Impact of international rice price volatility on Malaysia’s rice imports

Purpose. This study examines whether international rice price volatility affects Malaysia’s rice import behaviour, defined as import flows or bilateral import volumes, and import structure or bilateral import shares, and assesses the moderating role of supply conditions in exporting countries. Methodology. As a small open rice-importing economy and a price taker in the international rice market, Malaysia’s rice imports are rigid for staple food security, which provides the theoretical basis for interpreting its import responses to price shocks. Using panel data from 2001 to 2024 covering Malaysia’s five major rice-exporting partners, this study employs a panel fixed-effects model. Import flows are measured as the logarithm of bilateral import volumes, while import structure is captured through import share ratios. Price volatility serves as the core explanatory variable, with the model incorporating exporting countries’ stock-to-use ratios, production capacity, and bilateral real exchange rates. Results. International rice price volatility exerts a negative but statistically insignificant effect on both import flows and import structure. However, the production capacity of exporting countries demonstrates a stable and significantly positive impact on import flows. Most interaction terms prove insignificant, although a weak lagged interaction effect emerges in the import structure model. This pattern suggests that supply availability is a more empirically robust determinant of Malaysia's bilateral import volumes than short-term price uncertainty, though both factors may interact in complex ways. Originality. This study extends the analysis of rice import determinants beyond static price-level effects to incorporate external market uncertainty. By examining Malaysia’s rice import behaviour through both quantity and structure dimensions, it provides a better understanding of how price volatility influences trade patterns in small open import-dependent economies. Practical implications. International rice price volatility does not significantly constrain Malaysia’s rice import behaviour directly, though it constitutes a persistent external pressure, whereas the direct effect of exporting countries’ production capacities is significant. Therefore, in the future, policymakers will need to implement a set of measures based on trade, diversified procurement, strategic reserves and supply chain monitoring, alongside sustained efforts to expand domestic production capacity.