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)