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In the wake of the global economic crunch, President Susilo Bambang Yudhoyono called on the Indonesian people to remain calm, while asking the United Nations to help address the impact of the surges in commodity prices that could severely affect poor economies.
"I have to tell the people and all parties concerned in the country that we and the House of Representatives (DPR) are still able to control the situation. We are also still formulating a credible and sustainable revised state budget. We are still able to overcome the economic problems we are facing now," President Yudhoyono said on Thursday.
The president made the appeal amid developing economies' outcry over the oil and food price surges fueled by among other things the conversion of farm products into biofuels in developed countries.
Indian Finance Minister P. Chidambaram was quoted by AP as saying in Singapore last week that the situation was being worsened by the diversion of food to produce biofuels in some countries. It was estimated that in the US, for example, nearly 20 percent of the country's corn production was used to make biofuels, he said.
Chidambaram said the prices of maize, rice and wheat had at least doubled between 2004 and now, while commodities such as crude oil and metals had doubled or tripled in price.
This was putting a strain on the finances of countries like India, which subsidizes food and fuel. Chidambaram said the rise in oil prices from about US$30 a barrel in 2004 to above US$100 this year was another example of "greed overtaking the common good of the world."
Corn, soybeans, sugar cane and other crops are seen as sources of clean and cheap biofuels. This means less grain is available for human consumption, driving up the prices of basic foodstuffs.
According to a UN report, biofuels are not only hurting poor consumers in Asia by driving up crop prices, they are also failing to help the region's farmers who have not been able to adapt their production to cash in on the boom.
"Small poor farmers in particular, have been left behind," UN Conference on Trade and Development economist Cape Kasahara, was quoted by AFP as saying in Geneva last week.
Food giant Nestle's chief executive Peter Brabeck also said earlier that the growing use of crops such as wheat and corn to make biofuels is putting world food supplies in peril.
With regard to the global economic problem which is also partly blamed on the subprime mortgage crisis in the US, President Susilo Bambang Yudhoyono is to ask the United Nations (UN) to take initiatives to deal with the impact of the current surges in world crude oil and food prices which were causing economic difficulties, especially in developing countries.
"I very much hope that the UN will take proactive steps by marshaling global awareness and responsibility to manage the economy of the world and all countries in view of the current surges in oil and food prices," the President said in a press statement at his office.
Besides asking for a UN initiative, President Yudhoyono also expressed hope that the people and all concerned parties in the country would remain calm in the face of the current world economic turbulences that were affecting the national economy.
"The impact in the country of the global food price hikes has led us to think of using funds from the state budget for poverty alleviation programs in an effort to assist the people," he said.
The president also said the 2008 state budget had remained under control and able to meet its functions in financing general administration activities to stimulate growth and improve the people's welfare, including the implementation of social safety net programs.
The president's call to stay calm is supported by the fact that amid world food price crisis Indonesia this year is expected to experience a rice production surplus which it is planning to export. But fear also exists that a surge in the world market price would lead to more exports and reduce stocks.
Director general for food crops Sutarto Alimuso said production in 2008 was estimated to reach 58.26 million tons of dry unhusked rice or equivalent to about 33 million tons of rice.
If the population is 227.78 million with a per capita rice consumption of 139.15 kg, the national need for rice is about 31.68 million tons. So this year, there would be a rice surplus of about 1.30 million tons.
Trade Minister Mari Elka Pangestu said the government was drafting a regulation on exporting food crops that are in surplus, including rice. The government is committed to securing stocks and stabilizing prices in the domestic market.
On the fear of depleting stocks due to exports, the trade minister said the regulation on rice export, which would guarantee stocks, would be issued this month.
"The main point is to guarantee rice stocks at home," she said.
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