Rice: Symbols Of The Rice Market In Malaysia

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Rice is a major staple food of Malaysian in the daily diet especially to Malays, the largest population in Malaysia as rice is a symbol of traditional Malay culture. There are many of the Malays’ dishes such as Nasi Lemak, Nasi Briyani, Nasi Kerabu and others, most of them are rice-based, meaning that the consumption of rice in Malaysia is relatively high and lead to a high demand of rice in the market. Therefore, rice as an essential commodity plays an important agricultural part in Malaysia and it is subsidising by the Malaysia government. The rice market in Malaysia is in monopolistic competition. The reason for this is that Padiberas National Berhad (BERNAS) is the single firm that has license in importing rice into Malaysia and exporting rice to the neighbouring countries. About 45 percent of local rice demand in Malaysia is controlled by the firm. Further, the demand curve and supply curve of rice are not able to intersect freely and achieve equilibrium in the market due to the government intervention on the price of rice by subsidy. Subsidy can be defined as an incentive given by the government to groups or individuals to get rid of some burden and is often considered to be interest of the public. There are two types of subsidy; one is granted to the producers in order to stimulate production as subsidy lowers the cost of production of goods whereas the other type of subsidy is given to the consumers in the form of cash rebates or redemption coupon so that they can

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