The panic buying<\/p>\n
The government's strong and fast move to flood the market with
\nstocks of basic necessities is indeed the most effective way of
\ncoping with the panic buying in several cities which was
\ntriggered on Thursday by the collapse of the rupiah's exchange
\nrate against the American dollar to more than Rp 10,000. Such a
\nfrenzied pace of buying, if it continues unabated for just a few
\ndays, would wrench a much more devastating impact on the
\neconomic, social and political stability of the country than the
\nplunge in the rupiah's exchange rate would likely pose. Scenes of
\nlong lines of buyers at shops are the making of a national
\ncrisis.<\/p>\n
Nonetheless, consumers cannot be blamed for having been so
\neasily incited into such irrational action. The economic and
\npolitical situation, especially since October when the rupiah
\nstarted its steep plunge, has been in such a shaky state that
\nrumors abound every day. Rumors often allow people to cope with
\nthe uncertainties of life by providing structure in an uncertain
\nsituation.<\/p>\n
The foundation or seeds of a rumor are planted when events
\nsuch as the current economic crisis and the upcoming succession
\nof national leadership are so important, while news or
\ninformation is lacking or ambiguous. Rumors explain things and
\nrelieve the tension of uncertainty, especially when some new
\nevents cannot be understood on the basis of established
\nassumptions. There is certainly a lot of tinder around and a
\nrumor, however, wild and irrational it may be, could easily
\nbecome the spark.<\/p>\n
Worsening the market jitters is the annual phenomenon whereby
\npurchases of consumer goods usually increase by up to 20 percent
\nduring the annual Ramadhan (Moslem fasting month) and the Idul
\nFitri holidays later this month. The highest monthly general
\nprice increase also occurs in that month. Unfortunately this year
\nmarket sentiment has been further damaged by the impact of the El
\nNio-induced drought which is affecting most food crops. The
\nsteady fall in the rupiah's value against the American dollar has
\nbeen fueling sharp rises of as high as 30 percent in the prices
\nof such imported food items as wheatflour, soybean, milk and
\nsugar.<\/p>\n
Despite all these unusual phenomenons, what took place on
\nThursday where even nervous rich men and women were seen carrying
\nbags of rice, sugar and other basic food items and loading them
\ninto their luxury cars parked at supermarket premises was nothing
\nother than panic buying. What most consumers did on Thursday was
\nnot simply purchase large amounts for fear of further price
\nincreases, but was already panic buying to the point of hoarding
\nfor unreasonable concern that basic food items might soon run out
\nof stocks.<\/p>\n
However, the inundation of the market with such basic food
\nitems as rice, wheatflour, cooking oil, and sugar, though quite
\nnecessary, is not enough to prevent another bout of panic buying.
\nThe government should act equally firmly and consistently to
\nfacilitate the smooth distribution of goods across the country.<\/p>\n
President Soeharto repeated in his Jan. 6 budget speech the
\ncrucial importance of removing all kinds of barriers to the
\nsmooth flow of goods through air, land and sea transportation.
\nSuch a directive has been issued many times every year over the
\npast 30 years. But lorry and bus drivers have always complained
\nabout the numerous illegal payments they have to make at police
\ncheck points. Shippers and forwarding companies are also
\ncomplaining about such illegal payments they have to give
\nofficials to avoid \"harassment\". The bitter fact is that such
\nofficial extortions tend to increase precisely during the
\nRamadhan month and the run up to the Idul Fitri holidays.<\/p>\n
The government has taken precautionary measures, including
\nimporting, to ensure adequate stocks of such food items as rice,
\nwheatflour, sugar and cooking oil. For example, the National
\nLogistics Agency has ordered two million tons of rice from
\nThailand, Vietnam and other Southeast Asian countries to
\nsupplement domestic production. Exporting crude palm oil and its
\nderivative products has also been banned. The government also is
\nstill subsidizing the prices of imported food items to curb
\nskyrocketing price rises as a result of the rupiah depreciation.<\/p>\n
What is urgently needed are firm and consistent measures to
\nprevent speculation and hoarding by profiteering businesspeople.
\nSuch measures, however, should be done in a fair and transparent
\nmanner to prevent market distortions which are anyway equally as
\ndamaging as the speculation itself. The government needs to act
\nstrongly and consistently against quasi monopoly and oligopoly in
\nthe production and trading of several essential commodities which
\nhave long been complained about by small businesspeople and
\nanalysts.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/the-panic-buying-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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