Rice import to halve last year's figure

JAKARTA (JP): Indonesia will import about 2 million metric tons of rice this year, half of the 4.3 million tons imported last calendar year, Minister of Industry and Trade Rahardi Ramelan said on Monday.

Rahardi, who is also head of the State Logistics Agency (Bulog) said the decrease was due too the better-than-expected rice crop this harvest season.

He said Indonesia's milled rice production was expected to reach 32.86 million tons in 1999, up from 29 million tons in 1998.

"Bulog plans to import between 2 and 2.5 million tons in the 1999 calendar year," Rahardi said during a hearing with the House of Representatives Commission V for industry, mining, trade, manpower, cooperatives and the environment.

He said the import forecast was based on "the most conservative assumption" that 1 million tons of rice will be procured domestically during the year, up from 250,000 tons last calendar year.

"We expect to produce 32.86 million tons of milled rice, or 52 million tons of unhusked rice. To reach this goal, the country has expanded the area under cultivation to 11.96 million hectares."

Prolonged drought last year caused by the El Nio weather phenomenon depleted Indonesia's rice harvest, forcing the country to import 4.3 million tons in the 1998 calendar year.

Rahardi also said that most of the trade financing facilities obtained by the government from several donor countries have not been fully utilized by local banks and companies to help restore import activities.

He said only US$828 million of the $5.77 billion obtained by the government for the trade financing scheme, which includes a letter of credit (L/C) guarantee and pre-export financing facilities, has been utilized as of Jan. 26.

"As of January 26, the trade financing scheme has been used by only 32 companies, with a total value of $828 million," he said.

Of the total utilized funds, $312 million was used for import activities by the State Logistics Agency (Bulog), another $274 used by state oil firm Pertamina and $33 million spent on imported fertilizers.

Rahardi also said the government would set up an export financing agency in March, to boost declining exports. This agency will not have access to public funds, with its activities exclusively financed by its export and import activities.

"The agency will need initial capital of $300 million to start its operations," he said after meeting with President B.J Habibie.

He added that the agency could be made up of state banks or private banks which are nationalized by the government.

The agency's capital will come from the government, which will hold the majority stake, and from minority private stockholders, he said.

It will also receive financing from bilateral and multilateral foreign aid organizations, channeled through the government, and the issue of commercial papers.

Initially, the financing agency will provide subsidized, pre- shipment working capital and export credit for exporters in financial hardship to maintain their production.

It will dispense guaranteed short-term export financing and export insurance, as well as operating as an export information center.

The agency will later expand operations by providing export credit facilities, mainly for mid and long-term post-shipment financing.

The economic turmoil has eroded international trust in Indonesia's banks and made it almost impossible for companies to obtain letters of credit from local banks to import their materials. The government has had to solve these financing problems, forcing local exporters to rely heavily on imports. (gis/prb)