Bulog to become state company next year: Ramli

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.

Pertamina

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)