Govt urged to draft antimonopoly law

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)