Govt's plan on Bulog hailed

JAKARTA (JP): Businesspeople and analysts hailed yesterday the government's plan to scrap the National Logistics Agency's (Bulog) trading monopoly in several commodities.

Businessman Sudwikatmono, an executive at the Salim Group, said he welcomed the government's decision and said the group's PT Bogasari Flour Mills, which holds the exclusive rights to mill Bulog's wheat into flour, had anticipated it.

"If that really happens, it's all right. We are happy with that," Sudwikatmono told journalists after attending PT Indocement Tunggal Prakarsa's extraordinary shareholders meeting.

"We have prepared everything for the ASEAN Free Trade Area (in 2003). It is in this context that we have also decided to restructure Indocement," he added.

Coordinating Minister for Economy and Finance Saleh Afiff reaffirmed yesterday the government's plan to abolish Bulog's monopolies in food commodities, except rice.

"If I have the full authority, I will slash them all, except for rice, our national staple, which I will not touch at all," Afiff asserted in reply to questions of reporters yesterday who seemed still doubtful about the seriousness on the part of the government.

He admitted that the plan was facing strong objections from several ministers.

"Some ministers are complaining. But we will try our best to reach a consensus," Afiff said, adding that Bulog's role would be one of "price stabilizator" for basic food commodities, especially rice.

Economist Didik J. Rachbini also welcomed the government's plan to end Bulog's monopoly, calling it a good step to reduce market distortions in several commodities.

Bulog could now concentrate on maintaining price stability, he said.

But he said the planned deregulation was a "little late".

"After decades of holding the exclusive rights to mill Bulog's wheat into flour, who can now challenge Bogasari's domination in wheat flour?" he asked.

He said any newcomers would find it extremely difficult to make inroads to the wheat flour market which has been dominated by Bogasari, he said.

Saleh Afiff said Wednesday the government planned to end Bulog's trading monopoly in wheat, soybeans, garlic, onions and sugar.

But Afiff said this measure was not related to the Salim Group's controversial restructuring which would inject PT Indofood Sukses Makmur, which controlled Bogasari, into its Singapore-based subsidiary QAF Ltd.

Afiff said the removal of the monopolies would also be in line with "our preparations to meet the challenges posed by economic globalization".

He added that the removal of trading monopolies would greatly stimulate new investment in those commodities and would eventually enable the country to produce not only for the domestic needs but also for the international market.

Bulog's public relations official Masykur Sulaiman said yesterday the agency was prepared to carry out whatever decisions the government would take regarding the agency's trading monopoly.

"Bulog has so far been successful in maintaining stability in the price of the commodities under its monopoly. Stable prices have supported the government in containing inflation," Sulaiman said.

"Bulog is the last line of defense in stabilizing the national economy," he asserted.

Franciscus "Franky" Welirang, another executive of the Salim Group, said he did not see any relationship between the government's market move, restructuring or Bogasari's businesses.

He contended that Bogasari was already well-positioned to compete freely with other flour milling companies if Bulog lost its wheat and flour monopoly.

"We are now the most efficient wheat miller in the country," Welirang said.

There are two other flour milling companies: PT Berdikari Flour Mills in South Sulawesi, whose management is also controlled by Bogasari, and the newly established PT Citra Flour Mills in Cilacap, Central Java.

Bogasari, Welirang said, received a fixed milling fee of Rp 83.7 (3.1 U.S. cents) per kilogram of wheat from Bulog. The fee included the costs of unloading the wheat from cargo vessels, storing, milling, packaging and loading the flour into trucks.

"Is that figure too expensive? I don't know. It costs about Rp 30 to mill a kilo of unhusked rice," Welirang said.

Economist Christianto Wibisono of the private Indonesia Business Data Center suggested the government pursue a gradual liberalization in commodity trading, which had existed for two decades.

"The problem is that we don't know the actual market condition now because the trading of those commodities has been managed by Bulog for over 25 years. Bulog has become so strong while the protected farmers remain weak," he said.

He suggested the government start by liberalizing wheat and sugar trade. But Bulog should be allowed to retain the rice monopoly.

"People are presently worried about the price of food items, especially rice, and their supply because of what has been happening to the rupiah," economist Christianto Wibisono said.

The rupiah declined sharply against the dollar following speculative attacks since early July but has since regained some ground.

Bulog has been assigned to ensure stable prices of so-called strategic food commodities and has an import monopoly on rice, wheat and wheat flour, refined sugar, soybeans, garlic and onions.

Bulog purchases rice at the government-set price from farmers for its buffer stock, currently at about three million tons and sells it on the market when the price rises steeply. (08/jsk/das/rid)

Editorial -- Page 4