Rizal wants to revive Bulog's rice monopoly

Rizal wants to revive Bulog's rice monopoly

JAKARTA (JP): Newly-appointed chief of the State Logistics
Agency (Bulog) Rizal Ramli said on Friday that the agency needed
greater "authority and resources" to resolve the national rice
problem.

Rizal said that the country's drive toward economic
liberalization had gone too far by ending Bulog's monopoly to
import and distribute rice.

"We must reevaluate the role of Bulog. The current (rice)
problem has emerged because Bulog no longer has sufficient
authority and resources," he told a group of protesting farmers
and non-governmental organizations (NGOs) during a dialog.

"Bulog must be given greater authority and resources
especially to deal with rice ... We can't just leave it to the
private sector because it turns out that many of them are not
performing well," Rizal said.

Under pressure from the International Monetary Fund, the
previous government of president B.J. Habibie in 1998 ended the
20-year exclusive right of Bulog to import and distribute basic
commodities, including rice, soybeans, sugar, wheat and cooking
oil.

The agency's only role now is to import rice, although the
government also allows the private sector to do the same. Bulog
is also charged with helping stabilize the domestic price of
unhusked rice to protect farmers.

But Rizal said that Bulog was no longer able to purchase the
oversupply of unhusked rice to stabilize the price because the
agency did not have the necessary funds.

He pointed out that under the new central banking law, the
independent Bank Indonesia could no longer provide special
liquidity assistance to Bulog to make the purchases.

He added that the state banks that should have assumed BI's
role were still reluctant to make new loans.

He said that previously, Bulog purchased up to 10 percent of
national rice production during peak harvest season to help
stabilize prices.

Farmers have protested the current low price of unhusked rice,
even lower than the minimum price level of Rp 1,020 per kilogram
set by the government.

Farmers and NGOs have blamed the government for allowing too
much imported rice.

NGO activist Wardah Hafidz said that the government should
have stopped rice imports because national unhusked rice
production last year was around 60 million tons, equal to about
30 million tons of husked rice, roughly the same as domestic
demand.

But Wardah said Indonesia imported some 6 million tons of rice
last year despite sufficient domestic production, causing a fall
in domestic prices.

Rizal insisted that the rice import policy must be maintained
to protect against times when domestic rice production dropped
below demand.

But he admitted that the agency lacks a credible data base to
design an effective rice import policy. He said that so far,
Bulog used data from the Central Bureau of Statistics (BPS).

He suggested the National Development Planning Agency
(Bappenas) sponsor research to be conducted by BPS and NGOs to
get the real picture of national rice production and consumption
levels.

Rizal also suggested the government implement a rice import
tariff of 90 percent to 125 percent to protect local farmers.

He said that this was the maximum tariff allowed under
guidelines of the World Trade Organization (WTO).

He said that a 90 percent import tariff should be applied when
rice imports were less than 70,000 tons, and a maximum 125
percent tariff when rice imports exceeded 70,000 tons.

But he acknowledged he had no authority to make policy,
pointing out that this was the authority of the Coordinating
Minister for Economy, Finance and Industry Kwik Kian Gie.

The current rice import tariff is 30 percent as agreed by the
government and the IMF in January.

Rizal appealed to senior government officials to protect the
national interest in designing economic policy, not the interest
of the IMF.

"I want to see our senior government officials act like their
Japanese or Chinese counterparts who fight for their national
interest at the international forum. Not the opposite. It seems
many of our officials fight for the interest of the IMF," he
said.

Separately, World Bank senior economist Bert Hofman said on
Friday that imposing higher import tariffs would not necessarily
protect poor farmers because they are not net sellers of rice,
but net buyers of rice.

Hofman suggested instead, that the government provide better
infrastructure, including irrigation.(rei/rid)