Indonesian Government Urged to Curb Rising Food Prices

Markus Junianto Sihaloho

Lawmakers said on Sunday that the government should broaden the state procurement agency’s powers in order to stabilize food prices during Ramadan.

The authority of the agency known as Bulog used to extend to many types of food, but because of International Monetary Fund-imposed reforms enacted after the Asian financial crisis, its powers were curtailed to the procurement of rice only.

Herman Khaeron, deputy chairman of House of Representatives Commission IV overseeing agricultural affairs, said food price fluctuations happened every year around Ramadan not because of supply and demand but because of speculators.

“Sufficient food stock under the state’s control would definitely curb speculative trading,” he said.

Herman’s remarks came in the wake of protests against fluctuating food prices, which have risen despite the government’s announcement that food supplies were sufficient.

The government has the obligation and the right to intervene to stabilize prices because Indonesia’s economy is based not on liberal capitalism but on Pancasila, Herman said.

“Under a Pancasila-based economy, the state has the obligation to guarantee price stability, especially the prices of staples,” the Democratic Party lawmaker said.

Hermanto, also on Commission IV, urged the government to guarantee the food supply during Ramadan and the Idul Fitri holiday.

“Increase food supplies by using food stocks and improving infrastructure so that the flow of food from production centers to the markets can run smoothly,” Hermanto said in Jakarta on Sunday.

Businesses should not stockpile food in their warehouses because that could cause food scarcity, the Prosperous Justice Party (PKS) legislator said.

He also urged government officials to visit traditional markets and logistics warehouses so they could see for themselves the conditions on the ground.

The government has promised to allocate Rp 135 billion ($14.3 million) to support food prices during Ramadan, a 12.5 percent increase from 2011.

State Enterprises Minister Dahlan Iskan said his ministry would sell subsidized food in 1,200 areas across the country, up from 900 last year. The money will also go toward subsidizing sellers.

The subsidies, Dahlan said, meant the public would only need to pay 30 percent of the regular retail price of the foodstuffs on sale.

The government subsidizes food each year to minimize the impact of price increases on staple foods prior to Ramadan in order to make sure the holy month does not result in further economic hardship for lower-income families.

Investor Daily