RI's rice import taxes won't hurt Vietnam

RI's rice import taxes won't hurt Vietnam

HANOI (Dow Jones): Indonesia's decision to raise rice import taxes and refrain from importing rice next year won't hurt Vietnam's rice exporters because they have already slowed their exports to Indonesia, a Vietnamese official said Monday.

In an interview with Dow Jones Newswires, the Vietnam Southern Food Corp., or Vinafood II, executive said that "because of (already) high import taxes, Indonesia hasn't bought much rice from Vietnam for two years already."

He indicated that, because of the weak sales this year and last, barriers to on foreign rice exports to Indonesia in 2001 won't heavily impact Vietnamese traders.

The official declined to give details of Vietnam's rice exports to Indonesia during the last few years.

In the mid-1990s, Vietnam often exported large quantities of rice to Indonesia. But strong rice harvests there, as well as rapid currency depreciation - that have made it harder for Indonesia to finance imports - have cut Indonesia's demand for Vietnamese rice this year and last, the Vinafood executive admitted.

"Sometimes we sell 4,000 to 5,000 (metric) tons to small Indonesian traders, but the total is insignificant," he said.

Indonesia last week announced that, in order to protect local farmers, it will next year raise the import levies on rice from an already-high 30 percent. Jakarta will also prevent the import of foreign rice if domestic supplies can meet demand.

"There will be no import permits for rice unless the rice is really needed," Mulyo Sidek, deputy chairman for planning and cooperation at Jakarta's national logistics agency Bulog told Dow Jones Friday.

Vietnam exported just 3.1 million metric tons of rice in the first 10 months of this year, down 23.4 percent from the same period a year ago.

Falling international demand for the crop has also pushed prices lower, leaving Vietnam's rice export revenues 36.5 percent lower in the January-to-October period at US$584 million, according to official figure.

To help counter the recent decline in sales to Indonesia and some other Southeast Asian neighbors, Vietnam will continue to search out new markets in the Middle East and Africa, the Vinafood executive said.

He noted that Vietnam's rice exporters will also try to maintain sales to the Philippines and Malaysia.

Nonetheless, observers say Hanoi will find it hard to develop large new markets for its rice crop, particularly as other producers are also recording strong crops and are increasing the amount of rice that they offer for export.