Govt promises to cure cement trading network
Govt promises to cure cement trading network
JAKARTA (JP): Minister of Finance Mar'ie Muhammad announced
here yesterday the government plans to abolish the widely
criticized cement marketing system.
The minister said the order to review the cement marketing
system came directly from President Soeharto and that the change
is essential to stabilizing the country's cement trade.
"The improvement of the cement trading network is essential as
the unstable market could disturb the nation's development as a
whole," the minister told the Budgetary Commission of the House
of Representatives (DPR) during a preliminary deliberation of the
state budget for 1995/1996.
Under the current trading system, cement producers are
required to sell their products in designated areas at the
government-set local reference prices. The semi-monopolistic
system has been widely criticized as it enables cement producers
not only to control the distribution system but also the prices.
Bambang Warih Koesoemo of the Golongan Karya (Golkar) faction
said that the current trading system benefits only the producers,
which mainly control the ownership of most cement distribution
companies.
He said he suspected that the recent waves of cement price
hikes were planned by the producers in a conspiracy with their
distribution companies.
Cement prices in Jakarta and the country's other major cities
reached Rp 10,000 (US$4.5) per 40-kilogram sack in October, 35
percent above the reference price of Rp 7,200.
Government officials and cement industry executives said that
the sharp increases in cement prices, the second wave of price
hikes since July, were caused by the "too high demand". They said
the low reference prices had also prompted retailers to raise the
wholesale prices for higher profits.
Cement prices still stand high at between Rp 8,500 and Rp
9,000 per sack.
Bad debts
When asked about problem loans, both doubtful and bad loans,
at state-owned banks, the finance minister said that they reached
around 19.7 percent of their outstanding credits as of August
this year, lower than the 21.2 percent recorded in October last
year.
He said the problem loans at both state and private banks
reached around 13.6 percent of their outstanding loans as of
August, as compared to 14.4 percent in October 1993.
Mar'ie, who established a special team last year to oversee
the bad loans of state banks, did not explain the reason behind
the decline in the problem loans.
Bank Indonesia (central bank) Governor J. Soedradjad
Djiwandono said recently that the loan arrears in state banks
reached Rp 7.76 trillion as of August this year, as compared to
Rp 5.9 trillion as of December 1993.
The country's state banks, which control more than a half of
the bank lending market, have become notorious due to the bad
loan scandal, which broke into public view with the arrest of
businessman Eddy Tanzil last year. Eddy, the president of a
chemical business group, is now serving a 17-year prison term for
his part in raising loans of over Rp 1 trillion from the state-
owned Bank Bapindo trough illegitimate procedures.
Eddy is one of 50 businessmen who were reported to have
incurred bad debts of above Rp 100 billion each from the
country's six state-owned banks -- Bapindo, Bank Negara
Indonesia, Bank Bumi Daya, Bank Dagang Nasional, Bank Ekspor
Impor Indonesia and Bank Rakyat Indonesia. (hen)