G/STR/N/16/MYS  
 
17 October 2016  
(16-5594) Page: 1/7 
Working Party on State Trading Enterprises  Original: English  
 
STATE TRADING  
NEW AND FULL NOTIFIC ATION PURSUANT TO AR TICLE XVII:4(A) OF T HE 
GATT 1994 AND PARAGR APH 1 OF THE UNDERST ANDING ON  
THE INTERPRETATION O F ARTICLE XVII  
MALAYSIA  
The following communication, dated 14 October 2016, is being circulated at the reques t 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/16/MYS  
 
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  I. ENUMERATION OF STATE  TRADING ENTERPRISES  
 
A. Identificat ion of state trading enterprise . 
 
Padiberas Nasional Berhad (BERNAS) . 
 
B. Description of products affected (including tariff item number(s) encompassed in 
product description).  
 
Rice (HS 10.06)  
 
II. REASON AND PURPOSE  
 
A. Reason or purpose for establishing and/or maintaining state trading enterprise.  
 
Padiberas Nasi onal Berhad (BERNAS) acts as a State Trading Enterprise for rice importation .  It 
performs non-commercial activities on behalf of the Government of Malaysia.  
 
B. 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 corporati zed 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 Padibe ras Nasional Berhad (BER NAS) was then created as a public limited 
company limited by shares registered under the Companies Act 1965  to carry out the relevant 
function for the Government besides its own commercial activities.  The Government of Malaysia 
via the Ministry of Finance (MOF) Incorporated holds one Special Right  Redeemable Preference 
Share in BERNAS.  
 
III. DESCRIPTION OF THE FUNCTIONING OF THE STATE TRADING ENTERPRISE  
 
A. Summary statement providing overview of operations of the state trading enterprise.  
 
BERNAS carries o ut 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 Government f rom time to time;  
iii. to act as the Buyer of Last Resort for paddy farmers;  
iv. to undertake the management of the disbursement of subsidies to paddy farmers 
under the Paddy Price Subsidy Scheme; and  
v. to undertake the management of the Bumiputera Rice Millers Schem es. 
The commercial activities of BERNAS include:  
 
i. paddy seed production;  
ii. paddy farming;  
iii. paddy procurement and rice processing;  
iv. distribution and trading of rice and its by products; and  
v. rice importation.  G/STR/N/16/MYS  
 
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  B. Specification of exclusive or special rights or pr ivileges enjoyed b y the state trading 
enterprise.  
 
For 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 statu tory power or authority. On the contrary, it is subjected to the same laws and 
rules as other rice millers and traders in the country.  
 
C. Type of entities other than the state trading enterprise that are allowed to engage in 
importation/exportation and co nditions 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 by direct sales to 
wholesalers that in turn distribute rice to retailers. BERNAS is not in competition with wholesalers 
that distribute rice directly to retailers.  
 
D. How import/export levels are established by the state trading enterprise.  
 
Rice is imported to supplement domestic production and for food secu rity 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 for food security. The deficit i s determined by the 
shortfall in  production against the estimated national consumption and requirement. The quantity 
is also determined by the level of rice stockholding in the stockpile.  
 
 E. How export prices are determined.  
 
BERNAS is not involved in the export of rice.  
 
 F. How the resale prices of impor ted 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 level s are determined by the 
market. However, for local super grade consumer, the ceiling price is regulated by the 
Government.  
 
The pricing strategy adopted by BERNAS is determined by quality and target markets. Rice 
imported into Malaysia fall s under the super grade , according to preferences of the consumers . 
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 niche 
segment s of the market  
 
G. Whether long -term contracts are negotiated by the state trading enterprise.  Whether 
the state trading enterpr ise is used to fulfil contractual obligations entered into by the 
government.  
 
BERNAS do es not buy rice on long -term contracts. BERNAS buy s rice on the spot or short term 
contract s depending on the international market and supply conditions. Rice contracts  are normally 
for a period of 3-6 months.  
 
H. 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 preferences  and needs. Import 
sources are chosen on the basis of commercial considerations namely quality, price, availability 
and demand. BERNAS procures the rice through international traders and exporters in the relevant 
exporting countries mostly by way of quotat ions or tenders. For strategic reasons BERNAS has also 
diversified its sources of supply in order to reduce its dependence on a single source which supply 
could be affected during period of drought or crisis.  
 G/STR/N/16/MYS  
 
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  IV. STATISTICAL INFORMATION ( SEE ATTACHED TAB LES I - III) 
 
V. REASON WHY NO FOREIGN TRADE HAS TAKEN PLACE ( AS APPROPRIATE)  
 
Malaysia is a net importer of rice. There is no  available surplus of rice for export.  
 
VI. ADDITIONAL INFORMATION ( AS APPROPRIATE)  
  
  G/STR/N/16/MYS  
 
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TABLE I  
STATE TRADING: PADIBERAS NASIONAL BERHAD (BERNAS)  
STATISTICAL INFORMAT ION, IMPORTS  
                                                
1 All rice import was done through STE (BERNAS).  
2 Members may report either under c olumns 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 1,918  2,100 – 2,800  Not Applicable  1,685  
2014 Not Applicable  863 1,855  2,100 – 2,800  Not Applicable  1,847  
2015 Not Applicable  960 2,068  2,100 – 2,800  Not Applicable  NA  
  G/STR/N/16/MYS  
 
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TABLE II  
STATE TRADING: PADIB ERAS NASIONAL BERHAD  (BERNAS)  
STATISTICAL INFORMAT ION, EXPORTS  
Description of 
product(s)  
(including HS 
number(s))  Total quantity 
exported1 Quantity exported 
by 
state trading 
enterprise1 Average 
procu rement 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 Applicable  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 o f this questionnaire.  
2 In cases where the initial procurement price is augmented by other payments, additional payments should also be reported.   
  G/STR/N/16/MYS  
 
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STATE TRADING: PADIB ERAS NASIONAL BERHAD (BERNAS)  
STATISTICAL INFORMAT ION, DOMESTIC ACTIVI TIES 
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 527 1,685  1,274  2,460  
2014 623 1,847  1,311  2,484  
2015 681 NA 1,476  2,508  
 
__________  
                                                
1 The estimated figure may differ slightly from the actual traded paddy/rice as this includes volume from subs istence farming and 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 import volume and domestic purchase as some volume is for the purpose of  stockpile and food security.  
3 National consumption is based on the Agro Food Statistic 2013, Source: Ministry of Agriculture and Agro -Based Industry Malaysia.