Government backtracks on plan to replace Bulog

Government backtracks on plan to replace Bulog

JAKARTA (JP): Minister of Industry and Trade Rahardi Ramelan
said on Thursday that despite reports to the contrary, the
government had not yet decided to replace the State Logistics
Agency (Bulog) with a new body.

Rahardi, Bulog's acting chairman, said the decision would be
taken after studies on the new role of the buffer stock agency
were completed and after the independent foreign auditor
appointed to review the workings of the agency had reported its
findings. The auditor is expected to finish work in December.

"My evaluation is not over. We do not yet know whether there
will be a new institution to replace Bulog," he told reporters at
a news briefing.

Bulog is currently in charge of importing and distributing
rice in the country. Similar monopoly rights over soybean, wheat,
sugar and cooking oil imports and distribution were removed last
month.

However, Rahardi said the government remained committed to
guaranteeing the supply of rice, which he explained was a
constitutional obligation.

"Whether it is Bulog or a different body, there will be an
institution to handle rice distribution in Indonesia," he said,
adding that the government intends to invite experts on the
economy and agribusiness to discuss Bulog's new role.

He said the government would uphold Bulog's existing
contracts, even if the agency is replaced by a new organization.

"As long as it's the government's obligation, we will bear the
responsibility," he said.

In the past, the buffer stock agency was notorious for
collusive practices which included awarding lucrative import and
distribution rights to well-connected business groups, especially
those controlled by Liem Sioe Liong, founder of the giant Salim
Group.

Rahardi said Bulog was currently playing a confused role,
sometimes acting to stabilize prices and other times being
required to work as a trading organization.

At least the decision in December will eliminate this
confusion, he said.

Auction

At Thursday's conference, Rahardi announced Bulog would start
to hold a monthly auction to sell the one million tons of wheat
and wheat flour remaining in the agency's warehouses. The
auctions will begin this month and last until February.

He said 150,000 tons of wheat flour would be auctioned on Oct.
28.

A further 200,000 tons of flour will be auctioned each month
for the next four months. If demand rises sharply in the holiday
month of December, the government will consider selling more than
200,000 tons, he said.

The auctions will take place at the agency's warehouses in
Jakarta, Semarang and Cilacap in Central Java, Surabaya in East
Java and Ujungpandang (South Sulawesi).

About 80 percent of the wheat flour will be allocated to 60
large-scale industries and 50 large distributors, while the
remaining 20 percent will be sold to around 3,000 small and
medium-sized industries, distributors and cooperatives, he said.

Small and medium-sized industries and distributors will be
allowed to bid for a minimum of one lot or 8.75 tons, while
large-scale industries and distributors must bid for a minimum of
six lots, he said.

The storage capacity, credibility and past performance of
companies interested in bidding will be scrutinized before the
auction takes place.

Rahardi said the government would give the remaining 310,000
tons of soybeans held in its stocks to the Indonesian Soybean
Curd Cake Cooperative.

The remaining 747,000 of sugar in its warehouses will be put
on auction. (das)