Tue, 01 Aug 2000

Bulog to become state company next year: Ramli

JAKARTA (JP): The government will change the status of the National Logistics Agency (Bulog) to a state firm by June next year in a move to improve the agency's performance, Bulog chief Rizal Ramli said on Monday.

Rizal said that the change to a state company would allow for better transparency of the use of Bulogs' resources.

"Our target is that by June 2001 we will become a Perum, (a state firm with a social mission)," Rizal told a news conference jointly held by Bulog, state owned oil and gas company Pertamina and state owned electricity company Perusahaan Listrik Negara (PLN).

Bulog and the two companies, which in the past had been widely involved in practices of corruption, collusion and nepotism, unveiled their programs to eradicate such practices.

Independent auditor Arthur Anderson revealed that Bulog lost Rp 6.7 trillion (US$788 million) between April 1993 and March 1998, due to unfavorable business contracts, irregularities and weak supervision.

As a state firm, Bulog would be allowed to be involved in commercial activities, and its gains from such involvement could be used to partly cover the government's rice subsidies, he said.

Bulog, which was founded in the late 1960s, is responsible for the price stabilization of unhusked rice and the distribution of rice. The agency held the monopoly in the importation of wheat, sugar, soybean and several other basic commodities before the scrapping of such exclusive rights in early 1998.

According to Rizal, the agency could, for example, commercialize its 1,500 or more warehouses, of which less than five percent are currently used by Bulog.

He said the overcapacity resulted from corruption practices in the past where the agency's facilities were mostly built without any feasibility studies.

Rizal said he planned to follow the model of Malaysia's logistics agency Bernas, which had a similar role to Bulog but is now a publicly listed company in that country.

He said he would reorganize the agency so that within a year it was ready to engage in commercial activities.

Rizal, an outspoken government critic before being named as the head of the agency early this year, acknowledged that the idea to transform Bulog into a Perum within a year was opposed to by Bulog's senior officers, who would only accept a four-year transition period.

"I told them (Bulog officers) that I could not accept four years and this (transition) must be completed within one year," he said, adding that he was confident that he would receive wide support from Bulog's younger officers.

Rizal said he would immediately replace four of the five Bulog deputies within the first week of August, followed by several heads of regional logistics affairs boards (Dolog) within the second week.

"We want to see a younger generation that is more professional and can show more integrity," he said.

According to him, Bulog's younger employees also resent the "hanky-panky" behavior of their seniors.

Commenting on the nation's rice supply, Rizal said that Bulog would not sign any new contracts for rice imports this year, as rice stocks were more than adequate.


During the media conference, state oil and gas company Pertamina, state electricity company PT PLN and the Ministry of Forestry and Plantations also presented their plans to curb inefficiencies.

Pertamina president Baihaki Hakim said that Pertamina's restructuring program was largely based on inefficiency findings by independent auditor PricewaterhouseCoopers (PwC).

PwC found that Pertamina had lost US$4.69 billion during the period from April 1996 to March 1998, which was caused by inefficiencies, loss of income opportunities and future obligations.

He said in order to improve Pertamina's working efficiency, he would propose a restructuring of Pertamina's organization.

The proposal would include the replacement of presidential decree no 11/1990, signed by then president Soeharto, which regulates Pertamina's organizational structure.

Baihaki said he planned to submit his proposal to the government by mid August and expected a replacement decree to come out by September.

PLN president Kuntoro Mangkusubroto said that a PwC audit between 1995 and 1998 showed that PLN lost Rp 260 billion due to operational inefficiencies and $2.1 trillion due to investment inefficiencies.

He blamed these inefficiencies partly on governmental interference in PLN's operations.

For instance, he said, the Asian Development Bank (ADB), which was to finance the US$200 million Musi power plant in South Sumatra, had delayed its funding because of such practices.

"A senior government officer at the office of the Coordinating Minister for Economy, Finance and Industry called ADB and ordered it to delay the funding," Kuntoro said referring to a call by the anonymous officer three weeks ago.

He urged the government to stop this "telephone culture", saying that any decision should follow formal procedures.(bkm)