Private firms to be allowed to import rice

JAKARTA (JP): State Minister of Food Affairs and Horticulture A.M. Saefuddin said here on Monday that private companies would be allowed to import good quality rice and sell it directly to consumers to help boost supply on the domestic market.

Saefuddin said that private sector imports would be restricted to first and second grade rice while the State Logistics Agency (Bulog) would continue to import lower grades.

He said that private traders importing rice would be exempt from import duties and value added tax.

The minister said the market for first and second grade rice, which is mainly consumed by the country's rich, was big enough to make the trade a viable commercial proposition.

"Imports of good quality rice will be limited to only 600,000 tons in this fiscal year because it is consumed by only 20 percent of the total population," Saefuddin said in a hearing with House of Representatives Commission III for agriculture and food affairs.

Saefuddin said the plan had been discussed during the regular meeting of economic ministers and had been reported to President B.J Habibie.

"The President has agreed and said he has no problem with the plan. A decision will be taken at the next Cabinet meeting in October," he said.

Harvest failure has prompted the government to commit itself to importing 4.1 million tons of rice in this fiscal year. Contracts have been signed for the import of 2.4 million tons of rice, some of which has already been delivered.

Of the remaining 1.7 million tons, Bulog last week procured 526,000 tons through a competitive bidding process and contracts to import a further 674,000 tons will shortly be put out to tender. The remainder is expected to be good quality rice imported by private companies.

Food shortage

Saefuddin also said that half of the country has been hit by food shortages.

He said that 150 of the country's 308 regencies were facing a food shortfall, adding that shortages in 53 of these regencies were severe.

"Shortfalls exist in 25 of Indonesia's 27 provinces. Only Jakarta and Bali are not facing a shortfall. In Jakarta, only the urban poor in slum areas are vulnerable to food shortages," he said.

Saefuddin said the government was taking several steps to combat the problem, including increasing rice imports.

He said that on Oct. 1 the government would expand its program to distribute rice at the subsidized price of Rp 1,000 (9 U.S. cents) to include a further 17 million poor families. The program currently embraces 7.3 million poor families across the country.

Saefuddin also gave assurances that there would be a sufficient supply of food available for the upcoming festivals of Christmas, New Year and Idul Fitri, all of which fall within a three-week period.

"We are anticipating increased demand around the three holidays. We are preparing to flood the market with rice, chilies, vegetables, spices, eggs, meat, chickens and other foodstuffs," he said. (gis)