KDI yet to receive guidelines for cooking oil sale

JAKARTA (JP): The Indonesian Distribution Cooperative (KDI) said on Saturday that it had not received any guidance or instruction from the government, despite last week's decision to make it the official distributor of cooking oil in the country.

KDI chairwoman Dewi Motik said that KDI, which groups 19 federations of cooperatives, was unable to begin the new job because it did not understand what it was supposed to do.

Last week, the government appointed KDI to take over the role played by the State Logistics Agency (Bulog) in the distribution of cooking oil as part of its efforts to improve the system used to distribute essential commodities in the country.

Motik said the government had notified her of the appointment, but added that the technical details of the contract remained unclear.

"We certainly need clear guidelines to carry out the job," Dewi added.

She said that all KDI provincial branches and officials were ready to distribute cooking oil, but said they needed clear guidelines to do the job well.

Last week, the government announced several changes in the distribution of cooking oil, wheat flour, sugar and soybeans. Subsidies on all these goods will be removed on Sept. 7, although the 60 percent tax on the export of crude palm oil will remain in place.

As a consequence, Bulog, which previously controlled the distribution of all commodities, will now only handle rice.

The government has projected that without the subsidy, the market price of cooking oil will rise to between Rp 4,600 and Rp 4,800 per liter. It is already above Rp 4,000.

Cooking oils, most of which are made of crude palm oil (CPO), have increased sharply in price since the rupiah fell drastically in value against the U.S. dollar.

Although the government has set a high export tax on CPO and its derivatives, large volumes have continued to leave the country, much of it smuggled. The resulting scarcity in supply has forced prices up to a level unaffordable for many Indonesians.

The government has tried a number of measures to ensure that a sufficient supply of cooking oil reaches the market at a lower price, but all have failed.

Analysts welcomed last week's decision to remove the subsidy on cooking oil, but urged the government to refrain from interfering further with trade in the commodity to allow the market to establish its equilibrium price.

They warned the government that it was repeating past mistakes by appointing KDI to play the role vacated by Bulog in the cooking oil distribution chain and said the appointment showed the government was merely shifting preferential status from big business to cooperatives.

They also urged the government to allow other parties to become involved in the distribution of cooking oil and lift the monopoly granted to KDI to avoid distorting the market.

Meanwhile, the director general of domestic trade in the Ministry of Industry and Trade, Ilchaidi Elias, said that several private cooking oil producers, including those belonging to the giant Sinar Mas Group, Salim Group, Bakrie Group and Astra Group, have pledged to supply KDI with a significant proportion of their output to help stabilize prices. (gis)