Government backs Bulog, allows it to pursue profit

Government backs Bulog, allows it to pursue profit

A'an Suryana, The Jakarta Post, Jakarta

The controversial National Logistics Agency looks set to be
renamed and given the green light to expand its business dealings
and seek profit.

Documents obtained exclusively by The Jakarta Post show the
government will issue a decree allowing Bulog, to be renamed
Perum Bulog, to form joint ventures with other companies, to form
subsidiary firms and to invest funds in other companies.

Bulog will even been allowed to issue bonds to raise funds
subject to government approval, the draft decree, dated Jan. 20,
says.

The permission to seek profit was allowed in order to assist
Bulog perform its main duties, including to safeguard rice
stocks, it says.

The government previously said that Bulog's profits from
commercial activities could be used to partly cover the
government's rice subsidy program.

But, for a while, Bulog's commercial operations would be
limited to vital commodities, such as soybeans, corn, sugar and
rice.

Some experts have aired concerns over the government's move to
allow Bulog to seek profit, arguing it will encourage Bulog to
shift attention from safeguarding and stabilizing rice prices to
profit-making activities.

Founded in the late 1960s, Bulog was not only responsible for
the stabilization of rice prices, but also held a monopoly over
the importation of wheat, sugar, soybeans and several other basic
commodities.

Bulog's wide-ranging authority during the New Order era made
it one of the country's most strategic institutions.

However, the New Order government's tight grip over Bulog has
left corruption unchecked in the agency, as the regime often used
it as a cash cow to support its political operations.

After former President Soeharto stepped down in 1998, the
agency was hit by a series of financial scandals relating to its
past activities.

One recent scandal involved Akbar Tandjung, now the speaker of
the House of Representatives.

Akbar, who got Rp 40 billion in 1999 when he served as
chairman of the then largest political party, Golkar, cum State
Secretary, has been found guilty by the Central Jakarta Court of
embezzling the funds. The Jakarta High Court has upheld the
verdict, but Akbar has appealed to the Supreme Court.

Following the downfall of Soeharto, the government scrapped
Bulog's various monopolies at the request of the International
Monetary Fund (IMF) which organized a multi-billion dollar
bailout loan for the country.

The IMF has also called for Bulog to be financially
accountable and transparent.

Many clauses of the decree pertain to Bulog's accountability,
reflecting the government's main concern over the issue.

"The company is not allowed to cover the expenses of the
government departments and agencies," a clause of the decree
says.

The decree rules that the government must establish a
supervisory board, consisting of a maximum five senior government
officials to watch over its operations. The board members are all
appointed by the minister of finance for a period of five years.

The board should gather once every three months to evaluate
the company's performance, while the company has to submit a
report on its financial reports to the board every three months,
aside from submitting an annual report to the Minister of
Finance, the decree says.