Govt to set up new agency to replace Bulog

Govt to set up new agency to replace Bulog

JAKARTA (JP): The government plans to set up a new body by
December to replace the State Logistics Agency (Bulog) in another
bid to improve the distribution of staple foods in the country,
Minister of Industry and Trade Rahardi Ramelan said on Tuesday.

Rahardi, the agency's acting chairman, said he was currently
preparing documents relating to the establishment of the new
agency, which he expects to be set up in December.

He said the government would not place the new agency under
the supervision of the industry and trade ministry as it has done
with Bulog because the functions of the two institutions are
completely unrelated. He also said he would not head the new
agency.

Bulog has for a long time been notorious for its indulgences
in collusive practices relating to the distribution staple food.
It has also been singled out as a target for reform by the
International Monetary Fund (IMF).

In the past, it awarded lucrative import and distribution
contracts to business groups controlled by well-connected people
such as the tycoon Liem Sioe Liong, who founded and controls the
giant Salim Group.

Bulog chairman Beddu Amang was sacked from his position in
late August and replaced by Rahardi Ramelan.

The agency is now only in charge of importing rice and
distributing it throughout the country, although until recently
it held similar monopoly rights over soybean, wheat, sugar and
cooking oil imports and distribution.

In June, the government removed the agency's exclusive rights
to import and distribute the four commodities after first cutting
subsidies on their sale in accordance with the terms of the
reform program agreed with the IMF in return for emergency funds
to rescue the country's ailing economy.

The IMF director for Asia and Pacific affairs, Hubert Neiss,
has said that Bulog's role will alter dramatically in the coming
years, leaving an agency still active in the distribution of
rice, but in competition with private traders and subject to
market forces.

Meanwhile, Minister of Agriculture Soleh Solahuddin suggested
that the new body should be placed under his ministry, given that
the two institutions' remits are related to agribusiness and
commodities.

Soleh said at a hearing with the House of Representatives that
he believed the distribution of food commodities would improve if
the agriculture ministry was given full authority over crop
cultivation, processing and marketing.

"But the final decision on Bulog's status lies in the hands of
the president. I will not force my desire," he told members of
House Commission III for agriculture and food affairs.

Members of the House commission said they were averse to the
government's plan to eliminate Bulog, saying the country still
needed Bulog as a buffer stock agency to stabilize prices,
especially for rice.

"Bulog has long experience of distributing rice and it will
not be easy to fill the role it has played because rice is a
political tinder box in this country," legislator Umbu Mehang
Kunda, who chaired the commission said.

Umbu said the government should improve Bulog rather than
establish a new agency which will take time to learn the ropes.

"The establishment of a new agency will only cause a deadlock
in buffer stock activities," he said. (das/gis)