Apikci asks for 11.5% export tax on cocoa

Adianto P. Simamora, The Jakarta Post, Jakarta

The Indonesian Cocoa and Chocolate Industry Association (Apikci) urged the government to impose a minimum 11.5 percent export tax on cocoa beans to help ensure sufficient supplies of the commodity at home.

"That's the only way for the government to ensure a sufficient supply of cocoa beans at home and to help boost the quality of local cocoa beans," Apicki secretary-general Djiddan Safwan told reporters on Tuesday.

He said that the association had sent the proposal to the Ministry of Industry and Trade.

The association groups local cocoa grinders and chocolate food producers.

Cocoa beans are processed by grinders into butter and powder which are then used by the food industry to make chocolate products.

The association earlier said that of the existing 13 cocoa bean grinders, only four were still in operation while the others had been forced to suspend operations due to the limited supply of cocoa beans.

Indonesia, the world's second largest cocoa producer after the Ivory Cost, currently imposes no export tax on cocoa beans.

The government currently imposes a 10 percent value-added tax and 2.5 percent income tax on the sale of cocoa beans from traders to the local grinders.

This has resulted in a shortage of cocoa bean at home as both traders and farmers prefer to export rather than sell to local grinders, according to Djiddan.

"Worse still, many foreign buyers buy cocoa beans directly from local farmers," Djiddan.

The Ministry of Trade and Industry has proposed that the Ministry of Finance impose an export tax of between 5 percent and 20 percent on cocoa beans.

However, the Indonesian Cocoa Association (Askindo), which groups cocoa beans traders, blasted the ministry's proposal, saying the policy would only serve the interests of cocoa bean grinders at the expense of farmers.

The country's cocoa grinders have a combined processing capacity of 200,000 tons per year, however only half of the capacity is being utilized.

Minister of Industry and Trade Rini M. Soewandi said it was important for the country to develop its cocoa grinding industry to add value to the commodity.

Djiddan said aside from securing supplies for local grinders, the imposition of tax exports on cocoa beans would provide the government with additional income which could be used to improve the quality of farmers' output.

He said foreign buyers cut prices for Indonesian cocoa beans due to their poor quality, caused mainly by disease.

Farmers have long complained about the lack of assistance from the government to combat diseases plaguing their crops.

"Importers cut the prices for Indonesia beans by about US$200 per ton due to the poor quality," he said.

"The government can use the funds it collects from the export tax to improve the quality of local cocoa beans," he said.

Indonesia exports up to 80 percent of its cocoa beans to the United States, Singapore, Malaysia and Brazil.