On Alimoeso’s Interview

by Guinandra Jatikusumo

An interesting interview with Soetarto Alimoeso (one of the Director Generals of Indonesia’s Ministry of Agriculture) about the Indonesian government intervening in the importation process and local market of basic food. He claims that unpredictable price fluctuation is a type of ‘market failure’ (really?), thus necessitating the Indonesian Bureau of Logistics (BULOG) to dip its hand into the market in an effort to rectify it.

His statement fundamentally contrasts with a prominent Indonesian economist who, based on my inference, opposes BULOG’s manipulative method of distorting the price of basic food in Indonesia. One day before my departure to Abu Dhabi, I watched ‘Suara Anda’ (Your Voice), a broadcasted roundtable discussion among Indonesian policymakers, economists, and scientists. I recall Kwik Kian Gie (former Coordinating Minister of Economy under Abdurrahman Wahid’s presidency) saying this:

BULOG’s intervention is undesirable simply because it defies economics’ most rudimentary principle. It purchases basic food produced in a high cost and resells it in a price lower than its production cost.

What he said was not exactly the same as what is written above, but I can corroborate that he was applauded when he said it out loud. A substantial portion of Indonesians, apparently, are fiscal conservatives who dislike government policies aimed at resolving economic problems in the short run. Indonesian taxpayers who were silent watchers of the discussion seem to detest the notion of their taxed income being used for implementing placebo policies rather than being used for promoting long-term growth by incentivizing local basic food producers.

Side note: The article also highlights that basic food importation in Indonesia is currently controlled by a number of private firms. Several economists doubting the effectiveness of Indonesia’s antitrust laws, during the televised ‘Suara Anda’ (Your Voice) discussion, proposed that the government take over these firms and form a non-profit-maximizing public monopoly to preclude the formation of cartels and maintain a socially-admirable price of basic food.