BI guarantee fertilizer imports

JAKARTA (JP): Bank Indonesia, the central bank, will guarantee letters of credits issued by local banks to import fertilizers, Minister of Industry and Trade Rahardi Ramelan said on Tuesday.

Rahardi, who is also the chairman of the State Logistics Agency (Bulog), said the central bank would provide a guarantee of about US$1 billion.

"The decision was taken in the limited Cabinet meeting on economy this morning (Tuesday)," Rahardi said in a hearing with the House of Representatives' Commission III for agriculture, forestry and plantations, transmigration and food affairs.

He said the facility could be used to import Tri Superphospate (TSP), superphospate 36 (SP36) and potassium chloride (KCl) fertilizers.

"Private companies and PT Pusri (state-owned fertilizer producer PT Pupuk Sriwijaya) could not import the fertilizers without the L/C guarantee."

He said Bank Indonesia's guarantee was important because overseas banks were still reluctant to accept L/Cs issued by Indonesian banks.

Local prices of fertilizers will not be affected by the circulation of imported fertilizers because prices have reached international levels.

Rahardi explained the government would retain PT Pusri to distribute fertilizers to farmers through village cooperatives despite alleged unscrupulous practices by its officials.

"No one could distribute fertilizers better than Pusri because it has long experience in fertilizer distribution and owns warehouses throughout the country."

The government decided to lift subsidies on fertilizers and remove all restrictions on their trade on Dec. 1. The new measures mean that fertilizers can be imported and distributed to farmers through cooperatives and retailers at the market price.

PT Pusri previously held a monopoly on the import of subsidized fertilizers.

Minister of Agriculture Soleh Solahuddin said separately on Tuesday that Pusri would distribute 45,000 tons of urea starting Dec. 8 to fulfill demand from farmers along the northern coastline of Java.

"Pusri will import 14,000 tons of KCl fertilizers, 30,000 tons of TSP and 26,000 tons of ZA, and they will be available to farmers by the end of December," he said in a news conference.

Soleh said Pusri's current stock was 150,000 tons of urea, 30,000 tons of SP-36, 25,000 tons of KCl and 13,000 tons of ZA.

"We expect that with the L/C guarantee for private importers, imported fertilizers can be distributed in January."

At the hearing, Rahardi also assured there would be an adequate supply of foodstuffs for the upcoming Christmas, New Year and Idul Fitri festivities which all fall within a three- week period.

"Bulog has anticipated the increased demand during the three holidays, despite the decline in people's purchasing power. So they will be no scarcity of foodstuffs."

Rahardi said the government projected the country would need 6.61 million tons of rice, 812,000 tons of sugar, 478,000 tons of wheat flour and 201,600 tons of cooking oil during the period of the festivities.

He added that the national rice stock during the period would reach 6.1 million tons.

"To meet the demand, and to strengthen our national stocks, Bulog will import 849,650 tons of rice in December."

He said the import was needed because local production could not meet domestic demand.

Rahardi said Bulog would also import 383,000 tons of sugar because national stock was estimated to reach only 429,000 tons.

It will not import wheat flour and cooking oil because stock would exceed demand during the festivities, he added. (gis)