The Indonesian Chamber of Commerce has called on the government to issue a joint ministerial decree to eliminate overlapping functions of ministries in dairy and beef farming.
The chamber, also known as Kadin, said eliminating the overlaps would help Indonesia compete in a free trade agreement signed between the Association of Southeast Asian Nations, Australia and New Zealand.
Juan Permata Adoe, Kadin’s deputy chairman for fisheries and farming, said on Monday the four ministries that supervised the sector - the ministries of trade, industry, agriculture and fisheries - had overlapping authorities, leading to confusion among investors.
“It would be good to have a strong agribusiness sector before the trade agreement is fully implemented in 2020,” Juan said during a meeting between Kadin and the Industry Ministry on Monday.
“We have to revitalize the agribusiness sector by reviewing the existing policy on fisheries and cattle farming,” he said. “To achieve this goal, the government should have one policy to avoid the kind of overlapping regulations that exist currently.”
Juan said ministries currently issued different and sometimes contradictory policies, lacking any single national blueprint.
He said he was confident Indonesian products could compete with products from countries like New Zealand, as Indonesia still had 10 years before it scrapped its import tariffs to zero percent from current levels.
Teguh Boediyana, chairman of the National Dairy Council (DPN), said some programs are necessary to develop current national dairy and beef products, including a soft loans scheme to boost capacity.
“We need to boost local farmers’ capacity from two or three cattle to four, even six cattle per traditional farming house,” Teguh said. “Ideally, each farmer should have between six and 10 cattle.”
The Association of Southeast Asian Nations Australia-New Zealand Free Trade Agreement, also known as the AANZFTA deal, was signed in Bangkok on Feb. 28. It consists of two bilateral deals with Australia and New Zealand.
In bilateral negotiations with Australia, Indonesia agreed to scrap 1,409 tariffs in the automotive sector. The country will eliminate four tariffs for beef and seven for dairy products from New Zealand.
In exchange, Australia and New Zealand would be eliminating tariffs on textiles and garments, as well as increase quotas for Indonesian workers in their countries.
Indonesia has been relying on imports to meet gaps in supply of local milk and beef. Local producers are worried that the AANZFTA will further eat into their market. According to data from the Trade Ministry, Indonesia had around 374,000 dairy cows raised by 127,211 farmers across the country, which supply about 20 percent of the country’s milk. The remainder is imported from Australia or New Zealand. Local farmers supplied about a third of Indonesia’s total beef needs of 385,000 tons in 2008.