Index Parity To Determine Import

Rabu, 24 Juli 2013 | 10:44

We may still remember the chaotic due to the scarcity of shallot-garlic and red pepper a few months ago as the commodity supply was limited due to weather anomalies, while on the other hand there were restrictions on imports.The chaos had caused the inflation rate to soar only because of the unavailability of onions in the market. A similar chaos also occurred when beef supplies running low due to such similar matters. Not only impacting the inflation, shortages of beef also expanded into the politics, involving officials of a political party.

Reflecting on the issue of shortages of beef and horticultural commodities in the market, the government – in this case the Ministry of Trade – issues discourse on the exemption of quotas on imports of some commodities vulnerable to weather anomalies and beef in 2014.

Ministry of Trade argues the quota system is exempted to prevent price hike on one of the commodities experiencing supply constraints. Thus, when domestic productivity cannot be pursued, the additional supply from abroad could be a solution to deliver the price stability.

Such policy to open or close access to import for commodities to be controlled is determined by the parity indicator or price balance. It means that the import will be permitted temporarily as long as the price in not normal and then restricted after the price returns to normal.

The ministry claims the price parity refers to the government's interest in maintaining the inflation rate while continuing to promote the production, and increasing domestic productivity.

Normally, a policy discourse on exempting quota system and replacing it with the price parity fixing would directly invoke pros and cons.

In terms of price stability, the import policy by the using price parity is believed to be able to control commodity price fluctuations. As long as the price fluctuates, opening access to import would be just enough to suppress the price.

Clearly such policy will be beneficial for consumers who always want stable and cheap price. Certainly the government wants stable price related to the control of inflation progress.

Yet, on the one hand, such policy draws sharp criticisms since it is assumed that it will not benefit local agriculture producers.

National Horticulture Council emphasizes import policy using price parity which is not limited by quota will weaken the competitiveness of national agriculture products. It means Indonesia will heavily rely on import and it cannot have self-sufficiency on food.

On the other hand, the policy of price parity mechanism can be successfully implemented given that there is no one doing market speculation. It must be assured that scarcity of commodity is not because speculators intentionally ‘eliminate’ goods from market so they can play with the price and finally open access to import.

Recent experience shows market mechanism in Indonesia is not running the way it should be. Speculators are often behind the scarcity of goods and commodity supply in the market.

The cooperation between Trade Ministry and National Intelligence Agency to minimize price speculation after the implementation of import mechanism using price parity shows that the policy needs heavy prerequisite in order to be successful. The involvement of BIN indicates big power of speculators which the Ministry cannot deal on its own.

Hence, this newspaper argues that price parity needs to be deeply considered, including its positive and negative effects in determining policy on commodity import. All related parties must be involved to find the best solution to anticipate scarcity of commodity supply, while also considering the interest of national production.

Indeed, it is not easy to find solution that satisfies all parties. However, that is what the government is for. (t07/t10/aph/tw)