TEMPO.CO, Jakarta – The simplification of basic commodities' distribution chain from producing areas to wholesale markets in large cities could reduce prices by at least 21 percent. The decline is made possible by cost-cuts made when distributors deliver the goods.
"One of the reasons is prices are so high is the fact that sellers are subject to distribution costs, which they then charge to consumers," Abdullah Mansuri, board chairman of the Indonesian Market Traders Association (IKAPPI), said last weekend.
Mansuri said if the government wants prices to go down, the long distribution chain that must shortened, because "this is the weakest point and it is rampant with illegal practices along the way," he said.
One problem that needs immediate addressing, he said, is the practice of extortion. Truck drivers have to shell out a lot of cash when delivering goods to wholesale markets. In addition, the procedure is complicated.
The Ministry of Commerce and the Ministry of Agriculture, said Mansuri, must ask the Transport Ministry, the police, and local governments to eliminate these illegal levies.
He also suggested the government to subsidize the distribution of staple goods.
Trade Minister Rachmat Gobel agreed that the distribution channel need plenty of improvement.
"The government will regulate distribution to control prices and secure product availability in the market," he said when visiting the Kramat Jati Market last Friday.
"There are plenty of hoarding cases found that cause supply delays and jack up prices," he said.