Food subsidies for industries to end

JAKARTA (JP): The government is to import only essential foodstuffs for household use and is encouraging industries to import food of a quality that meets their needs, a minister said yesterday.

"We will only import food for household consumption, not for industrial use," State Minister of Food, Drugs and Horticulture A.M. Saefuddin told reporters following a meeting on essential food items with other economic ministers.

Industries would be free to import their essential food items, including sugar, flour, cooking oil, and soybeans, he said.

He explained that the new policy would eliminate subsidies such as the sugar subsidy that had been enjoyed by beverage producers for years.

"The nine essential food items for household consumption will continue to be subsidized," he said, pointing out that the imports would use a subsidized exchange rate of Rp 6,000 to the U.S. dollar.

He reiterated, however, that subsidies on household foodstuffs would be eliminated by Oct. 1, except for rice, as agreed with the International Monetary Fund (IMF).

The rupiah is currently hovering at around Rp 10,500 to the greenback, compared to Rp 2,450 last July.

Saefuddin said that the new policy would become effective after being discussed at a cabinet meeting scheduled for next week.

Indonesia is currently experiencing its worst ever economic crisis and is being assisted by the IMF through its multibillion dollar bailout in exchange for sweeping economic reforms. One of these is that the import of basic food items is no longer monopolized by Bulog, the state logistics agency.

The government could no longer afford to continue subsidizing imported essential food items as it has a very limited budget due to the crisis. (rei)