G/STR/N/15/MYS
29 October 2014
(14-6287)  Page: 1/7
Working Party on State Trading Enterprises  Original: English
 
STATE TRADING 
NEW AND FULL NOTIFICATION PURSUANT TO ARTICLE XVII:4(A) OF THE 
GATT 1994 AND PARAGRAPH 1 OF THE UNDERSTANDING ON 
THE INTERPRETATION OF ARTICLE XVII 
MALAYSIA  
The following communication, dated 21 October 2014, is being circulated at the request of the 
Delegation of Malaysia. 
 
_______________ 
 
 
I am pleased to submit herewith Malaysia's notification pursuant to Article XVII:4(a) of the GATT 1994 and paragraph 1 of the Understanding on the Interpretation of Article XVII. 
 G/STR/N/15/MYS 
 
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  1  ENUMERATION OF STATE TRADING ENTERPRISES 
1.1  IDENTIFICATION OF STATE TRADING ENTERPRISE Padiberas Nasional Berhad (BERNAS) 
 
1.2  DESCRIPTION OF PRODUCTS AFFECTED  (INCLUDING TARIFF ITEM NUMBER (S) 
ENCOMPASSED IN PRODUCT DESCRIPTION) 
Rice (HS 10.06) 
 
2  REASON AND PURPOSE 
2.1  REASON OR PURPOSE FOR ESTABLISHI NG AND/OR MAINTAINING STATE TRADING 
ENTERPRISE 
Padiberas Nasional Berhad (BERNAS) maintains a State Trading Enterprise for rice importation 
subject to its responsibilities in performing the non-commercial activities on behalf of the Government due to the private concession agr eement between the Government of Malaysia and 
BERNAS.  
 2.2  SUMMARY OF LEGAL BASIS FOR GRANTING THE RELEVANT EXCLUSIVE OR SPECIAL 
RIGHTS OR PRIVILEGES, INCLUDING LEGAL PROVISIONS AND SUMMARY OF 
STATUTORY OR CONSTITUTIONAL POWERS 
The National Paddy and Rice Board (hereinafter referred to as NPRB) was corporatized on 
7 July 1994 and later privatised on 12 January 1996.  Following this corporatization exercise, the 
Board was dissolved and all its regulatory functions and activities were transferred to the Ministry 
of Agriculture. The commercial and non-commercial activities, on the other hand, were taken over by the Padiberas Nasional Berhad (BERNAS), a new public limited company limited by shares 
registered under the Companies Act 1965. Government via MOF inc. hold one Special Rights 
Redeemable Preference Share in BERNAS.  
The privatization of the National Paddy and Rice Board was carried out under the country's 
privatization programme with the objective of reducing the Government's involvement in commercial activities. Under the programme, BERNAS was formed to take over the non-commercial and commercial activities of the defunct National Paddy and Rice Board.  
 
3  DESCRIPTION OF THE FUNCTIONING OF THE STATE TRADING ENTERPRISE 
3.1  SUMMARY STATEMENT PROVIDING OVERVIEW OF OPERATIONS OF THE STATE 
TRADING ENTERPRISE 
BERNAS operates strictly as a business concern except for the arrangement to carry out the non-
commercial activities on behalf of the Government include: 
 
i. to conserve, maintain and manage the National Paddy/Rice Stockpile; 
ii. to undertake the purchase of paddy from paddy farmers at the Guaranteed Minimum 
Price (GMP) as determined by Go vernment from time to time; 
iii. to act as the Buyer of Last Resort for paddy farmers; 
iv. to undertake the management of the disb ursement of subsidies to paddy farmers 
under the Paddy Price Subsidy Scheme; and 
v. to undertake the management of the Bumiputera Rice Millers Schemes. 
The commercial activities of BERNAS include: 
 
i. paddy seed production; G/STR/N/15/MYS 
 
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  ii. paddy farming; 
iii. paddy procurement and rice processing; 
iv. distribution and trading of rice and its by products; and 
v. rice importation. 
3.2  SPECIFICATION OF EXCLUSIVE OR SPECIAL RIGHTS OR PRIVILEGES ENJOYED BY 
THE STATE TRADING ENTERPRISE 
In consideration of the non-commercial activities undertaken on behalf of the Government, 
BERNAS was given the right to import rice into Malaysia (previously undertaken by NPRB). 
However, as a company, BERNAS has no statutory power or authority. On the contrary, it is subjected to the same laws and rules as other rice millers and traders in the country.  
3.3  TYPE OF ENTITIES OTHER THAN TH E STATE TRADING ENTERPRISE THAT ARE 
ALLOWED TO ENGAGE IN IMPORTATIO N/EXPORTATION AND CONDITIONS FOR 
PARTICIPATION 
Through its privatisation agreement, BERNAS is the only company permitted to import rice for the 
country. The distribution of the imported rice in the country by BERNAS is almost entirely at first-hand sales, i.e. the imported rice is sold ex-BERNAS warehouse to wholesalers who in turn 
distribute rice directly to retailers. BERNAS does not compete to distribute rice directly to retailers. 
 3.4  HOW IMPORT/EXPORT LEVELS ARE ESTABLISHED BY THE STATE TRADING ENTERPRISE 
Rice is imported to supplement domestic production and food security purposes. The two main 
criteria used for determining the annual quantity to be imported are the annual rice deficit in the country and the rice stockpile requirement/food secu rity. The deficit is determined by the shortfall 
of production over the estimated national cons umption and requirement. The quantity is also 
determined by the level of rice stockholding in the stockpile.  
3.5  HOW EXPORT PRICES ARE DETERMINED 
BERNAS is not involved in the export of rice. 
 3.6  HOW THE RESALE PRICES OF IMPORTED PRODUCTS ARE DETERMINED 
Under the Rice Order (Control of Grades and Prices ) 1992, rice marketed in Malaysia is classified 
according to three major grades, i.e. super grade, premium grade and standard grade. The maximum prices of the lower grades, i.e. premium grade and standard grade, are fixed by law. 
The imported rice super grade does not have a ceiling price and price levels are determined by the 
market, however, for local super grade consumer ceiling price is regulated by Government.  
Rice imported into Malaysia in line with market  preferences and needs fall under the super grade. 
The pricing strategy adopted by BERNAS is determin ed by quality and target markets. The quality 
of the imported rice is mostly of a higher quality compared to the local super grade and as such it is priced higher than the local super grades and is targeted mainly at the upper segment of the 
market. i.e. more affluent consumer.  
 3.7  WHETHER LONG-TERM CONTRACTS ARE NEGOTIATED BY THE STATE TRADING 
ENTERPRISE. WHETHER THE STATE TRADING ENTERPRISE IS USED TO FULFIL 
CONTRACTUAL OBLIGATIONS ENTERE D INTO BY THE GOVERNMENT 
BERNAS do not buy rice on long-term contracts. BERNAS either buy rice on spot or short term 
contract depending on the international market and supply conditions. Rice contracts are normally 
for 3-6 months period.  G/STR/N/15/MYS 
 
