Bernas privatisation would put veil over rice prices, says Pakatan
Pakatan MP Rafizi Ramli said that taking Bernas out of public view would mean a lack of transparency where rice prices were concerned. — Picture by Choo Choy MayKUALA LUMPUR, Dec 12 (MalayMailOnline)
With Tan Sri Syed Mokhtar Al-Bukhary now closer to privatising Malaysia’s sole rice distributor Padiberas Nasional Bhd (Bernas), opposition lawmakers fear the move would hide price setting of the staple from public eyes and cause prices to rise like sugar that is also under the tycoon’s control.
Pointing out Bernas’s virtual monopoly over the essential rice supply, PKR MP Rafizi Ramli said the proposed privatisation of the rice distributor would remove the “national strategic asset” from public scrutiny.
“Everything will be subjected to close-door negotiations with the government. If they ask for increase of price and government wants to maintain subsidy, the government will have to fork out more; the public will end up paying more for rice,” he said, referring to the food item whose price is monitored by the government.
He also warned that warned that taking Bernas out of public view may even allow foreign and profit-minded firms to subsequently acquire the distributor without Malaysians finding out.
“If Bernas is to be taken private, it’s saying that they don’t want to share with the public,” the PKR strategy director said, saying that the public currently could still obtain information about the listed company through the stock exchange.
On Tuesday, a lawyer for Bernas minority shareholder Ilustrasi Hikmat Holdings Sdn Bhd (IHSB) reportedly confirmed that its April case against three of four parties ― Bernas, Syed Mokhtar and his company Tradewinds (M) Bhd ― was struck out on November 27.
The case, in which IHSB said that Bernas’s control and ownership cannot rest in a single individual’s hands, could have scuttled the privatisation plans. IHSB has now filed an appeal to reinstate the three as parties to its case.
With the barrier to the takeover of Bernas removed this week, Rafizi said the proposed privatisation by companies controlled by Syed Mokhtar was inevitable.
When asked for suggestions on what the government could do to block the privatisation, Rafizi said it was possible for Putrajaya to intervene “on the basis that Bernas is a national asset and the public have the right to know”.
The alternative is for the government to dismantle the monopoly or renegotiate some of the long-term positions within the existing contract, Rafizi said.
“The penalty of revoking the permit or liberalising the market so new players can come in is very minimal,” Rafizi said, contrasting Bernas’s situation to toll concessions where companies have poured in a lot of money to build the highways.
DAP’s Zairil Khir Johari alleged that the privatisation bid was an attempt to “take advantage” of the 10-year extension for Bernas’s exclusive rice distribution contract, which will now run from January 11, 2011 to January 10, 2021.
He warned that there was a risk of rice prices increasing if the privatisation takes place, based on what transpired previously with sugar.
“The worry is that when he first took over the sugar monopoly, the price of sugar went up immediately and has been on the uptrend until today,” the first-term Bukit Bendera MP said, referring to Malayan Sugar Manufacturing, which is owned by Felda Global Ventures, and Central Sugar Refineries, which is part of the Syed Mokhtar’s Tradewinds (M) Bhd empire.
“We’ve seen this rollout of subsidy rationalisation. Rice could be the next thing on the block, again it’s the people who’s going to pay more, it will disadvantage millions of Malaysians,” Zairil added.
Since September, Putrajaya has slashed fuel subsidies for RON95 petrol and diesel by 20 sen/L, completely removed price support for sugar, and announced a hike to electricity tariffs by 15 per cent starting January 1.
Pointing out that Bernas was founded to ensure fair distribution for the rice industry’s stakeholders, including farmers, Zairil said the problem with the company’s monopoly over the country’s supply was the resulting “unfair pricing”.
He also suggested the new Competition Commission, a statutory body that promotes and enforces competition in businesses, scrutinise the proposed takeover for elements of market abuse.
PAS’s Dr Dzulkefly Ahmad described the proposed privatisation of Bernas as “sheltered monopolies” where the company could “abuse the contract extension and operate quietly without competition”.
The former Kuala Selangor MP added that privatisation could “encourage deregulation against the benefits for the consumer which can lead to higher prices and less quality products”.
There could also be “incentive to do creative restructuring where it can blatantly increase share ownership, transfer all jewel asset, strip excess and refloat with leaner assets,” PAS research centre’s executive director suggested.
After a privatisation bid in March failed to get sufficient acceptance from Bernas’s minority shareholders, another attempt was made last month to turn it into a private company with a proposal to voluntarily remove it from Malaysia’s stock market.
Bernas’ shareholders would decide on the proposed voluntary delisting from Bursa Malaysia in an extraordinary general meeting, but the notice of the EGM has yet to be announced.
The cash-rich Bernas has RM612.67 million in the bank as of September 30, which is double the RM398.6 million it held in January this year, The Edge reported last month.
On April 26, 2011, the government announced that Bernas’s exclusive contract of rice distribution will be extended for 10 years starting from January 11, 2011 to January 10, 2021.