1,700 Bulog Marts to sustain price control plans

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President Susilo Bambang Yudhoyono’s plan to bolster the government’s capacity in controlling food prices would entail the setting up of an unprecedented 1,700 “distribution centers” throughout the archipelago, according to State Logistics Agency (Bulog).

Bulog chief Sutarto Alimoeso told The Jakarta Post last week that the existence of the distribution centers, dubbed “Bulog Marts”, was necessary to sustain the agency’s anticipated expansion operations in the future.

Yudhoyono said earlier this month that the government would allow Bulog to procure other food commodities apart from rice, amid soaring global food prices. Food prices are among the main contributors to inflation in Southeast Asia’s largest economy.

The discussion on what extra commodities are to be managed by Bulog is still underway, but Yudhoyono has hinted that apart from rice, supplies of five commodities — sugar, corn, soybeans, cooking oil and meat — must be secured.

Under the New Order era, which lasted until 1998 with the fall of former president Soeharto, Bulog played a central role in controlling nine basic food commodities. Long associated with corruption, Bulog was often held up as a prime example of all that was wrong with Indonesia under the autocratic leader.

In September 1998, the government removed the agency’s exclusive rights to import and distribute soybeans, wheat, sugar and cooking oil in accordance with the terms of the reform programs agreed with the International Monetary Fund (IMF), in return for US$43 billion in emergency funds to rescue the country’s ailing economy.

Despite the looming possibility of a moral hazard in reviving Bulog’s past glory, Yudhoyono said that adding fire power to the agency was necessary so it could carry out its duty as a price stabilizer given the conditions of the global economy.

As an initial step in achieving its goal, Bulog would set up around 100 Bulog Marts in Indonesia this year, Sutarto said.

So far, Bulog already runs 10 similar outlets in Bandar Lampung, Lampung; Bandung, West Java; Semarang, Central Java; Malang, East Java; and Makassar, South Sulawesi. “The Bulog Marts will serve as distribution centers which can be accessed by cooperatives, village cooperative units (KUD), kiosks, small stores, and others. This will cut trading chains, thereby resulting in increased efficiency, as price gaps between producers and consumers can be reduced,” he told The Jakarta Post recently.

In addition, the outlets might also function as retail stores, depending on their location, particularly where there was a shortage of food supply, Sutarto further said. Shorter and increasingly integrated distribution networks would allow Bulog Marts to sell food commodities at prices lower than the market, he added.

The Indonesian Retailers Association (Aprindo) deputy secretary-general Satria Hamid said that his association supported Bulog’s efforts to support the smooth flows of commodity distribution and maintenance of price stability, but questioned its move to establish the Bulog Mart. “By doing this, Bulog, which is actually a regulator, turns into an executor by stepping into the distribution business,” he said.

The Indonesian Association of Food and Beverage Producers secretary general Franky Sibarani also voiced his doubts over Bulog’s efforts to develop its new commercial chain, saying that the firm had thus far run state-related functions.