WORLD TRADE
ORGANIZATIONG/STR/N/7/IDN
G/STR/N/8/IDN
23 August 2002
(02-4562)
Working Party on
State Trading EnterprisesOriginal:  English
STATE TRADING
New and Full and Updating Notifications Pursuant to Article XVII:4(a)
of the GATT 1994 and Paragraph 1 of the Understanding on
the Interpretation of Article XVII
INDONESIA
The following communication, dated 19 August 2002, has been received from the Permanent
Mission of Indonesia.
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The Permanent Mission of Indonesia sends herewith the notification pursuant to
Article XVII:4(a) of the GATT 1994 and paragraph 1 of the Understanding on the Interpretation of
Article XVII.G/STR/N/7/IDN
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QUESTIONNAIRE ON STATE TRADING
BULOG
I. ENUMERATION OF STATE TRADING ENTERPRISES
A. IDENTIFICATION OF STATE TRADING ENTERPRISES
Badan Urusan Logistik (Bulog) as a State Trading Enterprise.
B. DESCRIPTION OF PRODUCTS AFFECTED (INCLUDING TARIFF ITEM NUMBER (S) ENCOMPASSED
IN PRODUCT DESCRIPTION )
Rice (ex 10.06)
As a densely populated country, Indonesia cannot depend entirely on world market, especially
rice.  Rice is the main staple food in this country with more than 220 million people.  Therefore, there
are at least four reasons why it should take a prudent policy on rice.
• Firstly, Indonesia is one of the world's biggest rice consuming nations, and has already been the
largest rice importer.  The government should ensure supply of main staple food for its people.
• Secondly, like any other developing country, Indonesia suffers a chronic shortage of foreign
exchange.  Dependence on imports of staple food in such a situation will cause problems and
uncertainty on the availability of food in the coun try.  The world rice market is still considered a
thin and residual market, dominated by a few countries that has made the price of rice very
unstable.
• Thirdly, overdependence on imported foodstuff may reduce foreign policy options and affect
national security.  Food security is a politically sensitive issue and may constrain sovereignty of
the country's external relations.  Political stability has traditionally been linked to thegovernment's ability to ensure an adequate supply of rice at a reasonable price.  In addition, the
rice processing industry plays a key role in rural development and poverty alleviation.
• Fourthly, rice is still the largest source of energy and protein for the majority of the people's diet.
Rice production employs more people than any ot her single activity.  Rice is the main wage
earner for an unskilled urban worker and expenditure on rice accounts for a large share of thepoor people's food budget.  Those who are involved in rice producing activities are
overwhelmingly small, poor farmers and landless labourers.
II. REASON AND PURPOSE
A. 
REASON OR PURPOSE FOR ESTABLISHING AND /OR MAINTAINING STATE TRADING ENTERPRISE
The purpose of establishing Bulog as a State Trading Enterprise, is to support domestic rice
producers, to stabilize the price of rice at consumer and producer levels.  In implementing its statutory
functions, the Agency engages in domestic procurement, sales/distribution, import/export and
management of rice stock.G/STR/N/7/IDN
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B. SUMMARY OF LEGAL BASIS FOR GRANTING THE RELEVANT EXCLUSIVE OR SPECIAL RIGHTS OR
PRIVILEGES , INCLUDING LEGAL PROVISIONS AND SUMMARY OF STATUTORY OR
CONSTITUTIONAL POWERS
Bulog is a governmental agency, governed by  the provisions of Food Law No. 7/1996, and by
Presidential Instruction No. 9/2001.  Bulog was established under the Presidential Decree of
10 May 1967 (Keppres No. 114/U/Kep/5/1967), and by  recent Presidential Decree of 7 January 2002
(Keppres No. 3/2002).
III. DESCRIPTION OF THE FUNCTIONING OF STATE TRADING ENTERPRISE
A. SUMMARY STATEMENT PROVIDING OVERVIEW OF THE OPERATIONS OF THE STATE TRADING
ENTERPRISE
• Manages imports for price stabilization and food security purposes, inter alia  long term bilateral
contract, G to G basis, counter-trade and food aid.
• Ensuring domestic rice price stabilization.
• Conducting domestic rice procurement for defending a guaranteed or floor price.
• Maintaining national stock reserve for food security purposes.
• Distributing rice for the poor and food insecure families, internally displaced persons, or people in
disaster areas due to a natural calamity.
B. SPECIFICATION OF EXCLUSIVE OR SPECIAL RIGHTS OF PRIVILEGES ENJOYED BY THE STATE
TRADING ENTERPRISE
• Undertake the government mandate to import and distribute rice, and maintain national rice
reserve stock for the price stabilization programme.
• In conducting its operation, the Bulog source of funds comes from the state budget and
dominantly from commercial credit guaranteed by the government.
C. TYPE OF ENTITIES OTHER THAN THE STATE TRADING ENTERPRISE THAT ARE ALLOWED TO
ENGAGE IN IMPORTATION /EXPORTATION AND CONDITIONS FOR PARTICIPATION
As part of government policy to liberalize the rice market, private sectors who are engaged in
the rice business have equal rights to export and import food commodity, including trade and
distribution.
D. HOW IMPORT /EXPORT LEVELS ARE ESTABLISHED BY THE STATE TRADING ENTERPRISE (STE)
The general rules for import and export of rice is that such activities are very much
determined by various factors, among others:  level of domestic rice production, demand of rice,
government food policy, etc.  STE is only an implementing agency of the government to import or
export rice.  Should there be a short supply based on projected production, import of rice is necessary.
On the other hand, if there is an ample supply due to good harvest and the price of rice is right, exportcan be carried out.G/STR/N/7/IDN
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E. HOW EXPORT PRICES ARE DETERMINED
Under the national legislation, goods may be freely exported or imported to and from the
country, and export or import prices will be determined based on agreed transaction.
F. HOW THE RESALE PRICES OF THE IMPORTED PRODUCTS ARE DETERMINED
Based on prevailing domestic price in order to avoid market disruption.
G. WHETHER LONG -TERM CONTRACTS ARE NEGOTIATED BY THE STATE TRADING ENTERPRISE .
WHETHER THE STATE TRADING ENTERPRISE IS USED TO FULFIL CONTRACTUAL OBLIGATIONS
ENTERED INTO BY THE GOVERNMENT
Bulog negotiates long term contracts or carries out transactions to fulfil contractual
obligations entered into by the government.  Bu log on behalf of the government implements the
bilateral long term contracts on G to G basis, counter-trade, food aid, etc.
H. BRIEF DESCRIPTION OF MARKET STRUCTURE
There are a number of business entities involved in the rice business, including marketing and
processing.  The government has encouraged private sectors in local markets to be more competitive
with regional and international markets.  When the market does not work well especially in the
harvest season, Bulog intervenes in the market and smooths-out the price fluctuation.
IV. STATISTICAL INFORMATION
See Tables I, II and III (attached).
V. REASONS WHY NO FOREIGN TRADE HAS TAKEN PLACE (AS APPROPRIATE)
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VI. ADDITIONAL INFORMATION (AS APPROPRIATE)
There is no additional information.G/STR/N/7/IDN
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Page 5TABLE I
STATE TRADING:  BADAN URUSAN LOGISTIK (BULOG)
STATISTICAL INFORMATION, IMPORTS
Year Description of product(s)
(including HS number(s))Total quantity
imported
(MT)Quantity imported by
state trading enterprise
(MT)Average import
price1
(US$/MT)Average
representative
domestic sales price2
(US$/MT)Mark up National production3
(MT)
12 3 45 678
1999
2000
2001Rice
Ex 10.064,183,000
1,513,000
1,384,4561,871,922
531,140
68,737231
189
168301
232
20928,933,200
29,514,600
28,206,900
Average 2,360,152 823,933 196 247 - 28,884,900
Notes:
1Based on rice price FOB at Bangkok for 25 per cent broken plus insurance and transportation costs (US$15).  Since January 2000,  the specific tariff for
rice (RP. 430/kg) is being applied.
2Price of rice at PIC (Cipinang Wholesale Market, Jakarta).
3Total production less for seed, animal feed, loss, etc. (less 10 per cent) that is rice available for human consumption.
Sources:
(a) Total import data from TRR (The Rice Report).  Import by STE from BULOG.
(b) Import price comes from Grain Report USDA.
(c) Domestic sales price based on wholesale price at PIC (Cipinang Wholesale Market, Jakarta) from BULOG.(d) National production data from CBS (Central Bureau of Statistics).G/STR/N/7/IDN
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Page 6TABLE II
STATE TRADING:  BADAN URUSAN LOGISTIK (BULOG)
STATISTICAL INFORMATION, EXPORTS
Year Description of product(s)
(including HS number(s))Total quantity
imported
(MT)Quantity imported by
state trading enterprise
(MT)Average import
price
(US$/MT)Average
representative
domestic sales price1
(US$/MT)Mark up National production2
(MT)
12 3 45 678
1999
2000
2001Rice
Ex 10.06None
None
NoneNone
None
NoneNone
None
None301
232
209None
None
None28,933,200
29,514,600
28,206,900
Average None None None 247 None 28,884,900
Notes:
1Price of rice at PIC (Cipinang Wholesale Market, Jakarta).
2Total production less for seed, animal feed, loss, etc. (less 10 per cent) that is rice available for human consumption.
Sources:
(a) Domestic sales price based on wholesale price at PIC (Cipinang Wholesale Market, Jakarta) from BULOG.
(b) National production data from CBS (Central Bureau of Statistics).G/STR/N/7/IDN
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Page 7TABLE III
STATE TRADING:  BADAN URUSAN LOGISTIK (BULOG)
STATISTICAL INFORMATION, DOMESTIC ACTIVITIES
Year Description of product(s)
(including HS number(s))Domestic purchases by
state trading enterprises
(MT)National production1
(MT)Domestic sales by state
trading enterprise
(MT)National consumption
(MT)
12 3456
19992000
2001Rice
Ex 10.062,448,752
2,173,585
2,010,79228,933,200
29,514,600
28,206,9005,150,563
2,715,960
2,035,56832,156,927
32,478,481
32,771,246
Average 2,211,043 28,884,900 3,300,697 32,468,885
Notes:
1 Total production less for seed, animal feed, loss, etc. (less 10 per cent) that is rice available for human consumption.
Sources:
(a) Domestic purchases data by STE from BULOG.
(b) National production data from CBS (Central Bureau of Statistics)
(c) Domestic sales data by STE from BULOG(d) National consumption data from Ministry of Agriculture.
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