Govt confirms end of Bulog monopolies

Govt confirms end of Bulog monopolies

JAKARTA (JP): The government has asserted that it has
abolished the monopolies of the State Logistics Agency (Bulog),
except in rice, but that it would continue to subsidize prices of
imported staples to ease the suffering of poor people.

"The government has ended Bulog's monopolies in sugar and
wheat flour in line with the IMF-brokered reform package,"
Minister/State Secretary Moerdiono said yesterday.

Moerdiono added that trading companies could now import food
items such as sugar, wheat flour, soybeans and cooking oil.

"However, the government sees it as quite essential to
continue subsidizing the prices of these basic staples to help
the common people," he said after a meeting with President
Soeharto.

Moerdiono, Minister of Industry and Trade Tunky Ariwibowo and
secretary-general of the President's Economic and Monetary
Resilience Council Widjojo Nitisastro met with Soeharto yesterday
at his private residence on Jl. Cendana to discuss the country's
latest economic developments.

The government is subsidizing prices for the people and not
for the importers, he said, adding that the subsidies covered the
difference between the prevailing rupiah exchange rate and the Rp
5,000 rate fixed by the government for the importation of basic
staples.

The rupiah ended yesterday at 9,450 against the U.S. dollar.

The rupiah has depreciated in value by about 75 percent
against the dollar since Asia's currency crisis began in Thailand
last July.

Bulog chairman Beddu Amang said recently that a foundation set
up by Bulog employees and several private-sector investors was
creating a new company to operate in the distribution of
commodities previously monopolized by the agency.

Moerdiono said the meeting with Soeharto also touched on
recent moves by the Association of Indonesian Wood Panel
Producers (Apkindo) which plywood companies alleged to be an
attempt by the association to create new cartel-like operations
in the export and shipment of plywood.

"Apkindo director Tjipto Wignjoprajitno has revoked his
directives to plywood companies," Moerdiono added.

The Apkindo directives cited by Moerdiono were issued Jan. 29.
One of them obliged plywood companies to transfer to Apkindo's
bank account Rp 50,000 for each cubic meter of plywood exported
as a bond to ensure they complied with a reporting obligation
imposed by Apkindo.

The directive was criticized by most plywood companies and
analysts as a new attempt by Apkindo chairman Mohammad "Bob"
Hasan to revive cartel-like trading in plywood, which had been
abolished early this month as part of the IMF-brokered reform
package.

Another Apkindo directive established a shipping service
center which most plywood companies alleged to be a move by Bob
to give preferences to his shipping company, PT Karana Lines, in
the shipment of plywood exports from Indonesia.

"Plywood companies are now free to use shippers of their own
choice," Moerdiono said.

"At our meeting, President Soeharto also reaffirmed his
instruction that bans local administrations from imposing levies
on exports," he added.

Trade surplus

Tunky said Indonesia recorded a 70.96 percent increase in its
trade surplus in 1997, partly due to a drop in imports.

The minister said the trade surplus stood at $11.77 billion,
up sharply from $6.89 billion in 1996.

Imports in 1997 dropped to $41.66 billion from $42.87 billion
in 1996.

Last year, the country's exports totaled $53.44 billion,
$11.62 billion in oil and natural gas and $41.82 billion in non-
oil goods.

Tunky, however, said Indonesia's exporters, most of whom
import much of their raw materials, were still haunted by
possible shortages of raw materials because letters of credit
issued by Indonesian banks -- even by Bank Indonesia itself --
were often rejected by banks abroad.

"The rupiah depreciation has increased our product
competitiveness. However, despite the weakening of the rupiah,
our exporters are also facing difficulties in importing their raw
materials," Tunky said.

Indonesia's top 10 exports from January to November last year
included textiles, electronics, wood-processed products, coconut
and palm oil products, shoes and footwear, pulp and paper and
basic chemical products.

Textiles, electronics and wood-processed products controlled
47.6 percent of the non-oil exports. Textile exports amounted to
$6.57 billion, while wood-processed goods totaled $5.61 billion
and electronics were about $3.07 billion.

The export of coconut and palm oil products was valued at
$2.19 billion. It was followed by rubber at $1.78 billion, shoes
and footwear at $1.72 billion, steel, machine and automotive
products at $1.59 billion, pulp and paper at $1.28 billion, food
and drinks at $1.02 billion and basic chemical goods at $907.34
million. (prb)