Association blasts export tax plan for cacao
Adianto P. Simamora, The Jakarta Post, Jakarta
The Indonesian Cacao Association (Askindo) blasted on Friday the Ministry of Industry and Trade's proposal to impose export tax on cacao beans, saying the policy would only serve the interests of local cacao bean mills at the expense of farmers.
"This is policy is suicide. It will prompt farmers to stop planting the crop," association executive director Zulhefy Sikumbang told The Jakarta Post.
The ministry has reportedly proposed to the Ministry of Finance the imposition of an export tax of between 5 percent and 20 percent on cacao beans.
No decision has been made by the Ministry of Finance, Yamin Rahman, director of agroindustry at the Ministry of Industry and Trade, said on Thursday.
The new tax scheme is aimed at curbing cacao bean exports and at boosting the availability of cacao beans for local cacao bean mills. Mills turns the beans into butter and cocoa powder, which are materials for the making of chocolate products.
Indonesia, the world's second largest cacao producer after the Ivory Cost, currently imposes no export tax on cacao beans.
Local traders prefer exporting their beans due to a rise in the price for the commodity on the international market.
Furthermore, the government's imposition of a 10 percent value-added tax and 2.5 percent income tax on the sales of cacao beans has also forced traders to raise the price of the commodity on the local market, which makes selling the commodity difficult.
Indonesia exports 80 percent of its cacao bean output to the United States, Singapore, Malaysia and Brazil. Output is expected to reach 400,000 tons this year.
The local cacao bean grinding industry has a 200,000 ton per year processing capacity. However, only half of the capacity is being utilized.
According to the Association of Indonesian Cocoa and Chocolate Industry, of the existing 13 cacao bean mills, only four are still in operation, while the others have been forced to suspend operation due to the lack of cacao beans.
Minister of Industry and Trade Rini Soewandi earlier said it was important for the country to develop its cacao grinding industry because it would add value to the country's cacao products.
She said the price of cacao powder or butter was currently about US$4.50 per kilogram, while cacao beans were valued at only $1.70 per kilogram.
Rini has also asked the finance ministry to scrap the value- added tax and income tax on cacao bean sales to lower the price of the commodity on the local market.
Zulhefy accused the government of siding with the bean grinding industry at the expense of farmers.
"The grinding industry does everything it can to press the price of the commodity," said Zulhefy.
He urged the government not to be hasty in imposing export tax on the commodity, saying the increasing price of cacao beans on the world market was only temporary.
Cacao bean prices soared to 1,615 poundsterling in London on Thursday, its highest since February 1986, on concerns over conflicts in the Ivory Coast.
According to Zulhefy, the ideal export tax on cacao beans was less than 3 percent.
"We agree with the export tax plan, but only on the condition that it is lower than 3 percent and existing taxes on cacao bean sales should be scrapped," Zulhefy said.
South Sulawesi is the largest cacao growing area in Indonesia with a total of 134,000 hectares. Together with the provinces of Southeast and Central Sulawesi, it accounts for 75 percent of cacao output in Indonesia.