Bernas

Bernas, Malaysia's leading rice smuggler

Posted by Raja Petra

Wednesday, 23 January 2008

ACA probes import of RM60m rice
(New Straits Times, 5 January 2008) -Investigations centred around 25,000 tonnes of fragrant rice worth RM60 million imported from Thailand without an import permit.

MPs want Bernas to be reviewed
(Bernama, 15 November 2005) -- Syarikat Beras Nasional (Bernas) which has the sole rice importing licence in the country has received much criticism from members of parliament.
the move by the government in giving the import permit (AP) to Bernas had resulted in the company focusing on importing rice instead of producing rice for the country.

Pagar makan padi: The Bernas story

(Free Anwar Campaign, 26 August 2003) - Padiberas Nasional Berhad, better known as Bernas, wants to retrench a couple of thousand of its staff because, according to the company, it is losing money. And the reason it is losing money, laments the company, is due to the rampant rice smuggling.

Last year, Bernas made a pre-tax profit of RM60 million on a turnover of RM1.76 billion. No doubt the company could argue that this is a drop of 54% from the figure of RM128 million the year before that. Nevertheless, the ‘suffering’ Bernas still saw fit to pay its Directors RM4 million in salaries and its shareholders RM21 million in dividends. That’s RM25 million in all.

If an austerity drive is necessary, should it not be the Directors and shareholders who suffer the cuts first rather than retrench more than 2,000 staff just because the company is not happy with the lower profit it made? And take note, it still did make a profit, though lower, and not make a loss as they claim.

Three years ago it made a mere RM18 million while the year before that it made RM111 million. Its turnover too fluctuates between RM1.7 billion and RM1.9 billion a year, still an impressive enough figure and not one of a company about to go under. In fact, on average, it made RM80 million in profits a year over the last four years from 1999 to 2002.

Bernas, which was given the rice import monopoly for Malaysia, is actually going great guns acquiring various companies in the food industry. The truth is, Bernas wants to reduce its dependence on the rice industry to 60% by diversifying into other food related businesses. Bernas, to quote what the company says, wants to become another Nestle.

Bernas has set aside RM300 million for these acquisitions. It paid RM55 million to buy a 30% stake in Gardenia and RM14 million for Burger King. It also acquired an interest in Rasa Sayang Food Industries and is said to be making a back-door entry into Kentucky Fried Chicken for RM110 million. It has also entered into ‘strategic alliances’ with other food conglomerates like QAF Ltd of Singapore and Dewina, a company linked to the Deputy Prime Minister Abdullah Ahmad Badawi’s family.

Why must Bernas dabble in affairs it was not set up to be involve in?

And is Bernas’ ‘strategic alliance’ with Dewina a business move or is it ‘investing’ in the next Prime Minister of Malaysia?

Bernas has just agreed to distribute and market Dewina Trading Sdn Bhd's products locally and internationally.

Dewina Trading is the sales and marketing arm of convenience food manufacturer Dewina Bhd. Now, who owns Dewina? Isn’t this company associated with Deputy Prime Minister Abdullah Ahamd Badawi’s family?

Bernas is supposed to ensure that Malaysia’s dependence on rice imports is reduced to 35% or less. This is to ensure that, in the event of a war or a major catastrophe in any of the rice exporting countries like Thailand, Vietnam, China, etc., Malaysia will not be starved of rice -- reminiscent of WWII when Malayans then had to eat Tapioca.

Malaysia is the only rice producing country in South-East Asia that is highly dependent on rice imports. Malaysia is at a great security risk and all our neighbours have to do is to stop selling us rice and we will be brought to our knees. And Bernas’ role is to reduce this dependence.

who are these people who are enjoying this RM25 million per year in Directors’ fees and dividends? The Perlis Menteri Besar, Shahidan Kassim, and his immediate family, are these beneficiaries. Incidentally, they are attempting to sell off their stake in the company and may be hundreds of millions of Ringgit richer soon.

According to the rice millers association that has about 300 members, it is the rice importers who are doing all the smuggling. And isn’t the sole importer of rice Bernas itself.

“Zaman Khan’s family is also involved in this business,” revealed Mansor (ex-Inspector of Rantau Panjang). “His family in fact comes from Golok and they have many businesses there such as hotels and so on.”

“How then to take action when the top guns themselves are involved?” laments Mansor.
"we just close our eyes and, once in awhile, stage these ‘successful’ raids and confiscate a few sacks or rice just to keep everyone quiet.”

It’s the legal importers who are the big-time smugglers. They bring rice in by the containers. And they can do so because they have import permits.”
According to some sources, the ‘imports’ far exceed what their permits allow. This is how the smuggling is done.

“There are 160,000 rice farmers in Malaysia,” argued a retired LPN officer. “And most of them live in poverty.”

“For example, for the year 2000, an estimated 9% or almost 16,000 rice farmers have incomes below the poverty level.”

