Rice exporters are calling on the government to revise a partnership deal between the state-owned Public Warehouse Organisation (PWO) and GGF Group, a Malaysian-Thai joint venture that wants to set up silos in several provinces and handle rice exports.

"Though the company has yet to set up a single silo, something peculiar is happening, as it has been circulating letters to international traders claiming it is the authorised representative to sell rice for PWO," said Chookiat Ophaswongse, president of the Thai Rice Exporters Association.

"We're afraid that in the future GGF Group will undercut rice prices, hurting overall Thai rice exports."
GGF Group signed a memorandum of understanding on rice co-operation with the PWO last month. GGF said it planned to invest US$200 million to build, own and operate 400 high-tech silos in 10 provinces to store 2 million tonnes of rice.

Each nine-storey silo can hold five thousand tonnes of rice. Construction is to be completed within two years.

Under the agreement with GGF, the PWO would get priority to lease the silos and would act as a broker to procure rice once the company secures purchase orders. The PWO would earn a 2% commission of the export price.

The association issued a letter to Prime Minister Abhisit Vejjajiva to revise the deal.

"Why are we allowing foreigners to do business in a manner that directly competes with Thai exporters?" Mr Chookiat asked. "More importantly, we're not sure of the price of rice at which the PWO is going to sell to GGF."

Yongyos Palanitisena, the acting PWO president, denied GGF's claim that it was appointed by the Commerce Ministry as the authorised representative to sell up to 2 million tonnes of rice yearly.

"I want to reiterate that the deal with GGF is just a memorandum of understanding to appoint GGF as the PWO's marketing representative to find potential buyers. A portion of PWO's rice supply may come from local exporters," said Mr Yongyos.

"The memo is not legally binding as the PWO has given no promise of an amount of rice to be kept in the company's silos."

Mr Chookiat said exporters were also sceptical of GGF's registered capital of only one million baht, as some believe the company was founded by special interests to earn commissions.

Source: Bangkok Post