Flour price protection

Flour price protection

It is almost certain that flour will be one of the most talked
about subjects in coming days: in reaction to its price increase
from Rp 681.91 to Rp 704,44 per kilo by the State Logistics
Agency. Although this represents an increase of only 3 percent,
the rise could trigger an increase in the price of other
essential commodities.

The problem that must be studied regarding the flour trade is
not just the price increase, but also the substantial disguised
government subsidy. According to a recent survey by the Institute
for Development of Economics and Finance, last year's flour
subsidy cost Rp 760 billion.

The logistics agency is Indonesia's sole importer and
distributor of flour. It sells to domestic flour processing
companies. According to the survey, 85 percent of Indonesia's
flour is processed by PT Bogasari -- a business group which
includes PT Indofood, which produces between 80 percent and 90
percent of Indonesia's instant noodles. The remaining 15 percent
is processed by PT Berdikari.

We understand the important role that the agency plays since
flour is one of our nine most essential commodities. But we fear
that if this monopoly -- which combines government and private
enterprise -- is allowed to go too far and is maintained too
long, the public's interests will be abused. After all, doesn't
too much concentration of power contradict the free market spirit
and principles which we so often hear about?

-- Bisnis Indonesia, Jakarta