Indonesia Clamps Down On Suharto Son Monopoly

Indonesian ministers appear to have slapped down a bid by President Suhartos youngest son to hang on to a lucrative clove monopoly, saying yesterday there was a free market in buying and selling the spice.

Industry and trade minister Mohamad Bob Hasan, a close friend and golfing partner of Suharto, led the charge, saying in a statement from three ministers that he would enforce a free market in cloves an essential ingredient in locally produced aromatic kretek cigarettes.

No one in this ministry has approved any special arrangement and we have no intention of doing so. We plan on applying the new rules, and that means free trade for farmers, traders and factories alike, Hasan said.

 

The Jakarta Post yesterday quoted business analysts as saying an unofficial requirement had surfaced obliging producers and buyers to trade cloves through PT Kembang Cengkeh Nasional (KCN), a firm controlled by Suhartos son Hutomo Tommy Mandala Putra.

Local media said KCN had to confirm a clove sale had been made through the company before manufacturers could buy the necessary excise tax sticker for cigarette packs.

Analysts said the KCN move followed a government agreement on economic reforms with the International Monetary Fund to disband a lucrative clove monopoly headed by Mandala Putra since 1991.

Under the IMF agreement, Suhartos son also lost government tax and tariff breaks for a national car project which had drawn the ire of international auto manufacturers.

Suhartos children and some business associates have made fortunes from their top-level connections in the business world.

In Mondays statement, Finance Minister Fuad Bawazier said he had told his ministry to vigorously review its practices, especially the sale of excise tax stickers.

I dont know what the practice was in the past, but I guarantee there will be no ratio or sourcing requirements (on cloves) from now on, he said.