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Indonesia's Bulog rises
again
By Bill Guerin
JAKARTA
- Yet another prehensile remnant of the Suharto regime's
mismanagement of Indonesia's economy - Bulog, the
national foodstuffs monopoly - is about to transformed
into something hopefully not a piggy bank for whomever
is in power. But don't count on it.
Bulog is
Badan Urusan Logistic Nasional, a name that just about
nobody ever used. For 35 years, as the government-run
logistics agency for basic foodstuffs, Bulog usually
nourished the elite at the expense of the poor whom it
was supposed to feed. It is now to be privatized and
turned into a commodities trading giant to engage in a
mishmash of new activities - most of which are light
years away from its basic brief of maintaining and
strengthening Indonesia's staple food industry and
distribution.
As with most government
monopolies, it spent most of its existence getting in
the way, inducing distortions into the system and
raising prices. It may still. Despite International
Monetary Fund admonitions to simply wipe it out, it has
been turned from a full-blown state agency into a
semi-profit-oriented state enterprise, or Perum - a word
about as unlovely as Bulog.
It now has new
masters - the government's ministries of finance and
state enterprises. Its new status stipulates that the
flow of money ostensibly will no longer be governed by
presidential decree as it was under Suharto, but instead
by state laws that demand standard accounting.
Suyitno Afandi, a deputy at the Ministry of
State-Owned Enterprises, revealed that the agency's
commercial activities are now to include hotels, gas
stations and hypermarkets. It will also build a central
logistics network and operate mills for rice, crude palm
oil, wheat, fodder and processed food. Cut loose from
state financial support, it is difficult to imagine
where the money is to come from for these activities,
but the message coming out of the ministries involved is
that its new paradigm is that of a profit-oriented state
company, equipped to make it more competitive in the
international market.
Bulog was established in
the late 1960s to purchase and ensure price stability of
basic commodities, especially rice. Its profit
ostensibly went directly to the government but its
status before the changes ensured that there was no
financial transparency or accountability. It
metastasized into import and distribution monopolies in
wheat, sugar, soybean and cooking oil before the IMF
clipped its wings in 1998 and scrapped its exclusive
rights.
The IMF was aghast at the way Bulog had
distorted the market and enriched the rich. The agency
topped their hit list of monopolies that had to go. Its
exclusive rights were rescinded and it was left to
control just rice. Minister of Defense Matori Abdul
Djalil has dubbed it a cemetery for politicians. But it
is still here and now it is expanding in new directions.
Bulog has been the source of scandal after
scandal since the downfall of former President Suharto
in 1998. But it wasn't until 2000 that the scale of the
pillage started to surface. Worse, it was still going
on. That year an Arthur Andersen audit revealed that
Bulog had lost some Rp 6.7 trillion (US$794.8 million)
between April 1993 and March 1998. The report cited
unfavorable business contracts, irregularities and weak
supervision.
For most of its existence the
agency was a prime source of easy money for the
political elite. Financed from the state budget, it
accumulated trillions of rupiah from its operations and
stored the funds in no less than 116 different accounts.
Huge profits, from what was a nonprofit agency, were
easily accessed by those with political clout.
In 1999 then president B J Habibie allocated Rp
40 billion from Bulog for a program, supposedly to feed
the poor, and tasked Akbar Tanjung, the House of
Representatives speaker and chairman of the Golkar
Party, which Suharto had once headed, with oversight.
The money was channeled through the State Secretariat in
1999, which Tanjung also headed. From there, it went
into channels that, like water when it flows
underground, never comes up again.
Tanjung
admitted channeling the money but claimed it was
transferred to meet basic needs of the poor during the
peak of the economic crisis in 1999. He in turn
appointed an unknown Muslim foundation, Raudlatul
Jannah, chaired by Dadang Sukandar, a property tycoon,
to distribute the sembako (nine basic food items
including rice and other staple commodities). They in
turn gave the job to a private contractor, Winfried
Simatupang.
