Malaysia agrees to help finance Indonesia's rice imports

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)