Vietnam stays outside South East Asian rice alliance

VietNamNet Bridge – In early October 2012, the Philippines, Myanmar and Thailand signed a memorandum of understanding on the establishment a 3-member South East Asian rice alliance. Vietnam is not a member of the alliance.

The three countries, when announcing the establishment of the alliance, said they hope they can create a full distribution chain and cement a firm position for South East Asian rice in the world’s rice market.

In the past, Vietnam once thought of cooperating with Thailand, one of the biggest rice exporters in the world, to control the rice prices. However, the alliance broke up because the two sides could not find a common voice to maintain the alliance.

Thai rice products have higher quality than Vietnamese, which explained why Thailand wants to set the rice prices at high levels in the world market. Meanwhile, Vietnamese enterprises want to sell rice at reasonable prices in order to increase the export volumes.

Most recently, Yanyong Phuangrach, a senior official of the Thai Ministry of Trade suggested an idea about a strategic cooperation among five South East Asian countries, namely Thailand, Vietnam, Laos, Cambodia and Myanmar.

However, two months later, a rice alliance was set up without Vietnam, where there are only three members – Thailand, the Philippines and Myanmar.

The fact that the Philippines, a big rice importer, not a rice exporter, is a member of the alliance which has caught the special attention from the public.

According to the Asian Development Bank, in 2010, the Philippines imported 2.45 million tons of rice. The import volume reduced to 860,000 tons in 2011 and plans to import 500,000 tons in 2012.

Filipino officials hope that the country would stop importing rice from 2013. It has fulfilled 80 percent of the plan on storing rice, while experts have warned about the global food crisis to occur in 2013.

However, ADB’s experts do not think the country would be able to stop rice import with its bad agricultural infrastructure and high rice production costs. Especially, it believes that the country would have to import 700,000 tons of rice in 2013.

Why hasn’t Vietnam joined the South East Asian rice alliance, though it has shown interest in such cooperation?

According to Nhip Cau Dau tu, Vietnam and Thailand are both the big rice exporters, who have been competing with each other in rice export, an alliance of the two rivals would not be able to exist.

Commenting about the three-member alliance, director of a rice export company said their cooperation would help fix the problems of every member. Thailand has a good rice brand, but its production has not been good enough. Meanwhile, Myanmar has more fertile and larger land fund. The Philippines have received the support from the US in agriculture production, while it has good rice varieties.

Vietnam is not a member of the rice alliance, but its rice production and export would not be influenced, according to Professor Vo Tong Xuan, former President of the An Giang University, who is considered the biggest rice specialist in Vietnam.

Analysts said that the immediate impact that the alliance can have on Vietnam is the loss of the orders from the Philippines – which has always been a big rice importer of Vietnam’s rice. The country has also reduced the rice imports from Vietnam recently.

Meanwhile, according to Xuan, Vietnam remains a big rice exporter in the world. Therefore, it is very likely that the three countries would discuss the rice alliance with Vietnam again.

The three countries, like Vietnam, want to keep the rice export prices at reasonable levels to both retain clients and ensure benefits for their farmers.

Do Thien