Systemic reform needed to lower Minyakita prices: Expert

Jakarta (ANTARA) - Researcher from the Center of Reform on Economics (CORE) Indonesia, Eliza Mardian, highlighted the urgent need for reforms in the logistics system to stabilize food prices, especially for cooking oil, or Minyakita.

"Systemic reform is needed, starting with adjustments to the logistics system and improving the government's ability to maintain prices, particularly for food, so it does not (lead to) increases in other costs, including workers' pay," she stated here on Monday.

Mardian suggested that the government consider the high logistics costs while formulating policies for food or goods distribution. She identified several factors that make Minyakita expensive, including the distribution and logistics challenges.

The researcher explained that although there is ample Minyakita stock, uneven distribution has caused prices to vary significantly across regions. However, she stressed that high logistics costs remain the biggest issue, as they exacerbate the situation.

Therefore, she suggested that Bulog, the state-owned food distribution company, should be assigned to handle distribution. Mardian believes this could lower costs, given Bulog's extensive distribution network throughout Indonesia.

Mardian also drew attention to Indonesian consumer spending habits as an important consideration in formulating the Minyakita distribution scheme.

Minyakita is used by people from the middle to lower socioeconomic classes, she remarked. Furthermore, they typically purchase it from small stores opened in suburban or rural neighborhoods.

The practice has led to Minyakita being sold at prices way above the maximum retail price of Rp15,700 per liter, as store owners buy their stock from distributors who sell it at prices close to that limit.

The researcher remarked that the maximum retail price often does not account for logistics costs and other factors, such as inflation.

Mardian suggested that these small stores be included in the distribution registry and called for a simpler registration process for smaller distributors.

"Incentives for distributors to get registered or easy access to stock for a better (profit) margin as well as integration with the public reporting system," she stated.