Monday, January 23, 2006

The Politics of Rice 12

Once again, my position with regards to the rice furor is: 1) Rice import is good, 2) Giving an exclusive right to Bulog is not good. It seems to me that people think that the fact that I support rice import automatically means I also support the role of Bulog. No. In fact, whenever the right to import is given only to one entity, my suspicion arises. The effect of such practice on the economy is just similar to the effect of quota. And it's bad.

Readers should not, however, confuse between rice import issue and Bulog's role issue. They are two different things, to be addressed separately, even though the policy implication would be heavily related. I have raised both issues simultaneously many times to avoid misunderstanding that my supporting rice import meaning I am supporting the import mechanism as it is now. Which is fallacious.

The press have quoted me in the way that might lead such misunderstanding about my position. Read here or here, for example. In the latter, they misinterpreted my table. I presented a simple calculation to show that Bulog's claim that they can stabilize rice price is not well founded. I compared two periods, namely the period when Bulog was given the sole right to import rice, and the period when the rice market was liberalized. The coefficient of variation of rice retail prices in Indonesian regions were all higher in the first period than in the latter. Meaning, under Bulog's authority, prices were more unstable. So, the claim was false.

Today, The Jakarta Post has an opinion written by Peter Milne. As I'm writing this, the online version isn't available yet. Milne argues, correctly, that importing rice is pro-poor. Please find and read it.

No comments: