Phuket’s charms have again helped the Kingdom build stronger international trade relations. Following weeks of intense negotiations, representatives from the world’s two biggest rice exporters, Thailand and Vietnam, came to Phuket to sign a memorandum of understanding (MoU) that will enable the two countries establish a joint rice-export price.

The landmark MoU signing, at the Metropole Hotel in Phuket City, comes just weeks after the signing of a free trade agreement between Thailand, Myanmar, India, Sri Lanka and Bangladesh, at Patong’s millennium Hotel.

The rice-export MoU lead to a stabilization in local prices and strengthen competitiveness in the world market. Deputy Commerce Minister Alongkorn Ponlaboot, who led the meeting, said Thailand and Vietnam had agreed to sign the MoU to fend off a swathe of price-cutting between the two competing rice producers.

"This agreement will ensure sustainable growth in rice exports, because Thailand and Vietnam are the world's biggest rice suppliers. Rice prices will be more stable, because both countries will stop undercutting each other’s prices," he said.

The two countries reached the agreement during the latest meeting between the Thai government and Vietnam Rice Cooperative in Hanoi earlier this week. The successful deal comes at the end of a seven-year effort to create a reference price for rice in the world market.

Thai Rice Exporters Association president, Chookiat Ophaswongse, said it was very difficult for two rice-export rivals to agree on a price-fixing scheme, but that his Vietnamese counterpart was enthusiastic to work with Thailand, because it would create more benefits for his country's farmers.

Vietnamese farmers should be able to generate higher incomes, because Vietnam's rice price has previously been much lower than Thailand's US$1-200 per tonne.

Thailand exports between eight and 8.5 million tonnes of rice, whereas Vietnam exports between 4 and 5 million tonnes per year.
Thai rice exporters have found it difficult to compete with Vietnam in recent years, because that country's rice price has been much lower than the Kingdom's.