Govt urged to draft antimonopoly law
JAKARTA (JP): Agriculture analysts hailed yesterday the government's decision to scrap the monopolies so far enjoyed by the State Logistics Agency (Bulog).
But they called on the government to prepare an antimonopoly law soon to ensure fair-trading practices.
Agriculture analyst Bungaran Saragih of the Bogor Institute of Agriculture said the dismantling of Bulog's monopoly over the import of several important commodities, such as sugar and wheat flour, had been anticipated for over 10 years.
"The scrapping of Bulog's monopolies is definitely a step in the right direction. But it has to be pursued with adequate rulings," he told The Jakarta Post.
Without a strong ruling, the reform would merely mean a handing over of the monopolies from Bulog to large private companies, he said.
Bungaran said although the move was good, it was also a painful adjustment because farmers would face more difficult times as their products would compete directly with imported agricultural products.
President Soeharto announced massive reforms, including the scrapping of a monopoly on the import of important commodities, as part of a deal tied to the US$40 billion-bailout package arranged by the International Monetary Fund to cope with the country's ailing economy.
The measure will come into effect next month.
Bungaran said the measure could mean a sharp increase in the price of commodities, something Bulog would normally try to stabilize.
To complement this action, domestic trade in all agricultural products will be fully deregulated, so traders will have the freedom to sell their goods whenever they want and to whom they want.
According to Bungaran, the reforms, if not complemented by adequate rulings, would lead to unfair income distribution, with farmers losing and traders gaining.
"The government has to improve the bargaining position of local farmers by strengthening farmers' economic organizations, such as village cooperatives.
He said with the farmers powerful bargaining position, Indonesia did not need to worry that the reform leading to agricultural products swamping the country's markets.
Executive director of the Center for Agricultural Policy Studies H.S Dillon shared Bungaran's view that the move should be followed up by the government's commitment to work out an antimonopoly bill.
"The newly announced economic reform needs to be completed with a promulgation of an antimonopoly law or equivalent rulings," he said.
"If the government does not take concrete action, the situation will be the same as before, and the abolition of monopolies will have no effect on the national economy," he said.
Dillon said the abolition of wheat and wheat flour monopolies would make PT Bogasari Flour Mills, Indonesia's biggest flour mill firm, more profitable, as the company had been processing wheat into wheat flour for over 25 years.
Dillon also said the government should not forget the fate of Indonesian farmers, since under the agreement, the government would reduce various import duties.
"The reduction of import duties is truly a threat to local farmers, although the import of various agricultural products is difficult to carry out due to the sharp drop of the rupiah's value against the U.S. dollar," he said.
Economist Anwar Nasution of the University of Indonesia told Antara from Bangkok that the agreement was solely aimed at restoring the health of the national economy.
But he said he feared the lifting of Bulog's monopoly on imported wheat would only benefit certain companies, such as Bogasari.
"But if the measure is implemented fully, productivity will improve and commodity prices will decline in the long term," he said.
Economist Sri Adiningsih of Gadjah Mada University said the reform expressed the government's desire to take the side of small farmers, which would have a positive effect on restoring public confidence.
She said with the scrapping of Bulog's monopolies, the price of food commodities would be based on market mechanisms.
"But the government has to provide tight and continued supervisory action," she said. (gis)