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)