Malaysia tries to reduce reliance on food imports as inflation climbs

Malaysia tries to reduce reliance on food imports as inflation climbs
Associated Press
17 April, 2008
KUALA LUMPUR, Malaysia: Malaysia's government is planning strategies to boost food production in hopes of reducing the country's reliance on food imports and controlling inflation, an official said Tuesday.

A Cabinet panel led by Prime Minister Abdullah Ahmad Badawi has been set up to tackle rising consumer prices, Second Finance Minister Nor Mohamed Yakcop said. Authorities believe it is crucial for Malaysia to be more self sufficient in its food output, he said.

"This is because we know that in the long run ... inflation related to food products will remain for some time," Nor Mohamed was quoted as saying by national news agency Bernama.

The minister did not say what food products would be targeted. But officials have said in recent weeks they are worried about rice in the wake of a global surge in the commodity's prices.

The government gives financial aid to rice farmers, who produce about 70 percent of the country's rice needs. Malaysia imports the rest from neighbors such as Thailand, Vietnam and Cambodia.

The Agriculture Ministry has said it needs 6 billion ringgit (US$1.9 billion; €1.2 billion) in funds to cultivate new rice fields and improve infrastructure to boost rice production.

Malaysia's inflation rate accelerated to 2.7 percent in February compared to 2.3 percent in January — partly because of rising food prices. The central bank forecasts inflation will rise to 2.5-3.0 percent this year compared to 2.0 percent in 2007.