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  3.8  BRIEF DESCRIPTION OF MARKET STRUCTURE 
Rice imports are also based on commercial and marketing considerations. The type, grade and 
quality of rice that is imported are determined by domestic market prefer ences and needs. Import 
sources are chosen on the basis of commercial cons iderations namely quality, price, availability 
and demand. BERNAS procures the rice through international traders and exporters in the relevant 
exporting countries mostly by way of quotations or tenders. For strategic reasons BERNAS has also diversified its sources of supply in order to reduce its over-dependence only on a single source 
which might make supply vulnerable during period of supply difficulty or crisis.  
 4  STATISTICAL INFORMATION (S EE ATTACHED TABLES I - III) 
5  REASON WHY NO FOREIG N TRADE HAS TAKEN PLACE ( AS APPROPRIATE)  
Malaysia is a net importer of rice. There is no rice surplus available for export.  
 6  ADDITIONAL INFORMATION (AS APPROPRIATE) 
  
  G/STR/N/15/MYS
 
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TABLE I 
STATE TRADING: PADIBERAS NASIONAL BERHAD (BERNAS) 
STATISTICAL INFORMATION, IMPORTS 
                                               
1 All rice import was done through STE (BERNAS). 
2 Members may report either under co lumns 4 and 5 or under column 6. 
3 Denotes the typical rice prices sold in the retail market , quality of those rice ranges from good to acceptable. Description of 
product(s) 
(including HS 
number(s)) Total quantity 
imported1 
(‘000 MT) Quantity imported by 
state trading 
enterprise1 Average import 
price 
(RM/MT) Average representative 
domestic sales price 3 
(RM/MT) Mark-up2 National production 
(‘000 MT) 
1 2 3 4 5 6 7 
RICE (HS 10.06)       
2013 Not Applicable 853 1,888 2,100 – 2,800 Not Applicable 1,694 
2014 Not Applicable 840 1,855 2,100 – 2,800 Not Applicable NA  
  G/STR/N/15/MYS
 
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TABLE II 
STATE TRADING: PADIBERAS NASIONAL BERHAD (BERNAS) 
STATISTICAL INFORMATION, EXPORTS 
Description of 
product(s) 
(including HS 
number(s)) Total quantity 
exported1 Quantity exported 
by 
state trading 
enterprise1 Average 
procurement price2 Average 
representative 
domestic sales price Average export price National production 
1 2 3 4 5 6 7 
Not Applicable Not Applicable Not Applicable Not Appl icable Not Applicable Not Applicable Not Applicable 
 
 
 
                                               
1 In cases where no exports have taken place under columns 2 or 3, provide an explanation under Section V of this questionnaire.  
2 In cases where the initial procurement price is augmented by other payments, additional paymen ts should also be reported.  
  G/STR/N/15/MYS
 
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STATE TRADING: PADIBERAS NASIONAL BERHAD (BERNAS) 
STATISTICAL INFORMATION, DOMESTIC ACTIVITIES 
Description of product(s) 
(including HS number(s)) Domestic purchases by 
state trading enterprise 
(‘000 MT) National production 1 
(‘000 MT) Domestic sales by 
state trading enterprise 2 
(‘000 MT) National consumption 3 
(‘000 MT) 
1 2 3 4 5 
RICE (HS 10.06)     
2013 198 1,694 1,274 2,460 
2014 329 NA 1,326 2,680 
 
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1 The estimated figure may differ slightly from the actual traded  paddy/rice as this includes vo lume from subsistence farming an d element of crop estimation. 
Source: Ministry of Agriculture and Agro-Based Industry Malaysia, Agro Food Statistics 2013. 
2 The actual traded volume may differ from im port volume and domestic purchase as some  volume is for the purpose of stockpile an d food security. 
3 National consumption is based on the Agro Food Statistic 2013, Source: Ministry of Agriculture and Agro-Based Industry Malaysi a.