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Bulog revives role as buffer stock agency, gets new boss

The State Logistic Agency (Bulog) is returning back to its old function as a buffer stock agency for the country’s main commodities, which was removed under the reform program mandated by the International Monetary Fund (IMF) in late 1998

Khoirul Amin (The Jakarta Post)
Jakarta
Fri, January 9, 2015

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Bulog revives role as buffer stock agency, gets new boss

T

he State Logistic Agency (Bulog) is returning back to its old function as a buffer stock agency for the country'€™s main commodities, which was removed under the reform program mandated by the International Monetary Fund (IMF) in late 1998.

As part of the change, the government has recently appointed a senior banker Lenny Sugihat as Bulog'€™s new president director to replace Sutarto Alimoeso.

'€œUnder the new management, Bulog will not only become a buyer for local farmers'€™ products but also a price stabilizer of main commodities,'€ said State-Owned Enterprises (SOEs) Minister Rini Soemarno following the appointment of the new president.

Lenny, who has previously worked at state-owned lender Bank Rakyat Indonesia (BRI) for over 30 years, obtained Master of Business Administration (MBA) from University of Houston, Texas, US in 1993. The 58-year-old woman held a position as credit risk management director at BRI as her latest position prior being appointed Bulog CEO.

Rini said that under the leadership of Lenny, the government would extend the number of foodstuffs that Bulog had to oversee, from five to seven.

Bulog would have obligation to maintain supply and stabilize prices of rice, corns, soybeans, sugar, onions, chili and beef.

Lenny, who will start assuming office on Jan. 2, commended that she would first determine scale of priority under her leadership and carry out efficiency programs in a bid to guarantee supply of main commodities to the public.

'€œThe three commodities which we will likely prioritize are rice, soybeans and onions,'€ she said.

Bulog had to make sure that it would buy the seven food commodities from local farmers at good prices, so the farmers could earn decent income, Rini said.

In addition, Bulog had to be allowed to import the commodities should the move was needed to maintain the commodities'€™ prices in local market, she went on.

To support the firm in carrying all of the tasks, SOEs Ministry would propose the President to add the number of Bulog'€™s directors to a maximum of seven people from the current five people, she said, adding that it would require a revision of a presidential regulation.

Bulog, which has total assets of Rp 25.9 trillion (US$2.05 billion) in 2013, was initially established in 1967 as a buffer stock agency, whose main task is to
stabilize prices of main commodities such as rice, sugar and soybean. It then started becoming a state-owned enterprise, just like today, in 2003.

While the state enterprise has been since its inception tasked to stabilize certain commodities'€™ prices, its current role seems less significant, with prices of commodities like onions and chili sometimes peaking up without control.

In 1995, Bulog was tasked to stabilize prices and maintain supply of rice, sugar, wheat flour, soybeans and other foodstuffs.

The role was, however, narrowed down in 1998 under of the economic reforms mandated by the IMF as part of the agency'€™s bailout program to help Indonesia cope with the financial crisis.

'€œUnder the current government, we want to make sure that Bulog can contribute in both helping farmers earn decent income and stabilizing foodstuffs'€™ prices,'€ Rini said.

As of December last year, Bulog absorbed 2.5 million tons of local rice or 84 percent of its total target of 3 million tons in 2014.

For this year alone, Bulog has previously stated that it targeted to absorb 3.2 million tons of rice produced by local farmers as rice production is forecast to surge.

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