RI to import 3.42 tons of rice in next fiscal year

JAKARTA (JP): After sucking a projected 4.1 million metric tons of rice from the international market this fiscal year, Indonesia plans to import another 3.42 million tons in 1999/2000.

The figure could go higher if domestic supplies fail to reach target, the chairman of the State Logistic Agency (Bulog), Rahardi Ramelan, said Tuesday.

Bulog has said it plans to procure one million tons of rice domestically in 1999/2000 fiscal year, beginning in April.

"We plan to import 3.42 million tons of rice if our domestic procurement can reach one million tons. If domestic procurement is lower, imports will be raised," Rahardi said at a hearing with the House of Representative's Commission III for agriculture, forestry and plantations, transmigration and food affairs.

Rahardi, who replaced Beddu Amang as Bulog boss last month, said the agency's proposed budget for 1999/2000 was Rp 10.06 trillion, of which Rp 3.89 trillion would be used to finance domestic rice procurement and $1.03 billion to finance imports.

The estimate is based on an exchange rate of Rp 6,000 per U.S. dollar, a floor price for unhusked rice of Rp 1,600 per kilogram and a 30 percent increase in management costs.

The rupiah, however, is currently trading at the 12,000 level against the dollar.

Rahardi said the government hoped that half of Bulog's rice imports for the next fiscal year could be financed through a mixture of foreign grants, soft loans and deferred payments.

For this fiscal year, Bulog had planned to import a total 4.1 million tons of rice, of which 2.44 million tons had been imported by the end of August.

Rahardi said Bulog would put its purchase of 600,000 tons of rice on Sept. 14 out to international tender.

"We have improved the tender mechanism by adding several requirements to ensure transparency and competitive bidding," he said.

At least 160 companies, both domestic and foreign, have shown an interest in joining the tender, Rahardi said.

He added that the tender -- initially scheduled for Sept. 2 -- had been postponed because of rising international prices of rice.

To strengthen its rice stocks, Bulog would purchase unhusked rice directly from farmers at market prices.

"We will buy rice at the market price from farmers in provinces which currently enjoy a surplus," he said, adding that South Sulawesi and East Java currently had rice surpluses.

Domestic rice procurement this fiscal year is especially low, projected at 138,000 tons, because of failed harvests in many parts of the country.

Falling domestic rice production has caused rice prices to soar to more than Rp 4,000 per kilogram for good quality rice from just Rp 1,200 a year ago.

Rahardi said Bulog would use 3.5 million tons of rice this fiscal year in market operations to control the soaring prices.

Bulog's market operations thus far have failed to arrest the rising price because of poor distribution networks, hoarding, and smuggling.

Rahardi said smuggling of rice had not been widespread and was not the main reason for the price rise.

"There hasn't been major reexporting of rice, but there have been some small cases in border areas that are worrying," he said.

There has been speculation that subsidized rice is being reexported to take advantage of the high disparity between the government's subsidized price and the international market price.

The International Monetary Fund, which is currently conducting a review of its economic program here, has said it will look into the reasons why rice prices have been rising.

The Fund, which arranged a multibillion dollar bailout package for Indonesia, has sought the abolishment of Bulog's trading monopoly on essential commodities.

And the government has promised to end Bulog's trading monopoly on all commodities, except for rice, beginning next year.

The government lifted its subsidies on wheat flour, sugar and soybeans last week, and simultaneously liberalized their importation.

Rahardi, also minister of industry and trade, said the government would also remove the subsidy on cooking oil starting on Monday when Bulog would stop setting the selling price of the commodity.

"So, we will not set the selling price anymore. In other words, there will be no more subsidy," Rahardi said, adding that the government, nevertheless, would retain the 60 percent export tax on crude palm oil.

The distribution of the cooking oil would then be handled jointly by the Indonesian Distribution Cooperative (KDI), he said.

He projected that without the subsidy, the market price of cooking oil would reach Rp 4,600 to Rp 4,800 per liter. It is already above Rp 4,000. (gis)