giving money to the government of the day.



RM60 million was a small price to pay to continue the lucrative monopoly business. Syed Mokhtar’s business acumen and mathematic skill are way above Anwar Ibrahim. So, when Bernas announced on September 1 that imported white rice would cost more – skyrocketing to RM3,200 from RM2,350 a tonne (up 36%) – the government could only watch with tail between legs.



Essentially, the price increase translates to about RM7 extra for a 10-kg bag of rice, a burden to “Bottom 40” households. It was absolutely a dumb mistake allowing Bernas to continue with the monopoly of the rice industry. The government is now fighting tooth and nail to combat not only over high price, but also a shortage of rice – a staple food for Malaysians.



While Anwar’s Madani government gets all the blame, Bernas laughs all the way to the bank. Sure, the government can blame external factors such as Ukraine War, climate change and even India, which is responsible for 40% of the world’s rice exports. On July 20, the Modi government, in order to fight domestic inflation and rising prices, banned the export of non-basmati white rice.



However, Malaysia imports only 35% white rice for domestic consumption as the country’s self-sufficiency rate (SSR) was at 65%. Despite the El Nino phenomenon and the loss of the Kedah rice harvest, Perak and Pahang’s rice output have increased to offset the deficit. Additionally, there was a stockpile of 1-million metric tonnes in spare, which is sufficient for 5.5 months.



Even if India has banned exports of rice, Malaysia was still able to import the staple from other countries such as Thailand, Vietnam and Cambodia. So, the burning question is why Syed Mokhtar’s rice empire was allowed to impose a sweeping 36% increase in price when the country only imports 35% white rice? Exactly why Bernas was allowed to profit from the 65% locally produced rice?



In fact, Bernas has profited twice – first, the usual profit on the price of local rice, followed by another 36% increase in price under the pretext of global shortage or whatever story cooked up by the company. It can’t argue that the local rice also subjects to global inflation because it would mean it had been making a loss, which is not true because Bernas has been very profitable.




The monopoly saw the rice importer paid out more than RM744 million in dividends from 2017 to 2021. In 2020 alone, it paid a jaw-dropping RM670 million in dividend. Every single year since 2012 to 2021, it recorded a net profit between RM70 million to RM180 million. Heck, Bernas had even received government subsidies – RM620 million in 2020 and RM570 million in 2021.



It’s not rocket science that the RM620 million government subsidies (which was actually taxpayers’ money) were used to pay the RM670 million dividends in 2020 to shareholders, including Syed Mokhtar himself. In comparison, paddy farmers – mostly Malays – received only RM250 each after Anwar forced the billionaire to share some of the profits.



To get an idea how Bernas has been making easy money out of paddy farmers and 33 million Malaysians, consider the fact that despite the price ceiling of RM2.70 per kg, rice from Vietnam can be sourced for as low as RM1.70 per kg. Does Anwar government realize these troubling figures when it kept silent over the company’s recent price increase?



More importantly, what Anwar Ibrahim has done so far to end the crony capitalism which he had been screaming till blue in the face now that he is the prime minister? Previously, former Agriculture Minister Salahuddin Ayub announced that the monopoly by Bernas had been terminated by the Pakatan Harapan government in June 2018, but the government collapsed in March 2020.



In Nov 2020, the backdoor regime of Muhyiddin Yassin, who had betrayed his own Pakatan Harapan government, suspiciously extended Bernas concession for another 10 years. But that does not mean the current Anwar administration cannot revoke the unfair monopoly or issue license to other companies to promote healthy competition in the import of rice.



The only explanation why the prime minister refuses to do so is because Syed Mokhtar is now Anwar’s bitch. But the story has just begun. The best part is this – despite the country producing 70% rice, local rice has gone missing. The 36% price hike saw syndicates or cartels scrambled to repackage local rice as imported rice, hence the sudden disappearance or shortage of rice.



Local rice has a control price of RM26 per 10-kg, while imported rice has jumped to RM38 per 10-kg. Because it’s not feasible for syndicates to go around the shops buying all the local rice for repackaging, the educated guess is they were working hand-in-glove with Bernas to profit from the people. And there’s absolutely nothing the government can do, even if they knew about the trick.



The Unity Government, formed by Pakatan Harapan and rival-turn-ally Barisan Nasional, can blame the previous Perikatan Nasional regime for inheriting the egg shortage crisis. But it has no one to blame but itself for the rice shortage crisis. There was even a silly UMNO leader who suggested that only Malaysians are allowed to purchase locally produced rice.



The shortage of rice has also affected the price of rice noodles nationwide, which has increased by 20% or RM1 per kg beginning September 5. According to the Malaysian Rice Noodles Manufacturers Association, the price hike was due to a serious shortage of broken rice (raw material for making noodles) – the first time such problem has occurred in the country since independence in 1957.



Clearly, the chain-reaction from the increase of rice price will drive up food inflation. Pretending that Bernas isn’t the elephant in the room will eventually come back to haunt Anwar-led Pakatan Harapan coalition. If he loses power and ends up in opposition, he can’t point his finger at Bernas for monopolizing rice, let alone attacking Syed Mokhtar for crony capitalism.



Of course, people who try to mix the food crisis with race and religion cards, arguing that the monopoly should not end simply because Syed Mokhtar is a Malay billionaire, must not complain about escalating food prices or a shortage of rice. Bernas does not discriminate the people it tries to profit from. The cash cow is a money making machine for Syed Mokhtar – plain and simple.