Agriculture Reference
In-Depth Information
The major issue is that the new BULOG organization has no clear bound-
ary between private and social responsibilities. On one hand, its activities con-
tinue to be very closely associated with price stabilization of staple food and
other necessary commodities. So whenever the food price fluctuates sharply,
people tend to blame BULOG for poor performance in implementing its so-
cial responsibility. People are not accustomed to seeing BULOG operating as
a business entity. On the other hand, the agency is also expected to play an im-
portant role in international trade and domestic distribution, primarily to gen-
erate profits for the state. It will take a long time before BULOG is able to dis-
associate from its past image of power associations with elite circles,
monopoly, cronyism, and political scandals involving large amounts of public
money.
This section examines the new nonparastatal status of BULOG by focus-
ing on organizational reforms and the business plan and its loopholes, and by
providing anecdotal evidence on some of the recent challenges that the country
is facing in terms of ensuring national food security.
Organizational Reforms
It took nearly 3 years to draw up the initial plan of reforming BULOG from a
regular nonministerial government agency to a state-owned enterprise. The ma-
jor debates during the policy formulation included an unclear boundary be-
tween private and social responsibilities of the new enterprise, public worries
that BULOG would resume its monopoly power in some strategic commodi-
ties, and more importantly, the absence of a major agency responsible for food
security in the country. There were also concerns about the rationale for re-
forming BULOG and the future of food policy in the country. If the reason be-
hind reform was to build a strong private trading and marketing system for rice
in Indonesia, the new format of BULOG was on the right track, as long as
BULOG and other players in the rice market complied with the Law 5/1999 on
fair competition and antimonopoly. However, if the reform process was intended
to develop more transparency and good governance in any public agency, the
new format of BULOG did not fulfill these concerns.
Under the new organizational structure, BULOG has made ambitious
business plans to operate as a conglomerate. Psychologically, the belief exists
that BULOG may resume its monopoly power on strategic commodities after
its removal by the IMF in 1998. In fact, it could obtain the legal or institu-
tional arrangements to resume its monopoly power. According to the new
release of the BULOG business plan, it has planned in the short term to ex-
tend its upstream food-related business (such as rice estates, pocket [bag]
factories, and rice mills) and its downstream businesses (such as retail busi-
nesses, franchised retailers, transportation, rebate and/or superstores, pest-
control units, and storage businesses for rice and sugar; Figure 6.2). In the