There have been strong rumors that
all three of the country's three largest political
parties - Indonesian Democratic Party of Struggle
(PDI-P) led by President Megawati Sukarnoputri , the
United Development Party (PPP) headed by Vice President
Hamzah Haz, and Golkar itself - helped themselves to
Bulog funds during the runup to the 1999 general
election, and that the only two parties not to have used
state funds were the Justice Party (PK) and the
Democratic People's Party (PRD)
Golkar was
instrumental pressing to investigate ex-president
Abdurrahman Wahid over the Bulogate I, the first scandal
to come to light and which eventually led to his
downfall. This involved the alleged embezzlement of Rp
35 billion from the agency by people close to Wahid. The
next scandal was disclosed by Wahid's National Awakening
Party faction, a move believed to be political revenge
for Wahid's ouster.
That was Bulogate II, which
surfaced when former Bulog chief Rahardi Ramelan told
prosecutors he gave Rp 40 billion, for the food relief
program, Rp 10 billion to former defense
minister/military commander Wiranto to fund civilian
security units, and Rp 4.6 billion to retail chain PT
Goro Batari Sakti (owned by Suharto's youngest son,
Tommy).
There is no evidence any food was ever
delivered. After Tanjung had been charged, but before
the trial began, Simatupang returned all the money to
prosecutors. He later admitted to the court that
returning the money to the state was based on "good will
and an intention to save Akbar Tanjung", and agreed that
the project was fictitious.
Prosecutors said the
money went into Golkar coffers to finance its campaign
in the 1999 general election. Indonesia's law on
political parties, though later amended, limited
personal donations to a party in excess of Rp 15 million
a year, and stipulated a maximum corporate donation of
Rp 150 million.
Tanjung awaits the result of an
appeal to the Supreme Court. Convicted in August 2002
for misappropriation of Rp 40 billion in Bulog funds, he
remains free and hopes to run for president in 2004.
Recent changes in the elections law were engineered to
allow a felon to run, provided the conviction has not
been confirmed by all avenues of appeal.
Bulogate III involved Suharto's youngest son,
Hutomo "Tommy" Mandala Putra, and former Bulog chairman
Beddu Amang. Tommy was sentenced to 18 months in jail in
November 2000 for his part in a dodgy Rp 5.2 billion
land swap with Bulog. He went on the run until being
captured in November 2001 and is now serving 15 years
for engineering the murder of Supreme Court Judge M
Syaifuddin Kartasasmita, who had sentenced him.
Bedung appealed to the Jakarta High Court over
his conviction for embezzling Bulog funds only to have
his sentence doubled to four years. Even the current
president, Megawati, is being linked to the latest
embryo scandal over a countertrade transaction to buy
four Russian-made Sukhoi jet fighters and two Mi-35
helicopters. Bulog's involvement in the deal is said to
have been improper. Minister of Industry and Trade Rini
Soewandi tasked Bulog with executing the US$129 million
countertrade deal between Indonesia and Russia, though
she insists it was the president herself who gave the
green light.
Bulog is demanding that the
government reimburse its $26 million down payment for
the hardware but DPR has barred the government from
paying back the money and has set up select committee to
investigate how Bulog came to be appointed executor of
the deal.
Bulog's 60,000 employees had been
bracing for changes as the pressure for reform grew, but
could hardly have expected to be cast off from
government funding so quickly.
Will Bulog, now
emerging from its chrysalis, be free from government
intervention? Hardly likely given that the new
regulation stipulates that Bulog's new masters can
assign any task they choose. Bulog's new status and its
plans also beg the question as to whether it will still
want to, or be able to, support farmers.
Only a
month ago Bulog chief Widjanarko Puspojo had said that
the agency would not exceed its brief of maintaining and
strengthening the country's staple food industry and
distribution network. "Bulog only handles four
commodities: soybeans, corn, sugar and rice," he said.
Will Bulog still be interested in giving farmers
a better price for their rice? Will the body still
supervise and maintain the national food stock?
"This is a business plan. The company's future
actions will only be determined by profit and loss. You
can trust us," Suyitno said.
(Copyright 2003
Asia Times Online Ltd. All rights reserved. Please
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