Experts critisize RI's trade laws on soymeal<\/p>\n
By Hidayat Jati<\/p>\n
JAKARTA (JP): Several analysts warned yesterday that
\nIndonesia's complicated trade regulations on soymeal were causing
\nunnecessarily high costs to the national logistics agency, the
\nministry of finance, and to the feed, poultry and livestock
\nindustries.<\/p>\n
\"The overall policies are not efficient, particularly for the
\nlivestock industries, and they benefit only the domestic firm
\nwhich has the sole right to crush soybeans into soymeal and
\ncooking oil,\" Jacqueline L. Pomeroy, a consultant to the Ministry
\nof Trade, said yesterday.<\/p>\n
Pomeroy was analyzing the impact of the regulated soymeal
\ntrade in a paper presented during the second day of a World Bank-
\nsponsored conference on deregulation taking place at the
\nBorobudur Hotel in Central Jakarta.<\/p>\n
Under current regulations, only the National Logistics Agency
\n(Bulog) is allowed to import and market soybeans. The government
\nhas appointed only one domestic firm to process the beans to
\nproduce soymeal and cooking oil at a given fee.<\/p>\n
The soymeal is then returned to Bulog who sells the commodity
\nto the feed and livestock industries at prices higher than the
\nthose on the world market.<\/p>\n
Imports of soymeal are still complicated today although the
\nregulations are more relaxed as compared to those in 1988 (see
\ntable).<\/p>\n
The cooking oil extracted during the crushing of the soybeans
\nis retained by the crusher who then markets that value-added
\ncommodity domestically and overseas.<\/p>\n
\"Up until 1993, Bulog sold the soybean meal produced by the
\ndomestic crusher to feedmills in Indonesia at a price around 50
\npercent higher than import prices,\" Pomeroy told The Jakarta Post
\nduring a coffee break.<\/p>\n
Impact<\/p>\n
The World Bank, in its 1994 Country Report on Indonesia,
\nargued that the complicated soymeal policies had been costly for
\nvarious industrial users, especially the poultry industry, which
\nthe Bank named as \"one of the most dynamic sectors of the
\nIndonesian economy with annual production growth of 25 percent
\nrecorded in the past decade\".<\/p>\n
Using the 1988 policy (see table), Pomeroy said that the
\ncrushing firm, which she declined to identify, had an annual meal
\noutput of 249,000 metric tons, while its annual capacity was
\nabout 300,000 tons.<\/p>\n
The crusher gains about 46,000 metric tons of soybean oil per
\nyear, Pomeroy said.<\/p>\n
Pomeroy said that the crushing fee for the domestic firm, at
\nleast up until 1991, was as high as Rp 30.41 (about 13 U.S.
\ncents) per kilogram.<\/p>\n
\"The fee set by the Ministry of Finance is higher than that
\npaid to crushers anywhere else in the world,\" she said.<\/p>\n
She added, however, that the increase in cooking oil prices
\nover the past two years may mean that the crushing fee has fallen
\nto about eight rupiah per kilogram.<\/p>\n
\"But I don't know for sure since it's extremely difficult to
\nextract information from the firm,\" she said.<\/p>\n
The crushing fees paid by Bulog to the contractor are not
\navailable to the public.<\/p>\n
Sarpindo<\/p>\n
Although Pomeroy refused to name the firm in question,
\nreliable sources (all of whom requested anonymity) said that the
\ncrusher was PT Sarpindo, whose mill is located near the Tanjung
\nPriok port in the same compound with another monopoly, wheat
\nprocessor PT Bogasari Flour Mill.<\/p>\n
Pomeroy described the soybean crushing mill as having highly
\nsophisticated technology and a fully automated crushing
\noperation.<\/p>\n
She estimated in her paper that the domestic firm's initial
\ninvestment in plant and equipment was approximately $50 million.<\/p>\n
Although it is not immediately clear who controls Sarpindo,
\nthe sources speculated yesterday that the company could be owned
\nby a consortium consisting of the Salim family, timber baron
\nMohammad Hasan, shipping tycoon Setiawan Jody and some other
\npolitically well-connected businessmen.<\/p>\n
None of those parties were available for comment yesterday.
\nSimilarly, no Sarpindo staff or Bulog officials were willing to
\ncomment on the claims contained in the conference paper.<\/p>\n
\"In return for the high crushing fees, the opportunity costs
\nforegone by the government have been enormous because Sarpindo
\nhas complete control of the cooking oil...On top of that, the
\nfeed, poultry and livestock industries are also disadvantaged,\"
\nsaid one of the sources yesterday.<\/p>\n
Another source said yesterday that, if the local-content
\nrequirements regarding soymeal were completely abandoned and the
\ngovernment allowed other soybean crushers to exist, \"there is no
\nway Sarpindo could survive.\"<\/p>",
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