“The estimated annual average net income from rice cultivation in Peninsula Malaysia for that same year ranged from RM1,500, or RM125 per month, in areas like Telok Intan, Kelantan and Terengganu, to RM6,000, or RM500 per month, in advanced areas like MADA.”

“How does one support a family with that low income level?” asked the retired officer.

“It is time the truth is revealed and Malaysians are made aware of the exploitation the rice farmers are being subjected to.”

Despite government expenditures for infrastructure development and financial assistance through input subsidisation and price support policies, a high level of poverty still exists amongst rice farmers. The situation did not improve much since the eight years after the privatisation of LPN into Bernas. Under Bernas, the individual shareholders of the privatised entity are now making profits at the expense of several hundred thousands rice farmers, their families, and other public stakeholders.

For example, for the year 2001, Bernas made a RM128 million profit before tax. For the year 2000, it made RM83 million and, in 1999, RM117 million. In 2002, it made about RM60 million.

But who really benefits from this profit? The rice farmers? Of course not! Those who benefit from these hundreds of millions of Ringgit every year are the major shareholders of Bernas.

And who are these shareholders?

One of them is Budaya Generasi Sdn Bhd (BGSB), which owns 34% of Bernas. The single largest shareholder of BGSB is Permatang Jaya Sdn Bhd (PJSB), which has a 44% interest in BGSB or, effectively, 15% of Bernas.

And who are the shareholders of BGSB?

The shareholders of BGSB are Dohat Bin Shafie and his daughter Nur Daliza Binti Dohat. Dohat Bin Shafie is the brother-in-law of none other than Shahidan!

The point is, the Shahidan family of Perlis owns 15% of the privatised national rice entity which is of strategic importance to the country and which the government acknowledged in its National Agriculture Policy 3 (NAP3) to be the backbone of the food security policy of the country!

Then, Sebiro Holdings Sdn Bhd, another shareholder, owns 5.5% of BGSB. A prominent Director of the company is Megat Junid Bin Megat Ayob, the Prime Minister’s henchman.

The other four (public) shareholders of BGSB representing the interests of several hundred thousand rice farmers, farmers and fishermen, own the other 34% of BGSB or only 11% of Bernas. These four are:

· Pertubuhan Peladang Kebangsaan (NAFAS)

· Persatuan Nelayan Kebangsaan (NEKMAT)

· Syarikat Perniagaan Peladang (MADA) Sdn. Bhd.

· Syarikat Perniagaan Peladang (KADA) Sdn. Bhd.

Just for the record, Yayasan Pok Rafeah Berdaftar, is the 11th largest shareholder of Bernas. Yayasan Pok Rafeah funds the Pok Rafeah Chair at Institut Kefahaman Malaysia dan Antarabangsa (IKMAS) at UKM. And Pok Rafeah is the mother to Tun Daim Zainuddin, another Umno kingpin and one-time Finance Minister of Malaysia.

Despite being a registered foundation, interestingly enough, the Registrar of Societies apparently did not have any information on Yayasan Pok Rafeah as to its Board of Trustees or any other information.

Last year, Bernas paid its Directors RM4 million in salaries. And, to add insult to injury, it declared a 10% dividend to its shareholders amounting to RM21 million! Just figure out how much the individual shareholders of Bernas are getting out of this?

Presumably, all this was the ‘reward’ for a ‘brilliant performance’ of turning in a RM128 million pre-tax profits for 2001 on revenues of some RM1.6 billion -- roughly 7.5% on sales. But then Bernas is about to retrench more than 2,000 employees on the excuse it is losing money.

Bernas is Malaysia’s sole licensed rice importer until 2010.


the government has acknowledged the importance of rice in the food security policy of the country. This is especially so after the 1997-98 currency crisis and the ever-increasing import bills for rice and other food products. Under the NAP3, the Self-Sufficiency Level (SSL) for rice is set at 65% until 2010.

Malaysia, therefore, is still very far from self-sufficiency and needs to import the balance 35% of its needs while other countries surrounding Malaysia not only DO NOT import their rice, but exports it -- to Malaysia. Even China, which needs to feed 20% of the world’s population, can export rice.

Why does Malaysia still depend on a high level of rice imports to feed the nation? And why does the government allow this? The answer is simple! This is so that Bernas can have the monopoly for all rice imports into Malaysia until the year 2010 and make tons of money out of it.

one has to remember that a 35% reliance on the open global rice market is risky given that rice is thinly traded. Only 5% of the world’s rice supply is traded in the open market compared to, for example, 12% for wheat. And, in the event of a bad harvest in one or two of the major exporting countries such as Thailand, Cambodia or Vietnam, or bad harvests in a number of major consuming countries such as India, China or Indonesia, or worse, bad harvests for both exporting and consuming countries as was the case during the el Nino catastrophe -- thus forcing the exporting nations to supply only their domestic needs, and forcing the major consuming nations to buy rice in the open market -- there will not be any rice left in the open market for Malaysia.

it is high time for Bernas to fulfil its obligations to its other stakeholders and not just focus on enriching its few privileged shareholders.

Malaysia Today