City to get auction market for basic goods

Damar Harsanto, Jakarta

In a bid to maintain supplies and prices of basic commodities during peak seasons, the city administration and the Jakarta Chamber of Commerce and Industry will establish an auction market to link producers with potential buyers.

"Not only Jakarta, several other provinces will also have similar auction markets that will be launched simultaneously by President Megawati Soekarnoputri via a teleconference on Monday," chamber chairman Pungky Bambang Purwadi told a media briefing at City Hall on Thursday.

Megawati is scheduled to be in Makassar, South Sulawesi, at that time for an undisclosed purpose, said Pungky.

Pungky said the market would facilitate the auction in which producers could negotiate directly with buyers.

Producers would include farmers, cooperatives and middlemen who register with the auction market management, while buyers would comprise traders, and consumers such as supermarkets, hospitals, hotels, restaurants and wholesalers.

"This way, hopefully, we can protect farmers or producers from middlemen who exploit them by buying their products at low prices and selling them at high prices, and at the same time ensure a stable supply of basic goods in the markets. Therefore, it would stave off the widespread practice of price-fixing," said Pungky.

Price-fixing is commonplace during holidays -- such as the fasting month, Idul Fitri, Christmas and New Year, when demand is high, because producers or farmers are not aware of the market situation, according to Pungky.

"At times, farmers simultaneously produce certain agricultural products, which amount to an excess in supply that exceeds demand and in turn causes market prices to plunge. At other times, they do not produce the commodities that are in high demand, causing the market prices to rise," he explained.

Through the auction market, the producers and buyers could enter into a legally binding contract to produce certain products of a fixed quality to trade at a particular time and at a fixed price agreed to by both parties.

The market would also impose quality standards for the auctioned products.

Aside from agricultural products, other items to be auctioned are products from plantations, animal husbandry, fisheries, forestry as well as processing industries.

The auction transaction would be guaranteed by city-owned Bank DKI.

"For the time being, the chamber of commerce will not impose any fees on the transactions. But, we plan to impose a maximum fee of 1 percent of the transaction if the system runs well," Pungky added.