Indonesia's garlic wars: Cartel trading suspicions

Linda Yulisman in Jakarta/The Jakarta Post
Asia News Network

Jakarta (The Jakarta Post/ANN) - Indonesia's anti-monopoly watchdog suspects the recent skyrocketing price of garlic bulbs to be the result of cartel trading, allegedly by several major garlic importers.

Business Competition Supervisory Commission (KPPU) commissioner Syarkawi Rauf said on Monday that 11 importers had allegedly conspired to retain imported garlic containers at Tanjung Perak Port in Surabaya, East Java, hoping to see the price skyrocket.

"We've found a number of garlic containers with the permit documents not processed [by importers]. We suspect importers did this with a purpose, planning to release them to the market when the price climbs further," he told reporters after a meeting about the issue with various stakeholders.

Indonesia, which imports a considerable portion of its garlic, saw the price of this key ingredient increase to 60,000 rupiah (US$6.3) per kilogram last week due to a supply shortage. The dramatic price increase had caused concerns about further increases in the country's inflation.

Amid the scarcity, the government detained 332 containers of imported garlic at the port as they were found without sufficient legal documents, such as import recommendations from the Agriculture Ministry and import permits from the Trade Ministry.

The containers form part of 160,000 tons of garlic import limit set by the Agriculture Ministry for the first half of this year.

Syarkawi said that, the government should evaluate its policy on the supply chain of key food commodities, particularly on import allocation.

"Domestically, we're not ready to enhance productivity resulting in a supply shortage and this is what speculators are trying to take advantage of," he said.

The anti-trust body said it would launch its investigation into the alleged garlic cartel business practices on Friday by questioning suspected importers.

Separately, Trade Minister Gita Wirjawan said the government would gradually release 293 containers at Tanjung Perak Port starting on Monday.

Last week, it approved the released of 39 containers out of the 332 garlic containers detained, which it claimed already cut garlic prices by up to 15 per cent.

"We've spoken with importers that have fulfilled our requirements, and they've agreed to sell the garlic to distributors at 15,000 rupiah per kilogram. This will certainly help slash the price, which has surged markedly recently," he told reporters after a joint press conference with Agriculture Minister Suswono.

Gita said that at the same time, the government would take legal measures against importers violating the rule on horticulture importation, including terminating the licenses of such importers.

"The government is considering several alternatives, including re-exporting, destroying and auctioning. But, we've temporarily prioritised stabilising garlic prices in the shortest time possible," he said.

Based on the Trade Ministry's data, three out of 14 importers ordering overseas shipments breached the prevailing regulation by purchasing garlic beyond the volume granted by their permits and utilising an expired horticulture import recommendation.

Suswono said that to ease importation, the government had vowed to simplify the procedures to access import recommendations as well as permits through an integrated service.

US$1=9737.10 rupiah