Ministers deny restrictions on clove trade

Ministers deny restrictions on clove trade

JAKARTA (JP): The government has denied any knowledge of a new
restriction on the trading of cloves, stressing it will no longer
interfere with the distribution and sale of the commodity.

Industry and Trade Minister Mohamad 'Bob' Hasan reiterated
Monday that the government was committed to freeing up the clove
trade and any other monopolistic arrangements, as it was a
mandate of the International Monetary Funds (IMF).

"No one in the ministry has approved any special arrangement
and we have no intention of doing so," Hasan said in a joint
statement with the ministers of finance and cooperatives.

"We are committed to enforcing the new rules and that means
free trade for farmers, traders and factories alike."

The statement was issued in response to reports that PT
Kembang Cengkeh Nasional (KCN), controlled by President
Soeharto's son Hutomo Mandala Putra, had allegedly continued the
monopolistic practices of the dissolved Clove Marketing and
Buffer Stock Agency (BPPC).

Under the IMF-brokered reform program, the government was
required to end the monopoly over cloves which BPPC had held
since early 1991.

The government has stated that it has ended the monopoly in
February, as required by the Jan. 15 reform package agreed with
the IMF, and has dissolved BPPC ahead of the June deadline.

Cloves are the main ingredients in locally produced cigarettes
which consume more than 100,000 tons of the spice annually.

Finance Minister Fuad Bawazier said in the joint statement
that he had assigned his staff to painstakingly review its
practices, especially on the sale of excise tax stamps used on
cigarettes packets.

"I don't know what the practice was in the past, but I
guarantee there will be no requirement from now on for cigarette
factories to buy clove from KCN as a condition to purchase excise
tax stamps," Fuad added in the statement.

The chairman of the Association of Indonesian Cigarette
Companies, Ismanoe Soemiran, told The Jakarta Post last week that
the association's members remained unofficially required to buy
cloves from KCN as a prerequisite for buying excise stamps from
the Directorate General of Customs and Excise.

Cigarette producers cannot sell their cigarettes without the
excise stamps.

The newsweekly tabloid Kontan said in its latest issue on
Friday that the trading arrangement was designed to keep KCN --
which currently holds 167,000 tons of BPPC's clove stock -- in
business.

The now defunct BPPC was also controlled by Hutomo.

Minister of cooperatives and Small Enterprises Subiakto
Tjakrawerdaja also asserted in the statement that his ministry
had met with farmer cooperatives last week to discuss the issue.

Subiakto said the ministry would help cooperatives by
providing the best ways for handling the sale of their cloves.

"But they have to manage any relationships with buyers on
their own and we won't interfere in any way," Subiakto added.

The ministers said they were committed to fully implementing
the new (free) clove trading system under the economic reform
package.

"People should feel free to bring problems like this to our
attention so we can correct them as quickly as possible," Fuad
added. (das)