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Viewing cable 08BANDARSERIBEGAWAN118, BRUNEI CONSUMERS PARTIALLY INSULATED FROM RICE PRICE

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Reference ID Created Released Classification Origin
08BANDARSERIBEGAWAN118 2008-04-23 07:21 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Bandar Seri Begawan
VZCZCXRO5339
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHBD #0118 1140721
ZNR UUUUU ZZH
R 230721Z APR 08
FM AMEMBASSY BANDAR SERI BEGAWAN
TO RUEHC/SECSTATE WASHDC 4173
RUEHZS/ASEAN COLLECTIVE
UNCLAS BANDAR SERI BEGAWAN 000118 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
STATE FOR EEB/TPP/ABT/ATP (JSPECK) 
 
E.O. 12958: N/A 
TAGS: EAGR EAID ETRD ECON PGOV PREL BX
SUBJECT: BRUNEI CONSUMERS PARTIALLY INSULATED FROM RICE PRICE 
INCREASES 
 
REF: A) STATE 39410 B)BANDAR SERI BEGAWAN 112 
1. (SBU) SUMMARY and COMMENT: Government subsidies are helping to 
shield Brunei consumers from the full effect of increase in the 
price of rice imported from Thailand.  Domestic retail prices for 
subsidized varieties of rice have not changed despite their trading 
prices on the world market having more than doubled.  The increased 
cost of subsidies for rice and fuel, along with the weakness of the 
U.S. dollar in which Brunei's exports of oil and gas are priced, are 
ameliorating the beneficial effects of higher hydrocarbon prices on 
the Government of Brunei (GOB) budget and the economy at large.  END 
SUMMARY and COMMENT. 
 
2. (U) Brunei imports about 80 per cent of its food needs annually. 
Local consumption of rice stood at 31,082 metric tonnes in 2006, 
with only 3.2 percent produced locally.  Rice, as a staple food, is 
a price-controlled item, heavily subsided by the government.  The 
GOB subsidizes three types of rice imported from Thailand: white, 
glutinous, and fragrant.  Subsidized commodities like rice are 
distributed through the government's supply control center, known as 
the "State Stores." Despite recent increases of rice in the region, 
in early April the GOB announced that there would be no change in 
the retail price of rice, and that current rice stocks are more than 
sufficient for the nation.  Prices for non-subsidized varieties of 
rice, such as basmati, and rice-derived products have increased by 
approximately one third. 
 
3. (U) According to 2006 statistics, total food & live animal 
imports totaled US$278 million, accounting for 14 percent of total 
imports into the country, the third largest import commodity. 
 
4. (U) Prices for imported food items have increased significantly 
in recent months.  The Consumer Price Index (CPI) of February 2008 
showed an increase of 2 to 18 per cent on common food items.  The 
rise in price of cooking oil, wheat and rice flour has created a 
slight increase in prices for other food staples like bread and 
noodles.  According to news reports, flour imports have been 
disrupted, due to the short supply regionally.  The consumer market 
has remained stable however, and we have not observed any shortages 
or other significant impact. 
 
5. (SBU) Although it is not clear if global rising food and 
community prices was the cause, the Sultan focused on the importance 
of developing domestic agriculture in Brunei's economic 
diversification plans in his speech opening this year's Legislative 
Council session (ref B).  US$76 million was allocated over five 
years for agricultural development under Brunei's 5-year 9th 
national development plan beginning 2007. 
 
 
SKODON