Logistics agency gets new boss

Logistics agency gets new boss

JAKARTA (JP): The Indonesian government separated the function
of the National Logistics Agency (Bulog) from the office of the
state minister of food yesterday amid growing concern over the
steep rise food prices, in particular the price of rice.

The separation was effected when Minister/State Secretary
Moerdiono promoted Beddu Amang from deputy chief to new chief of
Bulog, replacing State Minister for Food Ibrahim Hasan, who had
held the post since March, 1993.

"We cannot let the market control the prices of staple foods
because there are basic differences between the mission of
private institutions, on the one hand, and state institutions, on
the other," Moerdiono said, adding that private sector is purely
profit-oriented, while Bulog's mandate is to stabilize prices.

He said that Bulog must intervene, whenever the prices of food
staples are soaring, by releasing its stocks.

Moerdiono added that food price stability is crucial to
curbing the inflation rate.

The government has been greatly concerned over the high
inflation rate in recent months, which is mainly due to steep
rises in the prices of food commodities, notably rice.

For the month of January alone, the inflation rate was already
1.16 percent.

Bulog was set up in 1967 by the Soeharto administration to
manage the distribution of basic food commodities in a bid to
maintain food security at reasonable prices.

Owing to its important role, Moerdiono ruled out any
suggestion of privatizing Bulog. "I have never thought of
privatizing Bulog."

Beddu Amang, who has been in Bulog for over 20 years, noted
that the idea of privatizing Bulog had been sparked by public
debate about the country's high cost economy.

"The debates have led to the provocative idea of privatizing
Bulog or making it a source of profit for the government," Beddu
said in a press conference immediately after his installation..

He said those who wanted to privatize Bulog did not really
understand Bulog's special role in the country's economy.

The government announced last October that the floor price of
husked rice paid by Bulog to village cooperatives was to be
increased by 11 percent to Rp 657 per kilogram beginning in
January but retail prices have risen much more steeply in recent
weeks.

Analysts say that the gap between Bulog's floor price and
retail prices should not be higher than 30 percent.

According to the ministry of agriculture, last year's
production of unhusked rice was estimated to reach only 46.4
million tons, down by 3.69 percent from 48.18 million tons in
1993.

The decrease in rice production has forced Bulog to import
rice and prompted the government to recall, ahead of schedule,
its rice loans to several governments, in order to add 900,000
tons to the national stock.

"The last two years were difficult years. We had drought,
floods, the problem of distribution, transportation, the
diminishing rice stocks and the importation of rice," State
Minister of Food Ibrahim Hasan told journalists.

Long time ago

Moerdiono, however, ruled out any notion that the separation
between Bulog and the office of the food minister had been
prompted by a failure on Ibrahim's part to secure the country's
rice self sufficiency.

"President Soeharto planned a long time ago to separate the
functions of the two institutions, given their important roles,"
Moerdiono said.

"The task of the minister of food is so important that he
should not be burdened with other duties of equal importance,"
Moerdiono added.

The government has assigned to Bulog the task of stabilizing
the prices of such basic food commodities as rice, sugar,
soybean, wheat, corn.

He explained that, after the separation, the office of the
state minister of food will be able to focus its attention on
policy, while Bulog will concentrate on price stabilization.

Moerdiono defended Bulog's monopoly on certain commodities,
provided it is for the purpose of ensuring the stability of basic
food prices for the people.

"For macro-economic strategy, Bulog's role is still needed to
maintain economic stability because up to now the prices of food
staples have weighed heavily among the components of the consumer
price index, which is the measure of our inflation," Moerdiono
said. (rid)