Indonesia, Southeast Asia's biggest sugar consumer, plans to allow state procurement agency Bulog to regain control over sugar distribution to help stabilise domestic prices, the industry minister said on Thursday.
Bulog, which currently has a monopoly on rice imports and exports, as well as managing government rice stocks to stabilise prices, lost its control of the sugar market as a result of the IMF-led reforms introduced in the wake of the 1997-1998 Asian financial crisis. "Sugar will be treated like rice," M.S. Hidayat told reporters. "So Bulog will resume its role to stabilise sugar prices."
Just 14 months ago, Bulog re-entered the sugar market by striking deals with state plantations to sell about 280,000 tonnes of sugar to prevent a further drop in sugar prices to below 5,000 rupiah ($0.536) per kg. But it was unable to stop domestic sugar prices from returning to record levels above 11,000 rupiah ($1.18) per kg over the past month because the sugar market is still controlled by trading houses in a tight global market.