Jakarta – Indonesia's National Logistics Agency (Bulog) has said that, as rice stocks were still plentiful, there was no need to sign any more contracts to import rice this year.

"Bulog's existing rice stocks are still plentiful and our rice harvests are very good. So we won't sign any new contracts this year," Bulog chief Rizal Ramli was quoted in yesterday's edition of the Indonesian Observer as saying. "Our existing stocks are much higher than the demand," he added.

The country is one of the biggest rice importers in the international market and the move is likely to affect Thailand and Vietnam, which are Jakarta's largest suppliers. Last year, Indonesia bought about 3.6 million tonnes of rice, which accounted for about 13 per cent of the rice sold on the world market. Mr Ramli said rice from existing contracts would continue to be shipped to the country, but gave no details on how much rice was yet to be imported.

Bulog had to renegotiate 178,000 tonnes of old rice contracts this year to help cut an influx of imported rice, which depressed prices of locally-produced grain. In a bid to lift prices, Bulog spent almost 500 billion rupiah (S$100 million) to buy rice from farmers at official farm-gate prices during the main harvest from January to May.

Indonesia's unhusked rice production is expected to increase to 51 million tonnes this year from 49.5 million tonnes last year, with the higher output attributed to an expansion of rice-planting areas and favourable weather.

Bulog lost its monopoly on the import of basic commodities such as wheat, sugar and soya beans in 1998 in line with a deal with the International Monetary Fund.

Private traders are now free to import rice, but Bulog still organises most imports through its tenders. Traders said Indonesia had been expected to import three million tonnes of rice this year with Bulog accounting for half of these purchases.

But Mr Ramli said private traders were expected to import one million tonnes. "Our unhusked rice production will be enough to meet local demand, so imports can be around one million tonnes of rice for stocks ... but this will come from private traders, not Bulog," he said.

Separately, The Jakarta Post quoted Mr Ramli yesterday as saying that Bulog would become a state company by next June in a move to improve the agency's performance. He said the change would allow for better transparency in the use of Bulog's resources. "Our target is that by June next year we will become a state firm with a social mission."

As a state company, Bulog would be allowed to take part in commercial activities. Gains from such involvement could be used to offset the government's rice subsidies, Mr Ramli said.

He added that the agency could commercialise its 1,500 or more warehouses. It now uses less than five per cent of them. He said the overcapacity resulted from corrupt practices in the past when many facilities were built without any feasibility studies.