Ministry eyes rice-for-planes trade deal

Zakki P. Hakim, The Jakarta Post, Jakarta

The Ministry of Industry has proposed a countertrade deal involving rice imports of 250,000 tons and exports of aircraft produced by state aircraft maker PT Dirgantara Indonesia (PTDI).

"PT Dirgantara Indonesia needs to market its products, and we need to import rice," Minister of Industry Andung A. Nitimihardja said on Monday on the sidelines of a hearing with the House of Representatives' Commission VI overseeing industry, trade and investment.

He said he had discussed the proposal with the government agency in charge of importing and distributing key commodities, the State Logistics Agency (Bulog) and its chief Widjanarko Puspoyo about the possible swap.

"I have informed (him) that Thailand is interested in PTDI products. It seems that the Bulog head agrees," Andung said, adding that Thailand could be interested in PTDI's CN-235 aircraft.

It will not be the first time that Indonesia has made plans to swap planes for rice with Thailand. In 2001, Bulog had revealed the same plan, but the deal was delayed due to a disagreement over the items to be swapped.

In April, Indonesian Ambassador to Thailand Ibrahim Yousouf told The Jakarta Post that Thailand purchased seven PTDI planes, which are being used for cloud-seeding.

"I will offer them more planes. The Thai Royal Navy is interested in buying CN-235 Maritime Patrol Aircraft," he said.

Thailand, aside from Vietnam, has been traditionally providing the bulk of Indonesia's rice imports before it banned rice imports in January 2004.

Indonesia then extended the ban in August that year until the end of 2004, due to expectations of robust domestic output. In December 2004, it extended the ban to June 2005 due to official assessments of sufficient stocks and a good rice harvest, and later extended it again until the end of this year.

But earlier this month, the government decided to allow Bulog to gradually import up to 250,000 tons of rice starting next month, in anticipation of higher demand ahead of the Ramadhan and Idul Fitri holidays.

Minister of Trade Mari E. Pangestu said on Monday that the government had not yet granted official permits for Bulog to import rice.

"The policy is aimed at stabilizing prices through stronger stocks. The imported rice will not be distributed to the market," she said during an impromptu visit to Jatinegara market, Cipinang rice market and a Carrefour hypermart outlet in East Jakarta.

The import permit was given to help Bulog maintain its stock above one million tons until the end of the year as the agency is responsible for providing the commodity for the government's rice-for-the-poor (Raskin) program.

Through the program, the government sells subsidized rice at about half the market price, with a monthly volume of approximately 180,000 tons.

The government will only lift the rice import ban if the average price of medium-quality rice exceeds Rp 3,500 and Bulog's rice stock declines to below one million tons.

The latest report showed that the current national stock stood at around three million tons, of which 1.6 million tons were held by Bulog. Meanwhile, the average price of medium-quality rice was Rp 2,950 in Cipinang market on Monday, well below the Rp 3,500 threshold.

But Commission VI deputy chairman Ade Komarudin said that countertrade had proven to be an ineffective measure, thus it was not recommended.

"Past experiences show that countertrade is not effective, as it would involve inter-departmental coordination. It's complicated, not as simple as it may sound," he said.

Ade also made a reference to the controversial case of a countertrade of local rice for Russian Sukhoi jetfighters.

The Sukhoi purchase made headlines in 2002, when the government was accused of a breach in purchasing procedures by excluding the Ministry of Defense from the entire process.

The government bought four Sukhoi jets worth US$265 million from Russia based on a countertrade deal involving 11 commodities.