Govt to discontinue rice subsidy for 565,000 families

Moch. N. Kurniawan, The Jakarta Post, Jakarta

Over 550,000 poor families will no longer receive government assistance through "Rice for the Poor" program in 2003 due to a reduction in the subsidy and anticipated higher rice prices, the State Logistics Agency (Bulog) chief said on Wednesday.

"The government has agreed to earmark subsidized rice for 9,224,675 poor families next year, down 565,325 families from 9,790,000 this year," Bulog chief Widjanarko Puspoyo told a hearing at the House of Representatives Commission III on agriculture, forestry and maritime affairs.

He said the government would reduce the budget allocation for the rice subsidy to Rp 4.2 trillion (US$471,900) next year from Rp 4.7 trillion this year.

The statement came a week after the government signed for a US$60.5 million grant from the United Nations World Food Program (WFP) to provide food for the poor, refugees and to finance food- security programs in the country.

The grant consists of $37 million worth of foodstuffs, including 172,800 tons of rice, 2,920 tons of beans, and 1,460 tons of cooking oil.

The fewer subsidy recipients does not reflect a decrease in the number of the poor, as Widjanarko said the central government was unable to cover all poor families' needs and would shift part of the burden to regional governments.

"Don't forget that the program is just a supporting program to help poor families in the region. The regional government must be responsible to help the poor in the region," he said.

The number of people who will no longer enjoy the subsidy could surpass 2 million, based on the estimate that a family consists of four people.

According to the National Family Planning Coordinating Board data, there are about 14.7 million poor families across the country.

Widjanarko said the basic price of rice was expected to reach Rp 3,432 per kilogram next year from Rp 3,414 per kilogram this year.

Rice for the poor will be sold at Rp 1,250 in 2003.

"With the reduced subsidy and projected higher price of rice, fewer poor families will receive subsidized rice," Widjanarko said.

Bulog will allocate 2.2 million tons of rice for the program next year, in which a family could receive a total of 20 kilograms per month, according to Widjanarko.

The program was launched this year to assist poor families, funded from the state budget and social compensation fund.

It emulates the special market operation program (OPK), which was first conducted in 1998 in the wake of the economic crisis. The previous program was funded by the World Bank.

The rice was distributed to poor families by the Village Resilience Board (LKMD), generally considered a corrupt organization at the village and district administration level.

Many irregularities were reported in the implementation of the market operation program, including corrupt officials selling the rice at a price higher than that set by the government and rice being distributed to non-needy families.

Moreover, most of the funds allocated for the social safety net program fell prey to corruption by a number of politicians, due to a lack of adequate internal controls.

The World Bank stopped channeling funds to the program in 1999.