Bulog wants to regain commodity monopoly

Zakki P. Hakim, The Jakarta Post/Jakarta

The government's main commodity regulator, Bulog, wants to regain its total monopoly on all strategic commodities such as rice, sugar, corn and soybeans in the country, according to chairman Widjanarko Puspoyo.

Bulog has made preparations over the past year to be able to resume its exclusive role starting in 2007, he said on Wednesday during a hearing with the House of Representatives Commission IV for maritime, fisheries, forestry, agriculture and food.

"An organization as big as Bulog deserves to get the government's mandate in handling all the staple foods," he later told reporters on the sidelines of the meeting.

"I suggest all strategic commodities should be returned to Bulog."

For decades, Bulog had complete control of all the trade of several key commodities here as part of government's stated efforts to ensure supply and price stability. But the government terminated that exclusivity four years ago, following demands from the International Monetary Fund, which was providing bailout funds and economic consultation to revive the economy. Most professional economists contend that such monopolies hamper the economy and create inefficiency.

Elsewhere, Widjanarko said that the company had approached state-owned plantation companies PTPN IX, X and XI to take over their sugar factories in Central Java and East Java.

He said that under Bulog's new plan, the three factories would be merged into one very large and "efficient" factory. The plantation firms will then supply the sugarcane and other raw materials to the renovated factory for processing.

He added that the factory -- with a 200,000-ton capacity -- renovation costs would be approximately Rp 100 billion (US$11.11 million), much cheaper than the establishment of a new factory with the same capacity, which would likely be well over Rp 1 trillion.

He explained that many banks were ready to finance such a project.