08/10/2009 (The Malaysian Insider), Bangkok — Thailand is drafting strict rules on rice and crude palm oil imports to protect its farmers and the quality of its produce next year as a regional free-trade pact expands, senior Thai officials said today.

New import regulations will be submitted for cabinet approval by the end of the year, said Chutima Bunyapraphassara, Director General of the Commerce Ministry’s Department of Foreign Trade.

The rules will coincide with the next phase of an Association of South East Asian Nations (ASEAN) EU-style trading bloc.

Under the ASEAN Free Trade Agreement, import duties on 23 categories of Thai agricultural goods will be eliminated on Jan 1, including two of Thailand’s biggest and most important commodities: rice and palm oil.

“We are in globalisation. We can’t avoid competitiveness. On the other hand, we could brace ourselves for it, seeking a way to go along with it as well as protect our farmers at the same time,” Chutima said.

Currently, rice and crude palm oil products are subject to import tariffs ranging from 5-30 per cent.

As the world’s biggest rice exporter, exporting up to 10 million tonnes in 2008, Thailand does not fear a flood of rice imports from neighbouring countries.

But exporters have expressed concern over the risk of low-quality rice imports blending with Thailand’s export-grade milled rice. This could harm Thailand’s reputation and drag down premium-grade rice prices, they said.

“As the biggest exporter selling mostly premium-grade rice, we have to maintain our quality to maintain good prices,” one exporter said.

Thai rice prices are about US$100 (RM340) per tonne above those for the same grade in Vietnam, the second-biggest exporter. Some premium Thai grades such as fragrant rice, long grain rice and parboiled rice are not available in Vietnam, exporters said.

Thailand plans to impose some non-tariff barriers for rice imports. These would include setting up strict quality controls, limiting import custom stations and allocating import licenses for specific importers, said a senior Commerce Ministry official.

“These would be submited to Cabinet very soon. It depends on the policymakers whether they pick up some measures or choose all of them,” he said.

Consuming around 1.4-1.5 million tonnes of crude palm oil annually, Thailand expects a balance in domestic demand and supply, and sees little need for crude palm oil imports.

“We produce ample palm fruit for both food and biofuel industries and if imports are needed, we would import very small amounts,” said Apichart Jongsakul, secretary general of Thailand’s Office of Agricultural Economy, part of the Agriculture Ministry.

Thailand is projected to produce around 9 million tonnes of palm fruit in 2010, or around 1.5 million tonnes of crude palm oil, of which 900,000 tonnes will be for food products and the rest for biodiesel, he said.

Thailand, a net oil importer, has embraced biofuels, introducing a two percent-blend with 98 pe rcent diesel in February 2008 and planning to impose the use of a five per cent blend nationwide by 2012, according to the Ministry of Energy.

In a bid to prevent farmers from being hurt by duty-free palm imports next year, the government plans to limit imports by allowing importers to bring in crude palm oil only in the December-to-February dry season when domestic production typically drops, Apichart said.

“We would also plan to give import licenses for some specific importers as well,” he added. — Reuters