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)