Malaysia agrees to help finance Indonesia's rice imports

JAKARTA (JP): Minister of Trade and Industry Rahardi Ramelan said on Monday that Malaysia had pledged to finance the procurement of 500,000 metric tons of rice for crisis hit Indonesia.

Rahardi, who is also the chairman of the State Logistics Agency (Bulog) told reporters of the results of his visit to Malaysia with President B.J. Habibie last week, "The Malaysian government will provide the finance for the rice, but it will be up to us (the Indonesian government) to decide how to obtain it."

"We expect the rice procurement to be realized in the 1999/2000 fiscal year."

Rahardi, however, did not reveal details of the funding scheme from Malaysia.

He said that aside from the 500,000 tons of rice, the country still needed to import another 1.8 million tons of rice during the 1999/2000 fiscal year.

"Bulog had obtained 2.28 million tons of rice from local farmers as of June 28. Our domestic procurement exceeded the earlier target of 1.5 million tons due to the good harvest," he said.

The agency, he said, planned to acquire at least 2.3 million tons of rice by the end of this year.

Rahardi said that Bulog had so far procured rice from overseas through government-to-government loans and competitive bidding.

"Earlier this month there was an open tender for 75,000 tons of rice to be imported," he said.

The agency would use a US$126 million loan provided by the Islamic Development Bank to obtain the 75,000 tons rice bought through the tendering process, he said.

Rahardi said in July, Bulog had also bought 800,000 tons of rice from Thailand in a deferred payment scheme from two companies at $216.90 per metric ton.

"During my term as Bulog's chief, I have never bought rice through direct appointment. The rice was bought either through the open tender process, limited tender and selective bidding," he said, while denying that the 800,000 tons of rice was bought in a direct purchase.

Bulog closed import contracts for 5.3 million tons of rice in the last fiscal year, which ended in March, but due to payment difficulties only 4.8 million tons were delivered. The remainder will be shipped in this fiscal year.

More than half of the imports were financed by foreign grants and loans.

Rahardi said that the Malaysian government had also agreed to establish joint sugar mill ventures with the Indonesian government and the private sector.

The plan to establish joint sugar mill ventures were set to coincide with the government's plan to relocate its sugar mills to islands outside of Java.

"We have received a positive response from the Malaysian government on plans to establish joint sugar mill ventures on islands outside Java. They said that such joint ventures would help them meet domestic demand," he said.

Rahardi explained that Malaysia, a big sugar importer, had limited land to be developed for sugarcane plantations.

"We are now preparing feasibility studies to bring the joint venture plan into realization. The sugarcane plantations and the mills will be located in Indonesia, on islands outside of Java, where land is still abundant," he said. (gis)